Retail investors may open up REITs

India’s markets regulator is contemplating opening up actual property funding trusts (REITs) to small buyers by step by step decreasing the minimal buying and selling lot dimension of REIT models from Rs 50,000 to the worth of only a single unit, very similar to how shares are traded.

The transfer is aimed toward enhancing liquidity for buyers in REITs, two folks with direct information of Securities and Exchange Board of India’s (Sebi’s) plans mentioned on situation of anonymity.

“Sebi is considering a plan to gradually make REITs trading akin to share trading. This will help grow the market as it will channelise household investments into commercial realty,” mentioned one of many two folks.

Embassy Office Parks REIT is at the moment the one such listed belief in India. On Tuesday, the corporate’s REIT was buying and selling at Rs 341 per unit on BSE.

The firm’s complete market worth is round Rs 26,245 crore however there is no such thing as a free-float market cap as a result of REIT models aren’t freely tradable, which is able to change as soon as Sebi relaxes the foundations and permits small buyers to purchase and promote REIT models on exchanges with none minimal lot dimension restrictions or maybe in small inexpensive lot sizes.

The market regulator’s proposal is consistent with world practices the place even a single REIT unit might be traded.

Though Sebi allowed itemizing of REITs in 2016, up to now, Embassy REIT is the one listed entity.

Despite subdued fairness markets, Embassy REIT fetched a return of 25% during the last one 12 months, which explains the rising recognition of REITs and the rationale why the market regulator is now planning to permit retail buyers to enter REITs market.

“Sebi is in receipt of the representation from some industry participants and is considering it. The regulator wants the REIT market to grow but can’t compromise on safety of investors,” mentioned one of many folks cited above.