(published in The Economic Times, The Times of India – Dec 10, 2014)
The real estate sector in India, despite its many impediments, continues to be a favoured investment option for many. Urbanisation has been rapid in the past few years, with ‘upwardly-mobile’ buyers keen to invest and reap dividends from the real estate market growth real estate investment has proved to be a good investment in the long run.
The current year and its developments have laid the path for strong demand in commercial real estate, debt and equity markets. This will also lead to an increase in demand for infrastructure from every other sector like manufacturing, education, health, industries, auto, etc., which, in turn, will lead to demand for residential as well. Some recent developments like the introduction of REITs and relaxation of FDI norms have raised market expectations, but then REITs are yet to take off and gain momentum and crowdfunding is slowly gaining ground and becoming popular though not, regulated yet.
People need to be aware about the project along with the operators of the crowdfunding platform
Despite the time delay, REITs will bring in globally accepted practices to real estate finance and will also attract domestic as well as global investors by providing them with a transparent and risk free investment opportunity to invest in completed revenue -generating properties. Crowdfunding has raised many eyebrows in India. Currently most of the reward -model crowdfunding projects are in the social and creative area currently, but slowly entering other sectors as well. The Securities & Exchange Board of India (SEBI) is in the process of finalising a legal platform for crowdfunding in India.
Until now, SEBI has considered three types of crowdfunding options namely equity -based (EbC), debt -based (DbC) and fund -based (FbC) for implementation in the first phase.
Crowdfunding is not entirely a new phenomenon, but once in motion it will enable investments in small sums of money, lucrative for people who have limited cash to invest. Even though crowdfunding eliminates most of the hurdles associated with traditional real estate investing, it needs to be organised, monitored and regulated.