Market regulator Sebi’s decision to allow setting up of small and medium REITs, according to industry players, will help curb and expand the growth of the new-age investment avenue called fractional ownership of rental real estate assets.
Real estate technology platforms welcome the Sebi decision to regulate the fractional ownership real estate market by facilitating fractional ownership of rental properties, which is still at a nascent stage in India.
Proptech platforms such as YOURS, ALYF, hBits and WiseX are helping investors acquire fractional ownership of primarily office and luxury holiday home assets. Real estate consultants such as Square Yards and 360 Realtors have entered this space.
On Saturday, the Sebi Board approved amendments to the REITs (Real Estate Investment Trusts) Regulations, 2014 to create a regulatory framework for the benefit of Small and Medium REITs (SM REITs), with asset value of at least Rs 50 crore. Minimum asset value for existing REITs is Rs 500 crore.
Welcoming the move, Shravan Gupta, founder and CEO of YOURS — a platform for fractional ownership of luxury second homes — said the Sebi initiative to regulate SM REITs and the real estate fractional ownership segment is a positive and necessary step.
“The guidelines proposed by SEBI are crucial for formalizing the sector, instilling investor confidence and addressing the complexities of Special Purpose Vehicle (SPV) securities issuance. Particularly beneficial for retail investors unfamiliar with this type of structure, the regulation is expected to contribute to the growth and acceptance of this innovative form of property ownership, in line with established practices in developed countries.
ALYF founder and CEO Sourav Vohara also welcomed Sebi’s move, saying it will help improve transparency, investor safety, liquidity and seamless exit options in fractional ownership. “This move has the potential to create a dual positive effect: formalizing fractional ownership as an investment class, thereby attracting a portion of portfolios towards a broader market and encouraging the supply of hospitality assets to meet growing demand in the travel and hospitality sector,” he said.
The fractional ownership industry is poised to see a tremendous transformation, felt Bhohara.
Shiv Parekh, founder and chief executive officer of hBits, described Sebi’s approval to set up SM REITs in Indian real estate investment as a “watershed moment”. He said hBits has always been enthusiastic about the potential of the concept of fractional ownership of real estate assets and the potential of democratizing access to real estate for retail investors.
“Sebi’s move to put in place a regulatory framework on fractional ownership of real estate is a strong testament to the regulator’s confidence in this new-age investment avenue and reinforces our belief in the model,” Parekh said.
The regulator’s move will give a significant boost to investor confidence and allow them to explore deeper opportunities in the commercial real estate space, he added.
Aryaman Veer, CEO of WiseX, called it a progressive step in regulating the fractional ownership structure.
“Sebi’s recognition of the growing trend of fractional ownership platforms and increased regulatory oversight is commendable. We believe this will not only increase investor interest in the real estate space but also ensure investor protection, common disclosure practices and a robust redressal mechanism,” Veer said.
Further, he said that lowering the minimum asset value of Rs 50 crore for small and medium REITs will open up exciting opportunities for investors seeking more accessible entry points into real estate ownership.
The SEBI Board has approved a regulatory framework for SM REITs that for structure, transfer of existing structures meet certain specified criteria, investment manager obligations, net worth, experience and minimum unit holding requirements, investment terms, minimum subscription, distribution asset rules and valuation. .
In August, Sebi had issued an advisory to regulate all web-based platforms offering fractional ownership of real estate assets to protect small investors. Such fractional ownership of real estate assets was proposed to be brought under SEBI’s REITs rules as micro, small and medium REITs.
Generally, fractional investment in real estate through fractional ownership platforms (FOPs) is an investment strategy in which the cost of real estate acquisition is divided among several investors, who invest in securities issued by a special purpose vehicle (SPV) established by a FOP. . This type of SPV buys real estate assets.
FOPs allow investors to own a specified percentage or fractional share of real estate assets through securities issued by the SPV. Some FOPs are managed by real estate agents or brokers (before purchasing the property) and then as property managers.
(This story has not been edited by News18 staff and appears from a syndicated news agency feed – PTI)
Where we collect the information from Source link
Disclaimer:- We include in each post a link to where each content on our website is collected from.If there is a complaint against any post please contact us directly.
Email: post-support.dailyfastnews24.com
You can also write on the popular online news portal dailyfastnews24.com. Writing topics feature, travel, lifestyle, career, IT, agriculture and nature. Send your entry today to [email protected]
advertisement:-If you would like to advertise on our website please contact us here.Our Ads team will contact you very soon.
Email: [email protected]
The cost of advertising:- 1 Post 100 USD Lifetime.
Thank you very much for visiting our website. Have a good day.