70% Properties In Texas Is Owned By Real Estate Trusts; Here's What India Should Learn

70% Properties In Texas Is Owned By Real Estate Trusts; Here's What India Should Learn

70% Properties In Texas Is Owned By Real Estate Trusts; Here's What India Should Learn

'Real Estate Investment Trust' is seen as one of the complicated subjects in India while other growing economies have already reaped benefits from this investment channel. Not just the developing ones, the third world economies of Africa are running successful investment trusts to allow foreign investments in the economy and make the best use of funds and give back attractive returns. In this scenario, there are certainly many lessons India can learn from other countries-

Open for foreign investment

Many countries have introduced Real Estate trusts to attract foreign money into the economy. These are those risky markets where investors aren't too confident of putting their money into but still want to reap benefits out of the housing demand as REITs are easier to exit than the actual real estate investment which involves physical involvement of property and asset. Ghana, Nigeria,  Kenya are some of the countries with an active listing of REITs on their stock exchange and open for up to 100 per cent investment by international investors. South Africa has an attractive realty ecosystem, still almost 33 South African REITS and three non-South African REITs listed on the Johannesburg Stock Exchange, as per the data furnished by SA REIT Association.

Also read: Update: With Favourable Tax Norms, REITs Will Flourish

Less burden on physical real estate

While REITs do not involve the physical transaction of asset and the money is invested into trusts which are listed on stock exchange, REITs put a little pressure on existing resources and let investors earn through these channels. While India is running short on land supply, the demand-supply cycle is making the real estate expensive in India. In such conditions, REITs can pull India out of the housing crunch as investors can earn money through trusts and actual buyers can make the real estate transactions. Countries like Singapore, Philippines,  Ireland, Honk Kong and Australia have very active REITs market where even small investors are reaping benefits from real estate.

Boost to rental housing

Real Estate Trusts can be an ideal way of boosting rental housing. These trusts can be tied up with any large-scale properties and the income generated through these would be distributed to the investors. While India can regulate the investment of these trusts into rental housing scheme, it is an interesting fact to notice that 70 per cent properties in Texas, US is owned by Real Estate Trusts.

Also read: All You Need To Know About REITs

Investor friendly

While even small investors with a modest budget can bank upon these trusts to reap benefits through real estate cycles, diversification is another benefit of putting money in these channels. A real estate investor can put money in different markets at the same time, without taking a risk and still making best of the realty sector. Moreover, these stocks can be easily bought and sold and offer more liquidity as compared to the physical asset. REITs listed in UK and Canada distributes 90 per cent of their income to investors which make the profit non-taxable. India can push REITs to bring more investors on board, obsessed with money making. 

Last Updated: Tue Feb 28 2017

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