SEBI’s Move to Classify REITs as Equity Welcomed by Indian REITs Association

SEBI’s Progressive Reform for REITs

In a landmark regulatory development, the Securities and Exchange Board of India (SEBI) has decided to classify Real Estate Investment Trusts (REITs) as equity for the purpose of inclusion in market indices. This move is being widely welcomed by industry stakeholders as a significant step toward aligning India’s REIT ecosystem with global standards.

The Indian REITs Association (IRA) has issued a strong statement of support for SEBI’s initiative, emphasizing its importance for deepening the REIT market in the country.

Industry Reaction: IRA’s Welcoming Note

“Indian REITs Association (IRA) welcomes SEBI’s progressive move to classify Real Estate Investment Trusts (REITs) as equity

SEBI’s Progressive Reform for REITs

In a landmark regulatory development, the Securities and Exchange Board of India (SEBI) has decided to classify Real Estate Investment Trusts (REITs) as equity for the purpose of inclusion in market indices. This move is being widely welcomed by industry stakeholders as a significant step toward aligning India’s REIT ecosystem with global standards.

The Indian REITs Association (IRA) has issued a strong statement of support for SEBI’s initiative, emphasizing its importance for deepening the REIT market in the country.

Industry Reaction: IRA’s Welcoming Note

“Indian REITs Association (IRA) welcomes SEBI’s progressive move to classify Real Estate Investment Trusts (REITs) as equity for the purpose of inclusion in market indices. This important step marks a significant milestone in strengthening the REIT ecosystem in India and aligns with global best practices where REITs are part of equity indices. This decision is a step forward that will contribute to enhancing the depth of REIT market and accelerating the growth of these instruments in India. By enabling this, SEBI has paved way for widening investor participation in these instruments and also improving liquidity.”

The IRA highlighted that this reform is in line with previous SEBI initiatives, such as the reduction in REIT lot size in July 2021, which also encouraged broader market participation.

Expanding Investor Participation

The SEBI decision is not only about index classification but also about widening the investor base for REITs. By recognizing REITs as equity, institutional and retail investors will be able to participate more actively in this asset class, thereby enhancing liquidity and making the market more vibrant.

The IRA noted:
“Similar to the reduction in lot size, which SEBI enabled in July 2021, this reform shall also help foster greater market participation and position India as a progressive investment destination for institutional investment in yielding assets.”

Expanding the Scope of Strategic Investors

In addition to index inclusion, SEBI has also announced reforms to broaden the scope of “Strategic Investor” for REITs. This step is aimed at facilitating wider investor participation and attracting long-term capital into India’s real estate market.

The IRA welcomed this decision as well, stating:
“IRA also welcomes SEBI’s move to expanding the scope of ‘Strategic Investor’ for Real EstateInvestment Trusts (REITs) to facilitate wider investor participation.”

Building a Robust REIT Ecosystem

By implementing such reforms, SEBI is not only modernizing the REIT market in India but also boosting its global competitiveness. These measures are expected to bring more transparency, strengthen investor confidence, and pave the way for deeper integration of REITs into mainstream capital markets.

In its statement, IRA concluded:
“The IRA commends SEBI for these forward-looking reforms and remains committed to working with all stakeholders to build a robust and vibrant REIT market in India. We now hope the stock exchanges make the necessary changes in the eligibility criteria of indices to enable REITs to be part of the eligible ones.”

Forward Note

The classification of REITs as equity for market indices is a landmark reform for India’s real estate investment landscape. It not only aligns the country with international practices but also creates avenues for improved liquidity, deeper investor participation, and sustainable market growth. With SEBI’s continued reforms and IRA’s commitment to collaboration, the future of the Indian REIT ecosystem looks stronger than ever.