The real estate market is yet again the prime focus for investors diverging from various other conventional markets. The signs of revival in realty market are prominent with increasing enquiries of available residential/commercial assets and new launches by developer groups. Along with the increasing traction on ground, the realty market has yet another reason to cheer in the present day.
The REITs have been qualified with final guidelines issued by SEBI, the stock market regulator in the country. As we know, REITs are just another type of mutual funds which instead of stock trading, channelize the pooled investments into property market. Given a go-through by the budget 2014 and SEBI, REITs are instilling faith amongst common/individual investors in the real estate sector and its prospects of growth.
As reported by The Economic Times, REITs will enable the common buyers to invest in currently available office space and hence pump in considerable amount of funds in the cash starved realty domain. Most importantly, REITS are the platform for common man to embark on the journey of monetization in the real estate sector which has so far been way beyond the reach for them.
REITs and the Common Man:
- No more barrier of a massive down payment to invest in real estate sector. With REITs, mid-income individuals will also be able to invest as SEBI guidelines have brought the minimum investment threshold to a bare INR 2 lac
- For common man, now real estate will be an opportunity for investment and hence the diversification of their investment portfolio will be easier and prudent. REITs will enable the trade participation of a larger base of investors belonging to various categories of fortune
- Being a regulated mechanism for investments, REITs will no longer let the common man be dependent on whims of builder groups and rather reassure them with bargaining power against the developers
- By far, the ROI in real estate was solely dependent on the level of value appreciation for one or two assets owned by single owners/investors. However, REITs will let the investors hedge their investments while it is invested in multiple projects of various segments/asset classes
- As performed in the developed markets, REITs will bring in a venue of regular income for investors as the asset value/rentals increase in tandem with inflation. This would do away the perception of a long gestation period required for monetization in the realty sector
As witnessed, market experts envision the future of realty sector to be a win-win arena for both the developer and buyer segments. The developers are expected to be relived with enhanced cash flow as a subsequent of more investors diverging towards real estate sector. On the other hand, the buyer segment also gets their share of profits with easy and regulated investments in the real estate sector which remained out of bounds for common man till date.