Back
Business
New investment channels planned in realty sector
Special Correspondent
| Centre to initiate $1.5 b fund for 60 cities |
REAL ROUTE: The Haryana Chief Minister, Bhupinder Singh Hooda (left) and the President of FICCI, Onkar Kanwar, at a real estate summit in New Delhi on Friday.
NEW DELHI: The Union Government is considering permitting real estate investment trusts (REITs) to offer investment opportunities to investors in the booming $12 billion realty sector on the pattern of mutual funds.
"We are considering the option of REITs as an investment tool; it is time for India to look into this modern tool... We have to develop an exclusive model with inputs from the industry,'' Urban Development Secretary Anil Baijal said at the FICCI organised international seminar on real estate here.
He said in principle his Ministry was in agreement with the industry on the benefits of REITs and was willing to work together with it to develop a practical model suitable for the economy.
Such investment channels for the real estate industry, Mr. Baijal said, were in functioning in many developed economies of the world including the U.S. where REITs were introduced during the 1960s.
Acknowledging that equities in the realty sector were not widespread at present, he said creation of such investment opportunities would offer scope to small investors.
The realty sector was estimated at $12 billion and was stated to be growing at 30 per cent annually. Mr. Baijal said that the Centre was proposing to institute a $1.5 billion fund for 60 cities to encourage States to take up urban development reform measures like repeal of the Urban Land Ceiling Act.
The assistance to States, under the National Urban Renewal Mission, was proposed to be made contingent upon the repeal of the Urban Land Ceiling and Regulation Act, amendment to the Rent Control Laws and reduction in stamp duties to five per cent over the next five years, he said.
"Cities are entitled to avail of assistance only when they start taking reforms,'' he said adding that urban development was a State issue and the proposed strategy was aimed at encouraging States to take advantage of the new policy and it would serve "our purpose.''
© Copyright 2000 - 2009 The Hindu