Lower minimum investment in REITS proposed for larger retail participation

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SME Times News Bureau | 08 Apr, 2021
In an attempt to increase retail participation in the new asset class, market regulator SEBI may look at reducing the minimum investment in REITs, or real estate investment trusts, from the present level of Rs 50,000.

Sources privy to the development said that the government has reached out to the Securities Exchange Board of India (SEBI) to examine the possibility of reducing the floor of investment decided for investment in this asset class.

While the specifics have been left to the regulator to decide, sources said that industry associations have pushed for halving this limit to Rs 25,000 to help in bringing more participation from small retail investors into REITs.

REITs are companies that own or finance income-producing real estate across a range of property sectors. Most REITs trade on major stock exchanges, and offer a number of benefits to investors.

"There is a proposal to reduce the minimum investment limit in REITs. However, a decision on this including quantum and timing will follow further discussions by the regulator," government sources said.

The changes, once implemented, would broadbase the investment pattern in REITS and would provide an opportunity even to retail investors to build on and gain from investment in this asset class.

According to a JLL report, India's REIT market will enter a period of prolonged growth, with more REITs forecast to be listed in 2021 and beyond. The report has said that the number of buyers and sellers will broaden significantly with the listing of more REITS in India, further increasing market liquidity and yield compression, and the incentive to securitise property assets.

The proposal to reduce the lot size for REITs follows an earlier 2019 decision by the SEBI fixing Rs 1 lakh as minimum investment limit for InviTs and Rs 50,000 for REITS.

There are three listed REITS in the country having a market capitalisation of over $7 billion: Embassy, Brookfield India and Mindspace.