News: The Securities and Exchange Board of India (SEBI) is preparing new regulations th at will allow the establishment and overseas operation of real estate investment trusts (REITs) within the country, reports Livemint. It is a move that is designed to provide a significant boost to the domestic real estate sector, creating ' opportunities for developers to exit commercial real estate projects ' and a ' new investment vehicle through which smaller investors can gain exposure to income generating real estate assets ' . Initially, the new SEBI regulations will allow only high-value REIT transactions to be made. The SEBI has released a consultative paper on the proposals for public feedback ahead of formalising the new regulations.
BMI View: Historically, we have forecast growth for the Indian commercial real estate market, particularly with a surge in maximum rents in Mumbai. However, we anticipate that rental rates through the end of 2013 will remain broadly stable across all sub-sectors that BMI surveys, with the potential for marginal gains in the office market. A slowing economy, lack of diversified 2013 supply in the market and increasing capital outflows have complicated the medium-term outlook. Additionally, rising political tensions with Pakistan, coupled with the likely deceleration of US quantitative easing and bond programmes, could significantly impact the investment climate and long-term demand for commercial space. Despite these cautions, we remain in line with consensus that economic growth should return to 7% levels by 2014.