FDI reforms, REIT rule relaxations to boost realty sector: CBRE

Reforms in Foreign Direct Investment (FDI) policy and relaxation of norms in Real Estate Investment Trusts (REITs) will benefit the realty sector, especially the commercial segment, property consultant CB Richard Ellis (CBRE) group said on Thursday.

Earlier this week, the government unleashed a second wave of FDI reforms, allowing 100% inflows in civil aviation and food processing sectors while easing norms in defence and pharmaceuticals.

"The measures announced by the government regarding FDI as well as REITs will facilitate investments into the country," CBRE South Asia Chairman and Managing Director Anshuman Magazine said in a statement.

The reforms in FDI, he said, will lead to greater inflow of foreign investments and encourage domestic players in sectors such as manufacturing with cutting-edge technology, defence, aviation, food processing and retail.

"The growth of these sectors will directly benefit the real estate market in India, especially office, retail, logistics and warehousing segments, among others," he said.

On REITs, Magazine said, "The changes proposed by markets regulator Sebi are clearly indicative of the eagerness to allow investments in REITs on a priority basis."

With an aim to make REITs more attractive to investors and real estate players, Sebi had last week decided to relax its norms to allow these trusts to invest more in under-construction assets and have a larger number of sponsors.

"The announcement to allow 20% investment in under-construction projects is likely to lead to an increase in potential yield returns, necessary for a successful REIT listing in the country," he said.

Overall, Magazine said these announcements will boost the overall economy of the country. "If implemented correctly, these measures will also help improve India's overall market sentiment," he said.