(Real Estate Investment Trusts) Regulations, 2008

DRAFT SECURITIES AND EXCHANGE BOARD OF INDIA (REAL ESTATE INVESTMENT TRUSTS) REGULATIONS, 2008 FOR PUBLIC COMMENTS

1 Jan 2008

In recent years, India's real estate business has seen significant expansion, underpinned by rapid economic growth coupled with a series of IPOs by real estate companies. Changing demographics, rising levels of foreign investment, a vibrant services sector powered by the IT sector and buoyant exports are the major contributors for India’s rapid GDP growth. The GDP growth and corporates' growing scale of operations have led to greater demand for commercial space, including modern offices, warehouses, lodging facilities and operational infrastructure. It has also boosted housing demand. Moreover, improved access to housing finance has boosted the demand for residential property. Over the last few years, modern real estate development and some investor interest has spread beyond metros and large cities.



In the aforesaid backdrop, Real Estate Investment Trusts (REITs) play a crucial role. REITs have become a preferred public property investment vehicle around the world. REITs boost and help to stabilize capital access, and reduce capital costs. REITs help in real estate business efficiently by creating conditions for building integrated property businesses. Most REITs in the leading markets are internally managed, and have diverse skill bases in property development, redevelopment, acquisitions, leasing and management.



REITs provide better access to stable, global and more competitively priced capital, as well as stronger and more professional property businesses. A significant part of the urban development activities currently underway is being undertaken by private sector real estate development companies. To raise resources from the capital markets and to achieve economies of scale, private sector developers adopt better corporate governance and financial transparency practices.



In the residential sector, a growing middle class is enjoying rising income levels. Increasing consumer interest has encouraged growth in organized retailing contributing to the spread of 'mall culture' and the popularity of other large-scale retail property developments. REITs can become the investment vehicle of choice for institutional and retail investors looking to participate in real estate ownership, management and development. They provide a similar structure for investors buying into real estate as mutual funds provide for investment in stocks.



With a view to encourage and facilitate healthy growth of REITs in India, SEBI is proposing to frame the Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2008.

download the draft regulations from

http://www.sebi.gov.in/commreport/RealEstateReg.pdf




Comments/suggestions on the draft SEBI (REIT) Regulations may be sent, on or before January 10, 2008, to Shri J.Ranganayakulu, Legal Adviser, 5th Floor, SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai – 400 051 or by email to rangaj@sebi.gov.in