India’s fast-growing real estate sector will soon witness the entry of real estate investment trusts (REITs). The Securities and Exchange Board of India (Sebi) has initiated the process to introduce REITs and will shortly come up with the first set of proposals on the same, according to Sebi chairman M Damodaran.

“We are also looking at introducing REITs... consultations with persons who have better understanding of these products have commenced and shortly we are going to write the first set of proposals,” Damodaran said while delivering a keynote address at the CII’s 2nd Capital Market Summit here today.

A real estate investment trust is similar to a mutual fund. REITs pool investors’ money and invest in buildings and houses. Common in developed markets, they generate income in the form of rent from real property or interest from mortgages.

Sebi is also in the final stages of preparing norms for the much awaited real estate mutual fund (REMF). “The accounting solution for valuation of real estate are being worked out by AMFI and ICAI,” Damodaran said. “We will ensure that both the products are made available to investors and there won’t be any partiality in introducing REMF and REITs.”

In 2008, the regulator plans to launch a nationwide campaign to educate investors and encourage market participants to take up the role of self regulating organisations (SROs) more seriously. “Recognising that the informed investor is going to be the backbone of the market, Sebi is going to devote calendar Year 2008 to a nationwide investor education campaign,” Damodaran informed, adding that the regulator has already set up its own investor protection fund.

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