Context:
The Indian REITs Association (IRA) recently launched Data Benchmarking Institutions (DBIs) to provide investors with detailed information on real estate investment trusts (REITs).
Relevance:
GS III: Indian Economy
Real Estate Investment Trusts (REITs):
- REITs are entities that either own or finance profit-generating real estate properties across diverse sectors.
- They enable investors to pool funds together to invest in a variety of real estate projects.
- Functioning similarly to a mutual fund, these trusts manage a portfolio of properties that generate income, including offices, hotels, and shopping centers.
- Unlike typical real estate firms that focus on selling developed properties, REITs acquire and manage properties for operational income as part of their investment portfolio.
- Investors in a REIT hold fractional stakes in real estate, proportional to their investment, gaining access to real estate benefits without needing to buy whole properties.
- REITs are generally publicly traded, making them as liquid as stocks, a significant advantage over direct real estate investments.
REITs in India:
- Introduction and Regulation: Introduced in 2014, Indian REITs are regulated by the Securities and Exchange Board of India (SEBI).
- Qualification Criteria:
- Income Distribution: At least 90% of income generated must be distributed to investors as dividends.
- Revenue-Generating Investments: At least 80% of the REIT’s assets must be in revenue-generating properties.
- Construction Investment Limit: No more than 10% of the investment can be in properties under construction.
- Asset Requirement: A minimum asset base of Rs 500 crores is required.
- Investment Restrictions: Investments in agricultural and vacant lands are prohibited.
-Source: The Hindu
