SEBI introduces new regulations for fractional ownership sector with SM REIT guidelines

SEBI's REIT Amendment: Securities and Exchange Board of India (SEBI) has introduced new regulations, termed Sebi (REIT) (Amendment) Regulations 2024, aiming to oversee fractional ownership sector. se regulations amend REIT Regulations 2014 to establish guidelines for Small and Medium Real Estate Investment Trusts (SM REITs), as per tification.

Under se amendments, SM REITs will be allowed to pool funds starting from Rs 50 crore by issuing units to a minimum of 200 investors, which will be utilised for acquiring and managing real estate assets or properties. This move is anticipated to facilitate fractional ownership of rent-yielding real estate assets, including high-end second homes nationwide.

Regulatory transparency boost

amendments, sanctioned by SEBI on vember 25 last year, are expected to broen scope of fractional ownership in real estate sector. revised regulations seek to regulate and organise fractional ownership segment while enhancing transparency in sector, according to Shravan Gupta, Founder and CEO, YOURS, a platform for fractional ownership of luxury second homes.

" recent decision by SEBI is expected to have a positive impact on emerging fractional ownership sector in country. This move comes at a time when market and demand for fractional or co-ownership properties are rapidly growing. amendments me to Real Estate Investment Trust (REIT) Regulations in 2014 aim to establish clear guidelines for formation of Small and Medium Real Estate Investment Trusts (SM REITs)," Gupta said.

"Through se amendments, regulatory body seeks to t only regulate and organise fractional ownership segment but also enhance transparency in sector. introduction of specific regulations for SM REITs will provide a level of assurance to both investors and property owners, boosting trust and encouraging participation in se ventures," Gupta ded.

Anticipated liquidity boost

Piyush Gupta, Managing Director, Capital Markets & Investment Services, Colliers India, said that tification on SM REITs was erly awaited and will provide a substantial boost to providing liquidity to granular holdings of office-yielding assets.

" tification on SM REITs was awaited for a long time and will provide a huge boost to providing liquidity to granular holding of office yielding assets. This opens a plethora of opportunities for size and scale of Markets and Products for Retail and Institutional Investors to invest in office-yielding Real Estate.

"With a minimum size of Rs50 crore and minimum holding of 5 per cent of investment manr, this isn’t a significant entry barrier for newer fund manrs, however key checks and balances have been provided by SEBI," Piyush ded.