The performance of real estate investment trusts in India can't be compared to other countries due to the size of rental portfolio held by realty players, according to Sriram Khattar, managing director of rental business at DLF Ltd.
“The size of the entire rental portfolio in our country is much lower than the developed countries,” Khattar told BloombergQuint in an interview. “I think it will take a few years before we see benefits of this (real estate investment trusts) emerging.”
Khattar, however, said the move opens up a huge market for retail investors who are interested in annuity and fixed-returns securities.
Embassy Office Parks REIT opened the country's first such offering last week and the issue was fully subscribed, led by the demand from retail investors. REITs are mutual fund-like listed instruments that pool in income-generating assets and allow investors to take exposure in real estate without physically owning it. India cleared such trusts in 2015 but the first public offer comes about four years later after several tweaks to the original rules.
As long as (returns in) REITs are higher than fixed deposits and government bonds, I think it should do well over the next several years.Sriram Khattar, Managing Director-Rental Business, DLF
Watch the full interview here:
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