How can an end User be Benefited from REIT
May 24, 2017 Real Estate News
The introduction of real estate investment trusts (REITs), will provide a platform that will allow all kinds of investors (even those with smaller budgets) to make safe and rewarding investments in the Indian Real estate sector.
First, let us first explain what REIT is: It is basically a process from which funds can be generated from a lot of investors can directly invest in properties like offices, residential units, hotels, shopping centres, warehouse, etc. As all the REITs will be structured as trusts, they will be listed on the stock exchange. Moreover, REIT assets will be held by independent trustees for unit holders/investors.
What would be the role of the trustees in REIT: All the trustees of REITs have defined duties. They are typically assigned to get involved in ensuring compliance and adherence to all applicable laws that protect the rights of the investors.
The objective and role of REIT: the REIT’s objective is to provide the investors with dividends that are generated from the capital gains accruing from the sale of the commercial assets. Ninety percent of the income is distributed by the trust among the investors via dividends.
Securities and Exchange Board of India (SEIB) have already given approval to REIT. Like mutual funds, it will pool the money from all investors across the country. The money collected from REIT funds will be subsequently invested in other commercial properties to generate income.
Even with a sum of money as low as Rs 2 lakh, investors can secure units in exchange. However, Rs 500 crores has been kept as the minimum asset size to be invested in. And, the minimum issue size would have to be less than Rs 2500 crores. Same as the stocks, the investors can buy the units from either the primary market or the secondary market.
A REIT is also supposed to provide diversified and safe investment opportunities with reduced risks that too under a professional management, and ensure maximum return on investments.
Following are the advantages of REITs:
Ninety percent of distributable cash will come as income dividends least twice in a year.
In order to make things transparent, REITs will showcase the full valuation on a yearly basis and will also update it on a half-yearly basis.
REITs will have to invest in a minimum of two projects with 60 percent asset value in a single project. This will make it more diverse.
It would be a low risk investment because at least 80 percent of the assets will have to be invested into revenue-generating and completed projects. Rest of the money would be invested in equity shares and other listed real estate activities.
REITs would be exempted from income tax. This makes it more all the more attractive.
A recent report by Cushman & Wakefield, says that between $43 billion and $54 billion across the top cities in India are ‘REITable’ investment opportunities.
If you are still wondering whether REITs more attractive than actual property purchase: You can be assured, investing in REIT, can be compared to investing in gold bonds. Moreover, The Indian property market has almost stabilised. Therefore, With the Union Budget 2017-18 clearly favouring first- time home buyers, 2017 may certainly be the year to make home ownership a reality.
First, let us first explain what REIT is: It is basically a process from which funds can be generated from a lot of investors can directly invest in properties like offices, residential units, hotels, shopping centres, warehouse, etc. As all the REITs will be structured as trusts, they will be listed on the stock exchange. Moreover, REIT assets will be held by independent trustees for unit holders/investors.
What would be the role of the trustees in REIT: All the trustees of REITs have defined duties. They are typically assigned to get involved in ensuring compliance and adherence to all applicable laws that protect the rights of the investors.
The objective and role of REIT: the REIT’s objective is to provide the investors with dividends that are generated from the capital gains accruing from the sale of the commercial assets. Ninety percent of the income is distributed by the trust among the investors via dividends.
Securities and Exchange Board of India (SEIB) have already given approval to REIT. Like mutual funds, it will pool the money from all investors across the country. The money collected from REIT funds will be subsequently invested in other commercial properties to generate income.
Even with a sum of money as low as Rs 2 lakh, investors can secure units in exchange. However, Rs 500 crores has been kept as the minimum asset size to be invested in. And, the minimum issue size would have to be less than Rs 2500 crores. Same as the stocks, the investors can buy the units from either the primary market or the secondary market.
A REIT is also supposed to provide diversified and safe investment opportunities with reduced risks that too under a professional management, and ensure maximum return on investments.
Following are the advantages of REITs:
Ninety percent of distributable cash will come as income dividends least twice in a year.
In order to make things transparent, REITs will showcase the full valuation on a yearly basis and will also update it on a half-yearly basis.
REITs will have to invest in a minimum of two projects with 60 percent asset value in a single project. This will make it more diverse.
It would be a low risk investment because at least 80 percent of the assets will have to be invested into revenue-generating and completed projects. Rest of the money would be invested in equity shares and other listed real estate activities.
REITs would be exempted from income tax. This makes it more all the more attractive.
A recent report by Cushman & Wakefield, says that between $43 billion and $54 billion across the top cities in India are ‘REITable’ investment opportunities.
If you are still wondering whether REITs more attractive than actual property purchase: You can be assured, investing in REIT, can be compared to investing in gold bonds. Moreover, The Indian property market has almost stabilised. Therefore, With the Union Budget 2017-18 clearly favouring first- time home buyers, 2017 may certainly be the year to make home ownership a reality.
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