A Stakeholder Perspective on Indian REIT Regulations

Abstract

This study examines the effectiveness of the regulatory framework of Indian real estate investment trusts (REITs). Interviews were conducted with 30 industry experts using semi-structured questionnaires. The feedback from the interviews was systematically analyzed using content analysis. The original data were categorized into first-level codes and zero-order codes, and further, these codes were used to identify overarching themes. The results indicate that India’s existing REIT model is functional and similar to comparable countries, such as the United Kingdom, France, Ireland, and China. However, there is a scope for improvement. To attract retail investors, it is suggested that tax regulations of REITs should be simplified, with a specific focus on the bifurcation of interest and dividend payments to the investors. The results also suggest that the interest received as loan repayment should be deducted from the initial acquisition cost to reduce the investor’s capital gain. The study recommends the integration of REITs into the Realty Index to increase investors’ confidence. It also suggests revising the treatment of security deposits from the Net Distributable Cash Flow (NDCF), as it is not a direct income of the REIT. These suggestions contribute to filling the gap in the existing literature on Indian REITs. It also offers practical suggestions for policymakers to improve regulatory frameworks and improve investors’ confidence.