Listing of REITs will bring transparency in markets: Sebi

Mumbai: The real estate investment trusts (REITs) will usher in a great deal of transparency in the sector and thus attract global funds, a senior executive of market watchdog Sebi said on Wednesday.

In September, Sebi had notified the norms for listing of business trust structures, Real Estate Investment Trust (REIT) and Infrastructure Investment Trust (InvIT) that would help attract more funds in a transparent manner into realty and infrastructure sectors.

Both the structures, norms of which were approved by the regulator in August, would get tax incentives.

"Tax incentives are key to the success of REITs and InvITs, as that would help attract more funds in a transparent manner into realty and infrastructure sectors. Additionally, compulsory listing of REITs will also usher in transparency in Indian markets," Securities and Exchange Board of India (Sebi) Executive Director Ananta Barua said at a real estate event organised by RICS here today.

The Board is in talks with the Finance Ministry to introduce tax incentives for real estate investment trusts (REITs) to make these instruments stage a successful take-off, he said.

Four stages of taxation are involved in the two trusts -- first while structuring and transferring assets to REITs or InvITs, second when they distribute income to their investors, third when they are traded and fourth time when there is an exit.

"These are heavy stages so tax issues have to be addressed," he added.

As per the notification, for both trusts, the minimum initial offer size should be Rs 250 crore with a public float of at least 25 percent, while the minimum asset base for these trusts to get listed is Rs 500 crore.

"With the twin objective of spurring growth back and infuse more liquidity in to the real estate market, the government's move to set up the REITs is laudable. While REITs will provide investors an investment avenue, which is comparatively less risky than investing in under-construction properties, implementation will also give them easier exit routes along with regular income in terms of returns," RICS Global Managing Director- Emerging Business Sachin Sandhir said.