Sebi likely to rework REIT rules to lure in FIIs, HNIs

The Securities & Exchange Board of India may amend the dormant guidelines governing real estate investment trusts to lure international investors into investing in them as various arms of the government scramble to defend the sliding rupee.

A new set of rules may soon be announced by the regulator which would make it easy for wealthy Indians and international investors to buy into these trusts that provide regular income like bonds or bank deposits, said two people familiar with the development.

The new format for the so called REIT will keep away retail investors as such investments with liberal guidelines may not be appropriate for those with less risk appetite.

“We are working on a new set of guidelines that will be attractive to FIIs,” said a person at the market regulator who did not want to be identified. But it will be out of bounds for retail investors since the relaxed guidelines will be a risky proposition for them, he said.

Indian regulators are looking to re-draft the Real Estate Investment Trust, or REIT, guidelines to draw foreign investment to shore up the rupee. The initial guidelines announced in 2006 were so onerous that not a single trust was founded. One of the conditions was that the trusts have to declare the net asset value on a daily basis, a requirement quite impossible in thereal estate market where similar properties do not trade on a daily basis.

REITs are a pool of funds raised by issuing a tradable security like a share or a debenture. The value of a REIT is dependent on the rental income from the properties that are owned by the REIT as a whole. This is one way of real estate investment for higher yields for small investors who cannot spend crores of rupees buying property.

The Indian currency is among the worst performers among emerging markets as foreign investors pulled out more than $6 billion amid fears that the Federal Reserve chairman Ben Bernanke will end the $85 billion monthly bond purchases that helped global stocks rally.



One thought on “Sebi likely to rework REIT rules to lure in FIIs, HNIs

  1. Pingback: Real-Estate investing: Investing in REITs | Markets And Trading

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s