Real Estate Investment Trusts (REITs) proposed in India

September 9, 2008 by OPPE News

Higher lending costs are thought to be behind a 25 per cent fall in property demand across India’s smaller cities.

The country’s Associated Chambers of Commerce and Industry (Assocham) said the slide had been noted in the last seven months in what are classed as ‘Tier II and Tier III’ locations.

These include cities such as Chandigarh, Sonepat, Panipat, Manesar and Pune, among others.

A shortage of some essential building materials such as cement and steel, plus utilities, was also causing problems, Assocham said.

The organisation said it has mooted a proposal to the government to introduce Real Estate Investment Trusts (REITs) in an effort to reverse the problems.

The introduction of such trusts would

“bring the much needed class of institutional investors to strongly support transparency and reign in the discipline of the domestic commercial real estate market”.

Earlier this month the Financial Express reported a number of Indian property developers were offering attractive incentives to buyers as interest rates climb.

Despite a recent slowdown, the long-term future of India’s property market is thought by many to be bright, with the likes of Trump Organisation US planning to enter the fray with a $1 billion hedge fund.