Framework on SM REITs to help property fractional mkt to grow 10 times to USD 5 bn by 2030: Report

Markets regulator Sebi's framework for Small and Medium Real Estate Investment Trusts (SM REITs) will help in the growth of the real estate fractional ownership market by 10 times to USD 5 billion by 2030, according to a JLL India and PropShare report.

Last week, Securities and Exchange Board of India (Sebi) notified the framework for SM REITs. Investors can now have fractional ownership of rent-yielding real estate assets by making a minimum investment of Rs 10 lakh.

The market watchdog notified the amended regulations for REITs, permitting fractional ownership of REITs and it will encompass commercial and residential properties.

The report highlighted that the real estate fractional ownership market is currently estimated at around USD 500 million and it is projected that the market is expected to grow 10 times in the next five years.

''Albeit the regulatory compliance issues that the industry is expected to witness during the initial phase of implementation of the MSM REIT regulations, these are expected to pave the way for the market to grow and potentially surpass USD 5 billion of Asset Under Management (AUM) by 2030,'' it said.

The report examined Grade A office assets across the top seven (Mumbai, Delhi NCR, Kolkata, Chennai, Bengaluru, Pune and Hyderabad) markets of India shedding light on the potential size and expected growth trajectory of the market.

The JLL-PropShare report mentioned that the emergence of REITs and Fractional Ownership Platforms (FOPs) has transformed the real estate investment landscape.

These innovative platforms have democratised access to real estate for retail investors and provide opportunities for investors to diversify their investment portfolios by accessing asset classes that were previously exclusive.

''With MSME REIT regulations, Sebi is now formally bringing this growing market into the regulatory ambit, which should lead to significant growth in this asset class while at the same time ensuring investors get the benefits that come with regulation - uniformity, fairness, transparency, and redressal mechanisms,'' Kunal Moktan, CEO of PropShare, said.

Commenting on the Sebi's framework, Sudeep Chandran, Founder and COO of YOURS (a platform for fractional ownership of luxury second homes), said the appetite for co-ownership of luxury properties has been on the rise, particularly in preferred tourist destinations like Alibaug, Goa, Nilgiris in the last couple of years.

''This trend is here to stay. In fact, the recent guidelines on small and medium REITs by Sebi will also help in deepening the fractional ownership market which has the potential to grow manifold,'' he said.