Realty shares spurt as Sebi aims to allow REITs

Shares of 14 real estate companies rose by 0.42% to 8.38% at 12:19 IST on BSE after the capital market regulator on Thursday, 10 October 2013, issued draft guidelines to set up real estate investment trusts in India.

Unitech (up 8.38%), DLF (up 4.01%), Anant Raj Industries (up 3.66%), Phoenix Mills (up 3.35%), Sobha Developers (up 2.39%), HDIL (up 2.12%), Indiabulls Real Estate (up 1.79%), D B Realty (up 1.66%), Oberoi Realty (up 1.24%), Sunteck Realty (up 1.12%), Prestige Estates (up 1.07%), Parsvnath Developers (up 0.94%), Peninsula Land (up 0.85%) and Godrej Properties (up 0.42%), edged higher.

The S&P BSE Realty index was up 3.38% at 1,363.96. It outperformed the S&P BSE Sensex, which was up 1.19% at 20,514.20.

The S&P BSE Realty index had outperformed the market over the past one month till 10 October 2013, rising 6.19% compared with the Sensex's 1.38% rise. The index had, however, underperformed the market in past one quarter, sliding 11.50% as against Sensex's 5.07% rise.

The Securities and Exchange Board of India (Sebi) on Thursday, 10 October 2013, issued draft guidelines to set up real estate investment trusts (REITs) in the country.

REITs are tax-efficient listed entities that mainly invest in income-producing real estate assets from which most of the earnings are distributed to their shareholders.

Media reports suggested that setting up of REITs will create opportunities for real estate developers to exit commercial real estate projects and will create a new investment vehicle through which smaller investors can gain exposure to income generating real estate assets.

Sebi's draft rules propose that only companies with assets worth at least Rs 1000 crore could list as a REIT, provided they sell at least Rs 250 crore worth of stock in the initial public offering.

The Sebi has proposed limiting investment in REITs initially to institutional investors and high net worth individuals and therefore it is proposed that the minimum subscription size shall be Rs 2 lakh and the unit size shall be Rs 1 lakh.

Powered by Capital Market - Live News