Real Estate Investments: How are retail investors benefiting from small and medium REITs?

livemint.com:

Indian regulators are pro-actively driving a dynamic and multifaceted transformation within the real estate sector. A wave of progressive regulatory reforms including implementation of the RERA Act (2016) for enhancing developer responsibility, GST for streamlining taxation, REIT regulations (2014) for paving a new asset class have all helped in fostering accessibility, transparency and stability for discerning investors.

The introduction of Real Estate Investment Trusts (REITs) regulations in 2014 and the subsequent listing of the first REIT in India in 2019 unlocked a new avenue for retail investors to benefit from institutional real estate investing. 

SEBI has upped the ante with their new framework for Small and Medium Enterprises REITs (SM REITs) which will further democratise access to real estate investing in India. While some investors were already diversifying their portfolio by investing in commercial properties through Fractional Ownership Platforms (FOP’s), this new SM REIT regulation will give investors an additional regulatory oversight and the inherent benefits that come with regulations — redressal mechanisms and enhanced liquidity.

Also Read: Small & Medium REITs framework to boost property fractional market growth by 10 times to $5 bn, say industry players

According to a joint-analysis by JLL and Property Share, the Indian fractional ownership market is currently estimated at around $500 million and is expected to grow 10 times in the next six years to surpass $5 billion of Asset Under Management (AUM) by 2030.

REITs (across asset sizes) are an established model for real estate investment globally. In the United States alone, publicly traded REITs manage a staggering USD 2.5 trillion in gross assets.