SEBI Approves Framework for Small and Medium REITs
The Securities and Exchange Board of India (SEBI) board amended the REITs (Real Estate Investment Trusts) Regulations, 2014, yesterday. This amendment establishes a regulatory framework designed to facilitate the creation of Small and Medium REITs (SM REITs). These SM REITs will operate with a minimum asset value of Rs 50 crore, a significant reduction from the Rs 500 crore requirement for existing REITs. The decision was finalized during a SEBI board meeting held in Mumbai.
Industry Experts Laud SEBI's Decision
The move to regulate fractional ownership in real estate has been met by positive reactions from industry experts. Aryaman Vir, CEO of WiseX, stated, “We applaud SEBI’s progressive move in regulating the fractional ownership framework with the amendments to the REIT Regulations, as the pioneers of the Fractional Ownership model and neo-realty investments in India.”
Expanding Market Access for Retail Investors
SEBI Chairperson Madhabi Puri Buch highlighted that the introduction of Small and Medium REITs aims to broaden market participation. The goal is to make it possible for a larger number of retail investors to participate in fractional ownership of REIT units. Buch further indicated the regulator's receptiveness to the development of similar investment products.
Enhanced Investor Protection and Market Transparency
Vir also commended SEBI for acknowledging the growth of fractional ownership platforms and for extending its regulatory oversight to this evolving market. He emphasized the importance of investor protection, saying, “We think it will guarantee investor protection, standard disclosure procedures, and a strong redressal mechanism in addition to stimulating investor interest in the real estate sector.”
Increased Accessibility and Flexibility
The CEO of WiseX further elaborated on the benefits of the reduced minimum asset value for SM REITs. “In addition, investors looking for more accessible entry points into real estate ownership will have exciting opportunities thanks to the lowered minimum asset value of Rs 50 crore for small and medium REITs. SM REITs’ ability to establish distinct schemes enhances the flexibility and inventiveness of real estate portfolio structuring. We anticipate that these regulatory changes will positively impact the ecosystem of fractional ownership, encouraging greater diversity and inclusivity in real estate investments.” He believes this will create attractive entry points for investors seeking greater access to real estate ownership.