Realty market investment to rise to $20 bn by 2010

MUMBAI: Investment in the Indian realty market is likely to increase to $20 billion by 2010 with a boost from Real Estate Mutual Funds and Real Estate Investment Trust, a recent report said.

"The sector, which is growing at an annual rate of 30 per cent and is currently worth $12 billion, will get a further boost from the Sebi's Real Estate Mutual Fund (REMF) and the Real Estate Investment Trust (REIT) regulations," a report by Deloitte said.

"The Indian real estate sector has emerged as one of the most appealing industries for both domestic and foreign investors and is presently the second-largest employing sector linked to about 250 ancillary industries," Deloitte Hakins & Sells' Partner Jayesh Kariya said.

"Currently, investments of over $1,400 billion are being made by REITs globally and we expect these investors to start looking at Indian realty," he added. Both REIT and REMFs are investment vehicles which channelise private investments into really sector through institutional mechanism.

However, REMF seems to be more preferred vehicle in view of beneficial tax treatment and ability of foreign investors to invest in the schemes, Deloitte National Director Tax Lakshminarayanan said. The REMF regulations provide a much larger and liberal canvas, he added. The regulations would provide realty sector with much needed alternative source of raising funds considering the increasing restrictive scenario.