The much-awaited Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) are likely to be launched in the country next year, says a study.
“Currently, the market for REITs and InvITs is relatively nascent. However, with various enabling factors, such as the growth of the economy and the middle- class, and a concomitant need for housing and infrastructure, the demand for these investment vehicles will see an upswing over the next few years,” PwC partner-tax, Abhishek Goenka, said in a statement.
The first InvIT is expected to be launched in March next year, while REITs will be launched by the end of 2017, he said.
“REITs and InvITs can play a pivotal role here, as these investment vehicles can be used to attract private investment in these sectors, while relieving the burden on formal banking institutions,” Goenka added.
According to the PwC-APREA (Asia Pacific Real Estate Association) report, the market for REITs, has evolved substantially in several countries and these investment vehicles have gained immensely, in terms of their market capitalisation.
See also: Crowdfunding versus REIT: Crucial differences
“A primary condition for the growth of these markets, as demonstrated by the experience of different countries, is their ability to customise regulations governing these investment vehicles, in conformity with domestic market conditions,” Goenka added. “India has managed to achieve this to some extent and therefore, we will soon see REITs and InvITs launched here,” he said.
REITs are expected to increase the depth of the Indian property market, through a sound regulatory framework which ensures transparency and high governance standards and promotes regular monitoring of their performance, the statement said.
“Given the importance of these two sectors in the country and the paucity of public funds available to stimulate their growth, it is imperative that additional channels of financing are put in place,” he maintained.
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