Sebi planning ‘micro’ REITs to bring property companies to nascent market- QHN


The Securities and Exchange Board of India (Sebi) is planning to allow “micro” real estate investment trusts (REITs), according to a senior official, to bring a wider set of property companies to the nascent market as India emerges from a pandemic-induced lull.

The regulator is considering reducing the size of REITs, allowing them to hold just a single asset or a diversified portfolio, to increase supply and flexibility for investors, said the official.

REITs in India must now have a minimum asset value of Rs 5 billion. The possibility that Sebi may lower the minimum has not been reported previously.

Sebi was taking an idea from consumer retail markets, the official said. Demand for shampoo in India was limited until the launch of single portion sachets tailored to the budgets of poor households sent the market soaring, the official said.

“That’s what Sebi is trying do with micro REITs,” the official said, with a working group assessing the risks and formulating the details on size.

“But disclosure requirements and governance will not be compromised in any way.”

The official declined to be named as the Sebi discussions on the matter were private. Sebi did not immediately respond to requests for comment.

Sebi’s plan comes amid a sweetening post-pandemic outlook for Indian commercial real estate, with demand and prices expected to rise steadily over the next few years, as employees head back to offices and shoppers flock to malls.

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