REITs come to rescue the investors

If you say that one would be able to buy a property with mere 2 Lakhs a couple of years back or say even months back, no one would be able to believe. This money is enough for a stock broker to submerge a person in tips of investment or a bank to probably lay some foundation stones but later on it could take ages for one to actually get their hands on the property.

Real estate investment trusts (REIT):

SEBI has issued some final guidelines for real estate investment trust which will help any investor having 2 Lakhs to get a piece in the real estate market. So, there are no more reasons to become a laughing stock in various Realtor’s offices.

These are similar to mutual funds, the only difference being, the money collected from investors goes into property rather than stock market and various bonds. There has been lot of brain storming being done on this trust but the current union budget seems to have taken a major hurdle out in the form of taxation of the REITs.

Scopes of REITs:

 Past few months have seen a substantial decline in the real estate market and there were lot of concerned raised by the people in this industry, through the new guidelines, SEBI has been able to put all these issues at rest. So this has come as a boon for both investors and the real estate industry as it will increase the cash flow in the drought hit market. As per the Chairman of JLL India, Mr. Anuj Puri, a cash flow of nearly Rs 60000 to Rs 70,000 crores can be expected through conversion of half of the Grade A office to REITs.

Market Entry Barrier:

When it comes to investment in Metropolitan or Tier 1 cities, the minimum investment could be upto- Lakhs and as now due to SEBI’s guidelines it has been considerably brought down to Rs 2 Lakhs, inviting more number of real estate investors in the market. Now, the minimum investment could be expected to be lowered to even Rs 1 Lakhs in some of the secondary markets.  As per the CEO of HDFC bank, Mr. Mistry, this has given a ray of hope even to the middle class income individuals as they can now hope to invest in real estate.

The only problem seems to be that the real estate has no space of can take lot space in form of investment in the portfolios. There are certain income groups who say that this might have come at the right time but it can negatively impact the real estate market in the form of high property price. The main idea is to resolve the financial issues faced by the developers and the banks funding them.