SEBI chief says her new ‘favourite’ investment product will equal the size of India's equity market

SEBI's calculations project that over the next 10-15 years, the REIT and InvIT market could rival the size of the equity markets, says Madhabi Puri Buch.

Real Estate Investment Trusts (REIT) as an investment product found a cheerleader in none other than SEBI chairperson Madhabi Puri Buch, who called it one of her "favourite products for the future". REITs, Infrastructure Investment Trusts (InvIT), and municipal bonds combined will become as big as India's equity markets in the next 10-15 years, the capital markets regulator's chief said at News18 Rising Bharat Summit on March 20 .

Real Estate Investment Trusts have huge growth potential as a key investment avenue for the future due to the latent demand for real estate in the country, Buch said. “It is crucial for each of us to have a stake in this wealth creation opportunity and strive to participate in what could potentially offer an inflation-proof source of income.”

Buch noted that SEBI received significant cooperation from the industry in pursuing its vision for REITs, which required higher levels of disclosure and compliance. She said that achieving this would provide SEBI the confidence to make REITs more accessible to retail investors.

As a result of these efforts, SEBI introduced small and medium-sized REITs, lowering the asset size threshold to as low as Rs 50 crore, down from the previous limit of Rs 500 crore.

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SEBI's calculations project that over the next 10-15 years, the REIT and InvIT market could rival the size of the equity markets, which is equal to the size of India’s GDP.

Further, instruments such as REITs have democratised the access to real estate, allowing even smaller investors to invest in property at small ticket sizes. "Democratising REITs across millions of people has the potential to contribute significantly to the country's GDP growth," she added.

In addition to REITs, Buch spoke about the burgeoning bond market, foreseeing substantial growth in the primary bond market, especially with the inclusion of Government of India securities in global indices.

She anticipated considerable foreign interest in Indian government securities, which could translate into increased investment in the corporate bond market. "Once the Government of India yield curve is established, investors are likely to show interest in our corporate bonds as well," she explained.

Buch concluded the session by emphasising that democratising capital markets for both investors and issuers would foster capital formation in the real economy while empowering citizens to build wealth.