Anarock reported a 48% YoY rise in housing sales of Rs 3.47 lakh crore across seven major Indian cities in the past fiscal year. The rise was due to both higher volumes and better price realisation. In value terms, sales jumped to Rs 3.47 lakh crore in 2022-23 from Rs 2.34 lakh crore in 2021-22. The primary market contributed to this growth, and cities such as Mumbai and Hyderabad saw sales increase by 46% and 50%, respectively. The growth suggests that the housing sector has become more mature and fundamentally robust, even as investors return to the market, according to industry experts.
The Securities and Exchange Board of India’s (SEBI) proposal to regulate all online platforms that offer fractional ownership of real estate assets is expected to institutionalise the segment and help attract more capital from both domestic and offshore investors.
The regulation will support in boosting the investors’ confidence and thereby help widen the acceptance to the newly emerging investment asset class. The move is also expected to support realty developers bringing in the much-needed liquidity as they can opt for one more channel to monetise their assets.1
Industry participants have cheered the capital market regulator’s decision and are drawing a parallel with its earlier move to streamline rules for the Real Estate Investment Trusts (REITs).2
In a discussion paper, SEBI has proposed that such platforms must be registered under the Regulatory Framework for Micro, Small and Medium REITs (MSM REITs), where it should have separate trustees, sponsors, and investment managers. These schemes shall not be allowed to raise debt.
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- 1. “The proposed regulation will safeguard both investors and fund managers against any legal and market-related issues such as property title and vacancies. The plan to ensure the sponsors commit at least 15% towards the asset will confirm the fund managers’ skin in the game. Background checks on sponsors and fund managers will also provide confidence to investors,” said Anuranjan Mohnot, MD, Lumos Alternate Investment Advisors.
- 2. “…Regulators have recognized the fractional ownership industry as a potent and emerging investment avenue and are taking strides towards introducing a formal regulatory framework. In 2014 when SEBI regularised REITs, it helped build a massive credibility for the industry taking the asset class to the next level,” said Sudarshan Lodha, Cofounder & CEO, Strata Property Management.