REITs to turn Realty into Reality

With the dawn of Affordable Housing, Housing For All and Smart Cities Mission, demand for property is projected to multiply in the course of next few years. There is no denying in the fact that today, the realty sector of India is facing a strong cash crunch and dampened investors’ confidence. The failure of analysing real demand, improper infrastructure, saturation of Tier 1 cities, property price escalation, stringent FDI norms and absence of a regulator in the sector had caused real estate in India to hang by a thread. Thus, the projects that were launched earlier and those that are on verge of getting ready, or have delayed, has been the work without much supervision; as a result, failing to impress today’s market. Whereas, the plans of today will blossom tomorrow and it is crucial for the government to provide much needed support to revive the sector. Although, the government over the last couple of years has brought in several measures to ease the ways of conducting business in the Indian real estate sector that will help the demand to grow in near future. With multiple boosts being provided through REITs for investment in the realty sector, the cash crunch problems will be answered and hopes will be high for a better demand of property in future.

Real Estate Investment Trust (REIT) is a company that owns or finances income-producing real estate. Much like mutual funds, REIT provide investors with all types of regular income streams, long-term capital appreciation and diversification. This tool allows anyone to invest in portfolios of large-scale properties, by way to investing in stocks. The stockholders of REIT earn from the income produced without having to own or finance a property. The investment cap of REITs has been increased from 10 to 20 percent for under construction projects. Indian realty sector is pretty much starving and REIT will here provide a much needed alternate route of fund raising and attract several small and medium level investors in the sector. With plans to upgrade Indian infrastructure already laid, REITs might serve as a chief instrument in years to come.

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