Market watchdog Sebi has notified revised regulations for real estate investment trusts, allowing investors to have fractional ownership of rental-earning real estate assets with a minimum investment of Rs 1 million.
Amid growing demand for high-value real estate assets, the Securities and Exchange Board of India (Sebi) has notified the framework for Small and Medium Real Estate Investment Trusts (SM REITs), and experts say the development ) expressed the opinion that it would have a significant positive impact on The fractional ownership sector is emerging in the country.
On March 8, the watchdog notified revised regulations that allow for fractional ownership of REITs, covering commercial and residential real estate.
In November last year, the Sebi board approved amendments to the REIT Regulations, 2014 to create a regulatory framework to facilitate SM REITs, with a minimum asset value of Rs 5,000 crore. 500 million for existing REITs.
According to the notification, the minimum price of each unit in the SM REIT scheme will be Rs 1 million or such other amount as may be specified by Sebi from time to time.
“The size of the assets proposed to be acquired under the scheme of SM REIT is at least Rs 50 billion but less than Rs 500 billion…” it added.
The SM REIT framework includes the structure, transition of existing structures meeting certain specified criteria, net worth, experience, obligations of the investment manager including minimum unit holding requirements, investment conditions, minimum participation, distribution criteria, asset valuation. is stipulated.
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Shiv Parekh, founder and CEO of fractional ownership platform hBits, said the notification highlights the potential of the fractional ownership model in democratizing access to real estate for individual investors. This reflects Sebi's confidence in the
Lowering the minimum investment threshold to Rs 1 million will attract more retail investors, he added.
Shravan Gupta, founder and CEO of YOURS, said the move is expected to have a significant positive impact on the emerging fractional ownership sector in the country.
A platform for fractional ownership of luxury second homes.
Sudarshan Lodha, co-founder and CEO of Strata, said moving to a fractional ownership platform remains an option.
Commenting on the notification, WiseX CEO Aryaman Vir said it will pave the way for expanded real estate investment opportunities. Aankush Ahuja, CEO and Founder of FOIP, said that the regulation of the fractional ownership industry under this framework will include both commercial and commercial sectors. This provides greater investor protection.
All these entities are fractional ownership platforms (FOP).
Typically, fractional investing in real estate through an FOP is an investment strategy that splits the cost of acquiring real estate among multiple investors and invests in securities issued by a special purpose vehicle (SPV) established by the FOP. Such SPVs purchase real estate assets.
FOP allows investors to own a percentage or fractional stake in real estate assets through securities issued by the SPV.
Parekh of hBits said, “As a pioneer in this fractional ownership model, hBits is also keen to be the first to list our SM REIT, thereby enabling investors to take full advantage of this. I'm thinking of doing that.”
(This report is published as part of an auto-generated, syndicated wire feed. Other than the headline, copy has not been edited by ABP Live.)
