The central bank’s decision to allow banks to invest in real estate investment trusts (REITs) and infrastructure investment trusts (INvIT) propped up real estate stocks last week. The stocks of DLF, Unitech and Prestige were up by 2 per cent or more on Thursday. DLF was one of the earliest players to show interest in launching REIT. It is likely that many of the realty players — especially those with significant commercial realty assets — will launch REITs to raise funds from the market. Many of the real-estate developers have high debt in their books, and weak house sales has been making the going tough. Fund inflows through REITs could give such companies a breather.
While the final guidelines for investing into REITs for banks is about two months away, it remains to be seen if banks will actually be interested in these instruments, given that the liquidity in such investments remains a question mark. There are also pending tax concerns.