- Real Estate Investment Trusts (REITs) are in the news, with analysts bullish about the potential in India and the Securities and Exchange Board of India looking to tweak norms – a process that will begin as early as next week including circulation of a consultation paper to amend the regulations of 2014, to encourage investments. Here is a ready-reckoner that will help in understanding what an REIT is, how it works, and the potential investment risks:
What are REITs?
- REITs are similar to mutual funds. While mutual funds provide for an opportunity to invest in equity stocks, REITs allow one to invest in income-generating real estate assets.
How does an REIT work?
- REITs raise funds from a large number of investors and directly invest that sum in income-generating real estate properties (which could be offices, residential apartments, shopping centres, hotels and warehouses).
- The trusts are listed in stock exchanges so that investors can buy units in the trust. REITs are structured as trusts. Thus, the assets of an REIT are held by an independent trustee on behalf of unit holders.
- The investment objective of REITs is to provide unit holders with dividends, usually generated from rental income and capital gains from the profitable sale of real estate assets.
- Typically, the trust distributes 90 per cent of its income among its investors by issuing dividends.
- REITs originated in the U.S. to give investors an opportunity to invest in income-generating real estate assets. After its introduction in the U.S., several countries such as Singapore, Australia and Hong Kong have implemented REITs.
Why now, in India?
- REITs, as a concept, have been on the horizon for a while now.
- India’sregulations in 2014 for the sector have not been able to attract investor interest. REITs obtained exemption from dividend distribution tax in the Budget, a step towards making them attractive for the investors.
- A report by real estate consultancy firm Cushman and Wakefield estimates that Indian commercial real estate (like office, retail assets) offers investment opportunities for REITs worth $43 billion – $54 billion (Rs, 2.88 lakh crore – Rs. 3.60 lakh crore) across top cities.
- The underlying strategy for REIT is to invest in rent-yielding assets and generate rental income for investors in the form of dividends. That explains why commercial real estate is seen as potential for REITs. The predominant strategy to invest in residential assets is via rental housing schemes. However, rental housing schemes in India are still not prevalent and hence investing in residential assets would be challenging
- The current SEBI guidelines for REITs permit investments only in rent-yielding assets.
Why invest in REITs?
- For investors who are averse to investing in physical purchase of property due to the risks involved, REIT is an alternative. Investors purchase units of REITs which are traded on the stock exchange, as against physical purchase of property. Therefore, investors can buy and sell units of REIT on the stock exchange as and when required, making investment easier to liquidate compared to physical property transaction.
- REITs units are listed on, and are subject to the vagaries of the stock exchanges, resulting in negative or lower returns than expected.
ರಾಜೀವ ಗಾಂದಿ ಪ್ರಾಯಪೂರ್ವ ಬಾಲಕಿಯರ ಸಬಲೀಕರಣ ಯೋಜನೆ - ಸಬಲಾ: ಜೀವನದಲ್ಲಿ ಕಿಶೋರಾವಸ್ಥೆಯು ಮಾನಸಿಕ, ಬೌದ್ಧಿಕ, ಭಾವನಾತ್ಮಕ ಬೆಳವಣಿಗೆಗೆ ಸಂಬಂದಿಸಿದಂತೆ ಒಂದು ಪ್ರಮುಖ ಅವದಿಯಾಗಿದೆ. ಹೆಚ್ಚಿನ ರೀತಿಯಲ್ಲಿ ಸೌಲಭ್ಯ ಒದಗಿಸುವುದಕ್ಕಾಗಿ ಹೊಸ ಚಿಂತನೆಯ ರೂಪದಲ್ಲಿ ಕಿಶೋರಿ ಶಕ್ತಿ ಯೋಜನೆ ಹಾಗು ಪ್ರಾಯಪೂರ್ವ ಬಾಲಕಿಯರಿಗೆ ...READ MORE
Ordinance clamps down on unregulated deposits Topic: Economy In News: In a bid to clamp down on Ponzi and fake deposit schemes, the government has, through an ordinance, banned unregulated deposit schemes. More ...READ MORE
Dear aspirants, You can donwload KARNATAKA BUDGET AND PROGRAMMES 2017-18 now. This special edition contains important initiatives by the government of Karnataka, which is very useful for your examination. This copy is ...READ MORE
The Cabinet approved Rs. 2,000 crore for the rehabilitation of Kashmiris who moved to different parts of India in the early 1990s and began to be recognised as migrants. It will ...READ MORE
The Commonwealth Heads of Government Meeting (Chogm), held every two years, was held in Malta It is an association of 53 independent nations The countries of the Commonwealth represent nearly one-third of ...READ MORE
Kashmir Terrorist Attack Topic: Internal Security In News: India revoked the Most Favoured Nation (MFN) status of Pakistan and warned of more measures in response to its support for terrorist groups targeting ...READ MORE
Tree survey is yet to take off in city Tree-fall, which endangers the lives of citizens and puts property at risk, is a common phenomenon during the rainy season. But the question ...READ MORE
RERA Topic: Polity and Governance IN NEWS: At the first meeting of a new RERA implementation committee held, there was broad consensus that the RERA Act needed to be amended to further ...READ MORE
ಭ್ರಷ್ಟಾಚಾರ ತಡೆಗೆ ಬಲಿಷ್ಠ ಕಾಯ್ದೆ ಸುದ್ಧಿಯಲ್ಲಿ ಏಕಿದೆ?30 ವರ್ಷಗಳ ನಂತರ ಭ್ರಷ್ಟಾಚಾರ ತಡೆ ಕಾಯ್ದೆಗೆ ತಿದ್ದುಪಡಿ ತರಲಾಗಿದ್ದು, ಲಂಚ ಪಡೆಯುವವರ ಜತೆಗೆ ಲಂಚ ನೀಡುವವರಿಗೂ 3ರಿಂದ 7 ವರ್ಷ ಜೈಲು ಶಿಕ್ಷೆ ಮತ್ತು ದಂಡ ವಿಧಿಸುವಂತೆ ಕಾನೂನು ಬಿಗಿಗೊಳಿಸಲಾಗಿದೆ. ಈ ತಿದ್ದುಪಡಿ ಮಸೂದೆಗೆ ರಾಜ್ಯಸಭೆ ...READ MORE
Buddhist remains date back to Satavahana period Topic: Art and Culture IN NEWS: The Department of Archaeology and Museums has found Buddhist remains under the ‘garbhagriha’ (sanctum sanctorum) of Sivalayam at Kondaveedu ...READ MORE
National Current Affairs – UPSC/KAS Exams- 25th Feb
FREE DOWNLOAD- KARNATAKA BUDGET AND PROGRAMMES 2017-18
Economic package for Kashmiri migrants’ rehabilitation
The Commonwealth Heads of Government Meeting
National Current Affairs – UPSC/KAS Exams- 16th February
Karnataka Current Affairs – KAS / KPSC Exams
National Current Affairs – UPSC/KAS Exams- 4th January
26th ಜುಲೈ 2018 ಕನ್ನಡ ಪ್ರಚಲಿತ ವಿದ್ಯಮಾನ
National Current Affairs – UPSC/KAS Exams- 29th January