The Hindu Business Line : Assocham calls for trusts for expansion of realty market

THE Associated Chambers of Commerce and Industry of India (Assocham) has proposed the creation of real estate investment trusts (REITs) similar to the ones prevalent in Singapore, the US and Japan.

This would ensure that property markets are suitably expanded with proper regulation to benefit real estate investors both in commercial and domestic properties. Generally, REITs are closed-ended companies or trusts that hold, manage and maintain real estate for investment purposes that is leased to tenants. These trusts tend to have a broad shareholder base and are often traded on the stock exchange.

According to the chamber, creation of REITs will not only improve the quality and quantity of finance for investment in commercial and residential properties but also expand access to a wide range of savings products on a stable and well-regulated basis.

REITs would bring about structural changes in property markets to reduce costs and improve flexibility and control of tenants, besides ensuring tax exemptions on purchase of properties in real estate.

Introduction of REITs will also put in place reforms in the property market by helping to promote better liquidity, more efficient investment decisions, wider access to smaller investors and improved supply of housing through greater institutional investor participation in the residential market.

The chamber suggested that management of capital raised through these trusts could be entrusted with experienced fund managers or asset managers for efficiency. These managers too should be closely regulated by the Securities and Exchange Board of India under regulations formulated for REITs.

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