Realty shares in focus after Sebi gives nod for REIT launch

DLF, Indiabulls Real Estate, Unitech, Oberoi Realty, HDIL, Phoenix and Prestige Estates are up 3-5% on NSE.

Shares of real estate companies are in focus and trading higher by up to 5% on the bourses after the Securities and Exchange Board of India (Sebi) approved the setting up and listing of Real Estate and Infrastructure Investment Trusts, commonly referred to as REITs.

DLF, Indiabulls Real Estate, Unitech, Oberoi Realty, Housing Development and Infrastructure (HDIL), Phoenix and Prestige Estates have rallied between 3-5% on the National Stock Exchange (NSE).

The NSE CNX Realty index, the largest gainer among sectoral indices, up 3% compared to less than 1% rise in benchmark CNX Nifty at 0945 hours.

According to a statement from the market regulator, the trusts, or REITS, will have to own assets worth at least Rs 500 crore. Investors will have to put a minimum Rs 200,000 into REITs.

Industry and experts said it would help attract investments to the tune of Rs 15-20 billion (over Rs 1 lakh crore); from foreign as well as domestic investors, through such trusts.

The government feels these new investment avenues will reduce the pressure on the banking system and also make available fresh equity in the form of long-term finance from foreign and domestic sources, including non-resident Indians, the Business Standard report suggests.