The much-awaited Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) are likely to be launched in the country next year, says a study.
"Currently, the market for REITs and InvITs is relatively nascent in the country. However, with various enabling factors such as the growth of the economy and the middle class, and a concomitant need for housing and infrastructure, the demand for these investment vehicles will see an upswing over the next few years," PwC Partner Tax Abhishek Goenka said in a statement.
He said the first InvIT is expected to be launched in March next year, while REITs by the end of 2017.
According to the PwC-APREA report, REITs market has evolved substantially in several countries and these investment vehicles have gained immensely in terms of their market capitalisation.
"A primary condition for the growth of these markets, as demonstrated by the experience of different countries, is their ability to customise regulations governing these investment vehicles in conformity with domestic market conditions," Goenka added.
"India has managed to achieve this to some extent and therefore, we will soon see REITs and InvITs launched here," he said.
In the near future, REITs are expected to increase the depth of the Indian property market through a sound regulatory framework which ensures transparency and high governance standards, and promotes regular monitoring of their performance, the statement said.
"Given the importance of these two sectors in the country, and the paucity of public funds available to stimulate their growth, it is imperative that additional channels of financing are put in place.
"REITs and InvITs can play a pivotal role here as these investment vehicles can be used to attract private investment in these sectors while relieving the burden on formal banking institutions," he said.
The report also discusses how the adoption of Ind AS (effective from April 1) is likely to have a significant impact on the financial statements of Indian companies across sectors, including real estate and construction.
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