REIT's - An Investment Opportunity in the making
Real estate investment trusts are expected be shortly on their way in India.
They will present an interesting and new investment channel for investors in the country where custom ticket sizes in terms of investments are likely to be on offer, offering returns over the medium to long term. REIT's will offer a fixed dividend like pay-out much like mutual funds with scope for a return on investments besides this over the medium to long term. Details will be explicit once the first REIT's come up.
Most of the REIT's would invest in ready commercial and office space buildings (stock) and a large amount of office stock is said to be waiting in the pipeline for such absorption.
Whilst REIT's represent an opportunity for investment, it would take some gestation time for the concept to catch on. Besides considering the market for these investments, one would also need to judge as an investor the safety of such investments and therein the promoter backgrounds would be of prime concern.
Whilst making assessments on the viability of investing in REIT's, due diligence in terms of professionals looking after routine management of the REIT as well as the composition of REIT's and the likely investment / divestment strategy of the REIT would be factors to consider when making investment decisions.
Gurgaon as a market is primed for the emergence of REIT's with astute and savvy investors who should see this as an alternative opportunity to invest without directly investing in real estate assets in the city, avoiding liquidation issues in a down market, maintenance of assets and a medium to long term structured view to making returns.
To sum up, we see REIT's as being a supplemental force to the market and likely healthy investment stream into the market as long as it receives a fillip from the better known private equity and developer players as well as favourable regulation from government authorities. These are expected to happen alongside the market being en-route for a more structured and transparent shape.
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