Global Accounting Firm KPMG
MUMBAI: Real Estate Investment Trusts (REITs) could be a game changer for the realty sector, but lack of clarity on taxation and regulatory aspects might act as roadblocks for attracting foreign investments in the commercial space, a report says.
According to a report titled 'Destination India -- Are we ready for REITs?' released here today by global accounting firm KPMG, jointly with Indian Private Equity and Venture Capital Association (KPMG-IVCA), REITs are expected to channelise funds from moderate investors such as insurance and pension funds, but several taxation and regulatory issues could act as impediments.
The KPMG-IVCA report has estimated that India has about 350 million square feet of 'Grade A' office space, which is valued at about $ 65 billion to $ 70 billion, out of which about 100 million square feet is estimated to be eligible for REITs in the next three years, valued at about $ 20 billion.
As much as 52.6 million square feet and 57.1 million square feet are likely to be developed in 2015 and 2016, respectively.
Most of India's 'Grade A' property is concentrated in seven major cities namely Delhi-NCR, which includes Gurgaon and Noida, in addition to Mumbai, Bengaluru, Chennai, Pune, Kolkata and Hyderabad.
Besides 'Grade A' office space, there are other commercial properties which might come under the purview of REIT-able properties including shopping centres, retail malls, hotels, industrial warehouses and other places of storage, the report said.