The recent notification by the Security and Exchange Board of India (SEBI) regarding Small and Medium Real Estate Investment Trusts (REITs) is set to enhance the fractional ownership sector and ensure the protection of investor interests. This new framework encompasses both commercial and residential properties, thereby promoting the involvement of both domestic and foreign retail investors, as stated by real estate professionals.
Fractional ownership platforms are projected to oversee assets worth over Rs.4000 crore in assets under management or AUM. The system of 'Fractional ownership' allows individual investors to jointly own commercial or residential assets as an alternative investment.
Properties can be acquired through special purpose vehicles or private limited companies.
Kunal Moktan, the Co-Founder and CEO, Property Share said, “Any regulated product comes with significant benefits for investors - uniformity, investor protection, fairness, transparency, and access to redressal mechanisms. As the firm that conceived FOP in India and the largest FPO platform, we are excited to see the new SM REIT regulations being notified and look forward to working with the regulator in making institutional quality real estate accessible to retail investors under a fully regulated regime.”
Shrinivas Rao, CEO, Vestian told,"SEBI’s notification to regulate small and medium REITs (SM REITs) is a welcome move for the Indian real estate sector. This will regulate the fractional ownership industry and safeguard investor interests, incorporating both commercial and residential properties within the new framework."
He further elucidated that, SM REITs can now raise funds from Rs.50 crore by issuing units to at least 200 investors, as opposed to the previous limit of Rs.500 crore. This change could result in a significant increase in the number of income-producing small and medium real estate assets that fall under the jurisdiction of REITs.
Shiv Parekh, Founder and CEO, hBits, said,"SEBI notification to the SM REITs regulations has come is just less than 3.5 months since the initial approval given by the regulator in setting up of SM REITs which clearly reflects SEBI’s confidence on the potential of the fractional ownership model in democratizing access of retail investors into real estate."
This will serve as a pathfinder to improve market efficiency, raise awareness among potential investors about the advantages of this investment option, and guarantee widespread adoption.
He further said that, hBits is also eager to become the pioneer in listing SM REITs, enabling their investors to maximize their benefits from this opportunity.
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