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Analysts see monetisable value of REITs at over $96 bn

But say govt needs to clear tax-related issues to make REITs successful

Press Trust of India  |  Mumbai 

The tax sops proposed in the for (investment trusts) can help realise a potential $96 billion by listing the occupied commercial across offices, retail and warehousing segments over the next few years, according to analysts and leaders.

According to a report prepared by KPMG, Knight Frank and Hariani & Co, nearly $96 billion worth or 1.41 billion sq ft of occupied commercial across the country, with the top seven metros forming a major part of it, can be listed on the platform.
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However, the major hurdle in tapping the potential is certain regulations and tax-related issues which the government needs to tackle to make REIT successful, KPMG India partner Punit Shah said in a note.

"The could have a large opportunity in the market with a growing economy, existing portfolio of commercial and conducive investment climate. However, to get to be functional and successful, the regulators have to ensure that the regime is continuously reviewed in accordance with the changing market requirements," he said.

According to the report, the critical issues that need to be addressed include tax efficiency, one-time waiver of stamp duty on transfer of assets to by states, tweaking of the Irda investment regulations to allow insurers to invest in REITs, thereby widening the investor base.

"Given the functional model of some of the established markets, it is evident that its success depends on the capability to customise the rules and regulations governing it in a way that they fit into their own markets.

"The support of governing authorities to ensure a less restrictive regime and favourable tax transparency status can be a critical factor in the development of a vibrant sector in a new market," said Knight Frank India chairman, Shishir Baijal.

First Published: Fri, March 06 2015. 12:07 IST
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