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News Topical, Digital Desk: India's Real Estate Investment Trust (REIT) framework may soon see a major overhaul. SEBI is currently considering the possibility of including REITs in indexes, as well as allowing a limited number of under-construction and greenfield real estate projects in their portfolios. SEBI Chairman Tuhin Kant Pandey said, "We are considering including a certain percentage of early-stage projects, but with safeguards that do not impact investor returns."
REITs are preparing to be included in major indexes.
To be included in an index, REITs must meet certain standards. These include:
- Adequate assets under management (AUM)
- Public shareholding at a certain level
Pandey said this move will increase liquidity and investor participation for REITs in the market.
REITs have already received equity status in mutual funds. The SEBI Chairman said that SEBI has already categorized REITs as equity instruments for mutual funds, while InvITs will be considered hybrid instruments. He said this clarifies how mutual funds should allocate investments. Equity classification for REITs will help improve liquidity. Capital Demand Given India's rapidly growing investment needs in energy, transport, and urban infrastructure, Pandey said REITs and InvITs will play a significant role in the country's infrastructure financing in the coming years. According to Nabfid estimates, India will need approximately ₹700 trillion in investments by 2047. Even though India is Asia's fourth-largest REIT market, investor participation is only around 1%. As of October 2024, there were 24 listed InvITs in the country, and the total REIT-InvIT asset base was ₹9.25 lakh crore. The SEBI Chairman stated that government agencies like the National Highways Authority of India (NHAI) could further strengthen this market by launching public InvITs. He added that SEBI is working with the Ministry of Finance to accelerate public asset monetization.
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