The move is expected to enhance the liquidity of the asset class in addition to providing the much-needed depth to the market that has so far seen a total three REIT listings in India. With this, retail investors can also invest in this asset class. The revised norms may also prompt more REIT listings hereon.
In 2019, the regulator had lowered the application value for REITs investor applications to Rs 50,000 from earlier Rs 2 lakh.
“The earlier Rs. 50,000 Cap restricted participation to only a certain set of investors. We believe that this amendment makes investment in REITs at par with other equity options in India. Reduction in minimum application amount will further bring in more investors thus improving the liquidity in REITs,” said Vinod Rohira, CEO, Mindspace Business Parks REIT.
The government and SEBI have been making efforts for the last few years to make REITs and InvITs a success story in India by getting regulation at par with global standards.
“REITs and InvITs, being permanent capital vehicles, need access to efficient equity and fixed-income capital markets and this development will allow investors to trade the securities efficiently besides permitting these securities to be included in indices over time. This announcement of SEBI will give a much-needed fillip to the Indian REITs and InvITs market,” said Sigrid Zialcita, CEO, Asia Pacific Real Estate Association (APREA).
According to Embassy REIT’s CEO Michael Holland, the reduction in lot size will increase liquidity for the entire REIT market, enable REITs to be included into benchmark domestic indices and allow greater participation from newer pools of institutional and retail investors.
The capital market regulator has also allowed listed REITs and InvITs, who have been in existence for less than three years, to tap the bond market for fundraising. They can issue debt securities to Qualified Institutional Buyers (QIB) through private placement basis only. Also, irrespective of the size, the issue needs to be built on the Electronic Book Provider platform.
The decision is expected to allow the business trusts like REITs and InvITs to access more liquidity.
The country’s maiden REIT listing took place in April 2019 with the Blackstone Group-backed Embassy Office Parks REIT. Following this, in 2020 two more K Raheja Group’s Mindspace Business Parks REIT and Brookfield India Real Estate Trust REIT listed on the bourses.
