REIT Not Before Next Year: Analysts

<p><em>Globally, REITs have demonstrated the ability to attract and effectively manage investments in real estate, says <strong>Monica Behura</strong></em><br><br>The Real Estate Investment Trust (REIT) is likely to be set up next year as the complex tax regime of the country is keeping investors at bay. Post announcement of commencement of REITs in India, the government received a diversity of feedback from the industry participants. Acting promptly, the government has resolved most of the hurdles, which does indicate that it is committed to making REITs a success in India.<br><br>“However, Dividend Distribution Tax (DDT) still remains a concern for industry participants and investors. Any positive step towards resolving this will make the whole model a lot more attractive,” says Shobhit Agarwal, managing director - Capital Markets &amp; International Director, JLL India.<br><br>As of now, expecting REIT listings in 2015 is a bit unrealistic - it is likelier to happen in 2016 says real estate analysts.<br><br>Agarwal says that not only can REITs create a level playing field for even common investors to share the gains of this asset class but it can also become a game changer in many other ways. By encouraging public ownership, it can provide the framework for real estate companies to become more transparent and better managed.<br><br>Globally, REITs have demonstrated the ability to attract and effectively manage investments in the real estate sector. Besides other advantages, REITs bring increased transparency in the sector by adopting better corporate governance. By providing institutional exits to funds that invest in realty projects, REITs encourage developers to take to public financing as a new source of project funding. This way they also help the industry to become more transparent to confirm with the stringent and continuous reporting requirements and disclosure norms required of publicly-owned firms.<br><br>Indian real estate companies like Blackstone, DLF, Unitech, Ansals, Purvankara, Supertech among others are having discussions with the government on a regular basis regarding REIT. These property developers have large portfolios of investment properties from which they can collect rental can use REITs to divest part of their portfolio, particularly commercial or industrial properties. In addition, implementation of a REITS regime will provide a new platform to divest their real estate. REIT funds can buy the real estate assets from business owners and also enable them to enter into an agreement to lease it back to them for a long period of time. It can therefore enable businesses to liquidate their real estate and free up capital for businesses.</p>