The Securities and Exchange Board of India (SEBI) has recently introduced detailed guidelines for Small and Medium Real Estate Investment Trusts (SM-REITs), aiming to enhance the liquidity of real estate assets on Fractional Ownership Platforms (FOPs). These comprehensive guidelines are designed to facilitate new listings and provide a pathway for existing companies that acquire and manage real estate assets through FOPs to transition their business models to the SM-REIT platform. With the real estate investment trust (REIT) sector already established, the introduction of SM-REITs is expected to broaden the scope and scale of this industry significantly. This move is seen as a progressive step that will bring more transparency and regulation to the sector, thereby increasing investor confidence. Kunal Moktan from PropShare Capital highlighted that their operation has evolved from being a non-regulated tech platform offering rental real estate assets to retail investors to now being under SEBI's regulatory framework due to the new SM-REIT regulations. This transition ensures that their product is fully regulated and can reach a wider audience, making it more accessible and appealing to a broader range of investors.
A notable change brought about by these new regulations is the reduction in the minimum investment requirement from ₹25 lakhs to regulated ₹10 lakhs. This significant decrease is particularly beneficial for stakeholders in the fintech sector as it lowers the barrier to entry, making real estate investments more accessible to retail investors. Moktan expressed his enthusiasm about these developments, noting that the reduced investment threshold would attract more retail investors to the platform. He emphasized that this regulatory change ensures a more inclusive and democratized investment landscape, allowing a larger population to participate in real estate investments. This, in turn, is expected to drive more capital into the sector, fostering growth and development. The increased participation of retail investors will likely lead to a more vibrant and dynamic market, with enhanced liquidity and better opportunities for both investors and developers.
Anshul Jain from Cushman & Wakefield also welcomed the new SM-REIT regulations, highlighting the appeal of such investment products. He pointed out that SM-REITs provide a stable income stream backed by real assets managed by professionals, which adds a layer of security and reliability for investors. Jain acknowledged that there have been some fluctuations in capital appreciation for REITs, partly due to concerns about the return to office trends and the future of the sector. However, he believes that these issues are gradually diminishing, and he views REITs as offering good yields for investors. As retail investors become more familiar with the sector and understand the benefits of investing in professionally managed real estate assets, Jain anticipates an increase in investment. He is optimistic that the enhanced regulatory framework will bolster investor confidence and lead to greater participation in the real estate market, ultimately benefiting the entire sector by creating a more robust and resilient investment environment.
A notable change brought about by these new regulations is the reduction in the minimum investment requirement from ₹25 lakhs to regulated ₹10 lakhs. This significant decrease is particularly beneficial for stakeholders in the fintech sector as it lowers the barrier to entry, making real estate investments more accessible to retail investors. Moktan expressed his enthusiasm about these developments, noting that the reduced investment threshold would attract more retail investors to the platform. He emphasized that this regulatory change ensures a more inclusive and democratized investment landscape, allowing a larger population to participate in real estate investments. This, in turn, is expected to drive more capital into the sector, fostering growth and development. The increased participation of retail investors will likely lead to a more vibrant and dynamic market, with enhanced liquidity and better opportunities for both investors and developers.
Anshul Jain from Cushman & Wakefield also welcomed the new SM-REIT regulations, highlighting the appeal of such investment products. He pointed out that SM-REITs provide a stable income stream backed by real assets managed by professionals, which adds a layer of security and reliability for investors. Jain acknowledged that there have been some fluctuations in capital appreciation for REITs, partly due to concerns about the return to office trends and the future of the sector. However, he believes that these issues are gradually diminishing, and he views REITs as offering good yields for investors. As retail investors become more familiar with the sector and understand the benefits of investing in professionally managed real estate assets, Jain anticipates an increase in investment. He is optimistic that the enhanced regulatory framework will bolster investor confidence and lead to greater participation in the real estate market, ultimately benefiting the entire sector by creating a more robust and resilient investment environment.