10 March 2024 – In a significant move to regulate the fractional ownership industry, the Securities and Exchange Board of India (Sebi) has issued amendments to the REIT Regulations 2014. These changes establish guidelines for the creation of Small and Medium Real Estate Investment Trusts (SM REITs), aimed at bringing regulatory clarity to the burgeoning sector.
The newly introduced regulations, known as Sebi (REIT) (Amendment) Regulations 2024, redefine REITs to include Small and Medium entities. A crucial change specifies that an SM REIT can pool funds starting from ₹50 crore by issuing units to a minimum of 200 investors. This capital will be utilized for acquiring and managing real estate assets or properties.
The amendment is poised to pave the way for fractional ownership in income-generating real estate assets, potentially including high-end second homes nationwide. This move democratizes real estate investment, allowing a broader investor base to participate in the real estate market.
Conclusion:
Sebi’s regulatory intervention through the introduction of SM REITs marks a crucial step in adapting to the evolving dynamics of real estate investment. This move not only expands investment opportunities but also aligns with global trends in making real estate accessible to a more diverse set of investors. The amendments are set to reshape the landscape of real estate financing in India, fostering innovation and inclusivity in the sector.
