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Indian Real Estate Investment Trust (REIT) firms, in their nascent stage, are currently considering the establishment of a professional association aimed at representing and advancing the growing sector. Drawing parallels with the Association of Mutual Funds in India (AMFI), the proposed association is anticipated to bolster awareness about this promising yet unchartered investment landscape.
A representative of a leading REIT firm, who chose to remain anonymous, confirmed, "We are in the initial stages of discussions concerning the formation of an association dedicated to the REIT sector. The goal is to collaboratively foster understanding of this innovative investment mechanism that carries vast potential."
The details surrounding the association's establishment, including cooperation with the Securities and Exchange Board of India (SEBI), are currently under negotiation. Insiders are hopeful that the association's foundation will be solidified within the present fiscal year.
The proposed association aims to do more than raise awareness. It seeks to establish sector-specific standards and regulations, resulting in a more transparent and resilient REIT market in India. The efforts are designed to better inform potential investors about the benefits of REITs, thereby encouraging more participation in this novel investment product.
REITs offer an alternative investment channel, allowing investors to acquire shares in a diversified real estate portfolio. This can present a more liquid investment opportunity compared to acquiring individual properties.
In terms of potential, India's REIT sector remains largely untapped. There's an astonishing 57 per cent unexploited opportunity, with 380 million square feet of pre-existing Grade A office space eligible for REIT listing. Presently, the total area managed under REITs is pegged at 100 million sq ft.
While the formation of the association is yet in its preliminary phase, industry insiders view it as a positive move for the Indian REIT market. The association is expected to promote and increase the accessibility of this unique investment vehicle to potential investors.
In conclusion, the REIT sector in India stands at a pivotal crossroads, with the proposed formation of an industry-specific association offering promising potential. By enhancing transparency, establishing regulatory norms, and promoting investment awareness, this association could be the harbinger of a new era for India's real estate investment landscape.
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