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Mumbai April 18 Mr John Kriz, Managing Director of Real Estate Finance arm of global rating agency Moody's, has advocated creation of real estate investment trusts (REIT) in India. A REIT offers investment opportunities in real estate similar to mutual funds in stocks.

They are tax vehicle for a corporation investing in real estate that reduces or eliminates corporate income tax. REITs are required to distribute their earnings, which become taxable at investors' end. The trusts can be public or private. They offer investment opportunities in real estate sector.

Apart from providing professional management they also help generate much-needed liquidity and transparency, he said.

Mr Kriz, addressing presspersons here, said Japan, Singapore, Malaysia, Hong Kong, South Africa and Mexico are some of the countries that had taken to it and India would do well to follow suit. While the trusts in the US and Canada preferred internal management of properties, but it could be best left to market forces to decide on whether third party or internal would be the most suited here, he said.

Mr Vikas Agarwal, General Manager, ICRA, said despite higher interest rates and spiralling land prices, real estate demand would not taper down as the growth fundamentals of the Indian economy were strong and the upswing was across all sectors. Investment and consumption too were rising. Real estate prices could be in for a correction, but would be area specific.

Some laws such as the Rent Control Act, Urban Land Ceiling Act and those relating to the township development posed impediments, besides high stamp duties. A more effective and transparent market regulation could also prove an ideal foil for the growth story, he said.

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