News: REITs one of the most viable investment alternatives outperforming other nancial products: Report-22-07-2020

https://economictimes.indiatimes.com/markets/stocks/news/reits-one-of-the-most-viable-investment-alternatives-outperforming-other-financial-products-report/articleshow/77112420.cms

New Delhi: India’s sole REIT launched in early 2019, has outperformed the market, not merely in normal circumstances but even during the ongoing pandemic, according to a report by international property consultant Savills and Federation of Indian Chambers of Commerce & Industry (FICCI).

The report also pointed out that REITs are relatively secure as 80% of the underlying assets in REITs are required to be operational and income-generating.

Moreover, the diminishing returns in other investment avenues such as PPFs, FDs, RDs and government bonds when compared to the superior pre-tax yields of REITs, makes it a lucrative option.

“REITs are an attractive investment oering, specially in the current environment when interest rates are benign.

Apart from capital growth, the returns from REITs include dividend returns which are currently 7%+. Overall, REITs promise to oer healthy returns over a 3-5- year period. Investors have had a positive experience from India’s rst REIT in the last year,” said Arvind Nandan, Managing Director, Research & Consulting, Savills India.

Through a comparative study with established markets such as the US and Singapore, and other instruments such as G-Sec, PPF and FD. Additionally, the report outlines the growth potential of REITs in India. Additionally, as per the report, commercial leasing activity will form the backbone of REITs in the Indian market.

The oice market holds signicant promise and is expected to bounce back in the near future. “Due to the COVID-19 pandemic, REITs and commercialreal estate market, in general, may feel some pressure on rental cashows in the short term.

However, given that India continues to be a top IT outsourcing destination globally due to the availability of talent pool, cost arbitrage and high-quality infrastructure, commercial real estate will continue to be a resilient, low risk and high return asset class,” said Sanjay Dutt, Joint Chairman, FICCI Real Estate Committee and Managing Director and CEO, Tata Realty and Infrastructure Limited.