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

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₹10 lakh. It amended the regulations for REITs, permitting fractional ownership of REITs which will encompass commercial and residential properties. This will help the real estate fractional ownership market to grow by 10 times to $5 billion by 2030, according to a JLL India and PropShare report.

India’s real estate fractional ownership market is currently estimated at around $500 million and it is projected that the market is projected to grow 10 times in the next five years. “Albeit the regulatory compliance issues that the industry is expected to witness during the initial phase of implementation of the MSM REIT regulations, these are expected to pave the way for the market to grow and potentially surpass USD 5.0 billion of Asset Under Management (AUM) by 2030," said the report. Industry players believe that the Sebi regulations address key aspects to safeguard investor interests and to ensure organized growth of the market.

The rules require the investment manager responsible for setting up an SM REIT to have a net worth of at least ₹20 crore and at least two years’ experience in the real estate industry or real estate fund management. Also, in a scheme of the SM REIT scheme which has opted not to undertake leverage, the investment manager shall always hold at least 5% of the total outstanding units during the first three years. The minimum holding increases to 15% in the case of leveraged schemes.