Leading the way in 1960, the US Congress signed a legislation introducing Real Estate Investment Trusts (REITs) to bring the benefits of commercial estate to the common American, which were largely available to financial institutions and wealthy individuals. REITs are securities linked to real estate that can be traded on stock exchanges once they get listed. They invest in income-generating real estate. This income gets distributed among unit holders, including sponsors, trustees, fund managers and unitholders. Bradley Real Estate Investors, Continental Mortgage Investors, First Mortgage Investors and First Union Real Estate were among the first ones to create REITs in the US. In 1965, Continental Mortgage Investors listed on the New York Stock Exchange.
Back home, though the Securities and Exchange Board of India (Sebi) introduced the draft REIT regulations as early as 2007, it was only seven years later in 2014 that Real Estate Investment Trusts Regulations, 2014 (REIT Regulations) were enacted. Other reforms, including liberalisation of foreign direct investment (FDI) norms in real estate, opening up of the domestic fund industry to foreign investments and clarity on tax implications of REITs, helped the market get ready for its first REIT listing in 2019. On April 1, Embassy Office Parks (a joint venture between US private equity firm Blackstone and Embassy group) REIT got listed on the BSE. Investors lapped it up.
According to estimates of the European Public Estate Association, the total value of listed real estate globally is around $3,864.3 billion and property under REITs forms nearly 53 per cent, around $2042.8 billion. However, this is largely concentrated in developed markets.
The two listed REITs of Embassy and Mindspace Business Parks hold a tad over 60 million square feet under listing out of the 500-plus million square feet of Grade A office space in India, according to industry estimates.
A healthy demand and supply dynamics for office space, factors such as low-interest rates, falling yields of government bonds globally, and interests from global firms have opened up opportunities for developers to tap into. The next two-three years could see another four-five listings, according to experts.
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WE NEED TO REACH OUT TO MILLENNIALS GLOBALLY
Bata shoes are an integral part of almost every school-goer’s life in India. That is why most Indians believe that the brand — founded in what is now the Czech Republic in 1894 and headquartered in Lausanne, Switzerland — is local, despite operating in over 70 countries. The company, which does a ₹3,500 crore business in the country, recently appointed India CEO Sanjiv Kataria as its global head. Kataria, who had taken over as India head in 2017 and under whom Bata India’s profits rose 46 per cent, tells Ajita Shashidhar how India’s diverse footwear consumption habits have given him a unique understanding of customer needs across the globe. Edited excerpts:
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