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Bombay Chamber’s Landmark Conclave on SM REITs 2.0: The Path to Compliance & Growth Focuses on the Potential of Monetising Real Estate

Mumbai, October 8, 2024 – India’s Small and Medium Real Estate Investment Trusts (SM REITs) market is on track to exceed $60 billion by 2026, driven by Mumbai’s significant completed stock and bolstered by recent tax reforms under the Union Budget 2024-25. With enhanced transparency, investor protection, and a growing demand for fractional ownership, SM REITs are fast becoming an attractive investment option poised to revitalise the commercial real estate market and boost investor confidence.

Against this promising backdrop, the Bombay Chamber of Commerce and Industry hosted the Conclave on SM REITs 2.0: The Path to Compliance & Growth, under the aegis of the PE & VC Committee. The conclave focused on the transformative potential of SM REITs, regulated by SEBI as of March 8, 2024, and featured key industry stakeholders discussing the evolving regulatory landscape and growth opportunities.

Ashith Kampani, Board Member and Chair of the PE & VC Committee, Bombay Chamber, and Chairperson of Cosmic Mandala 15 Group, in his welcome address, stated, “The potential market size for SM REITs in India is projected to exceed $60 billion by 2026. The regulation of fractional ownership of real estate assets is a commendable step that will encourage foreign direct investment from global retail investors.”

Sanjay Dutt, Board Member and MD & CEO of Tata Realty & Infrastructure, set the stage by emphasising India’s robust real estate demand, “India is witnessing unprecedented office space absorption. For the first time in the history of the country, for the 2024 calendar year, India will witness the highest office absorption in the country. By the end of 2024, net absorption is likely to touch 65 million sq. ft., with the gross figure approaching 80 million sq. ft. This growth extends beyond the top eight cities and opens up new opportunities for developers and investors nationwide.” Dutt praised SEBI’s regulations for transforming India’s unregulated real estate sector into an institutionalized market.

In his Keynote Address, Shri Pramod Rao, Executive Director of SEBI, highlighted the potential of SM REITs to unlock value from India’s real estate wealth, which comprises over half of the country’s total wealth. He noted, “A report computes the wealth of Indians, and states that wealth in the form of real estate exceeds half of the total wealth in the whole country, with gold coming second, at 15%, bank deposits at 13%, equities at 5.8 % and insurance and pension at 5.7%, each. To me this underlines the fact that the wealth of a lot of individuals is in real estate. Real estate is the largest asset class globally, yet it is often illiquid and difficult to manage for individual investors. SM REITs convert these physical assets into financial assets, offering liquidity and fractional ownership, making it a powerful tool for financial inclusion.”

The first panel discussion, moderated by Kailash Babar, Deputy Editor at ET, explored the regulatory framework and compliance landscape for SM REITs. Expert panellists, including Sudip Mullick, Advocate, Dr. Niranjan Hiranandani, Founder & Chairman of the Hiranandani Group, Ruchir Sinha, Managing Partner at Resolute Partners, and Sandip Bhagat, Partner, S&R Associates discussed key drivers for SM REIT growth, taxation challenges, and the sector’s role in democratising real estate investment.

The second panel, led by Neil Borate, Deputy Editor at LiveMint, provided an investor-centric view of SM REITs. Industry experts Shobhit Agarwal, MD & CEO, ANAROCK Capital; Divya Goyal, Executive Director and Head of Investment Risk Monitoring Services, Consulting, India, CBRE; Abhinav Maker, Partner, Trilegal; Shiv Parekh, Founder & CEO, hBits, and Raj Shah, Co-Founder, Invest in Pre-Leased discussed differentiators between SM REITs and mainstream REITs, the sectors showing the most promise, and key concerns for investors as the market evolves.

The event was supported by Embassy REIT, Trilegal, S&R Associates, Anarock, hBits and Invest in Preleased.

Remembering Ratan Tata

(December 28, 1937 – October 9, 2024)

With profound sadness, Bombay Chamber of Commerce & Industry mourns the loss of Mr. Ratan Naval Tata, visionary industrialist, philanthropist, and Chairman Emeritus of Tata Sons on October 9, 2024, at the age of 86. He is the recipient of India’s second highest civilian honour, Padma Vibhushan.

Born on December 28, 1937, in Mumbai, Ratan Tata was the great-grandson of Tata Group founder Jamsetji Tata. Educated at Cornell University and Harvard Business School, he went on to lead the Tata Group, one of India’s largest and most respected conglomerates, from 1991 to 2012. Under his stewardship, the Group expanded globally with the acquisition of marquee brands such as Jaguar Land Rover, Tetley Tea, and Corus Steel, placing Indian enterprise on the world stage. Ratan Tata’s legacy is one of integrity, humility, and a deep commitment to improving lives. His efforts went beyond the boardroom as he championed social causes through the Tata Trusts, funding initiatives in healthcare, education, rural development, and environmental conservation. Notably, he played a pivotal role in the development of the Tata Nano, a symbol of affordable innovation for the masses.

Throughout his life, Ratan Tata remained a staunch advocate of ethical business practices and was revered for his modesty and compassion. Despite his immense success, he was known for his down-to-earth demeanor and his ability to connect with people from all walks of life.

A luminary, he leaves behind an unparalleled legacy that will continue to inspire future generations. Ratan Tata’s influence on Indian business, his philanthropy, and his commitment to fostering a better world will be remembered for generations to come.

May he rest in peace.

Bombay Chamber Mutual Fund Conclave says industry needs a North Star to guide towards long term financial security for all

Bombay Chamber organised its annual Mutual Fund Conclave yesterday at the St Regis Hotel, Mumbai. The theme of the Conclave was India’s growth funded by Indians.

In her welcome address, Pinky Mehta, President, Bombay Chamber and CFO, Aditya Birla Capital, said, “The Assets Under Management (AUM) of India’s mutual fund industry rose by an impressive 40.70% over the past year, climbing from ₹46.94 lakh crore in August 2023 to ₹66.04 lakh crore in August this year, as reported by the Association of Mutual Funds in India (AMFI). Recognising this expanding market, SEBI has introduced a simplified regulatory framework for launching passive mutual fund schemes, known as MF Lite. This initiative aims to reduce compliance burdens and encourage new entrants into the mutual fund space.”

Setting the theme for the Conclave, Nilesh Shah, Past President, Bombay Chamber & Group President and Managing Director, Kotak Mahindra AMC said, “The MF industry represents a sustainable model where distributors, manufacturers, and investors come together to drive economic freedom. It is unique in aligning the interests of all three stakeholders. The industry’s primary responsibility is to safeguard investor trust, which has remained strong thanks to regulatory oversight.”

He further added, “Currently, 93% of household savings in India go into instruments like bank savings and fixed deposits, which do not keep pace with inflation. The remaining 7%, invested in equities and mutual funds, offers inflation-beating returns. This imbalance means most Indians are not financially secure. A greater push, such as through initiatives like Jan Nivesh, is needed to direct savings toward real-return products. The younger generation must also be engaged – 18 crore Indians traded in cryptocurrencies and lost money, with many of these being young investors. The MF industry needs a North Star, to guide these efforts toward long-term financial security for all.”

The Keynote Speaker, Manoj Kumar, Executive Director, SEBI, said, “With 60 lakh crore AUM, the regulator should work fast too. There is no meaning to whatever has been built if trust is eroded. Our objective is to help everyone. We are making changes to MF to match the pace of growth of the industry. We actively consult with everyone for these changes – the industry, the distributors and gain a holistic view. The recent introduction of MF Lite was in keeping pace with the needs of the industry and investors. To reduce compliance burden and make it lighter, while also ensuring compliance standards are adhered to. Similarly, the new asset class for HNIs. With a lot of unauthorised activities that happen at the lower end of the market, we need to take action and adopt a development approach to the same. Since there is a need in the market, we address it by bringing it into the regulatory framework. The structure we are trying to create is that all PMS and AIF players should be facilitated in MF Lite and the new asset class. “

In a Fireside Chat on Guardrails for a Growing Mutual fund industry, between Navneet Munot, Board Member, Bombay Chamber and Chairman, AMFI and MD & CEO, HDFC AMC and Anil Singhvi, Managing Editor, Zee Business, the two speakers shared insights on reaching the 5 crore unique investors and cautioned that the industry still has a long way to go.

The Conclave also saw two panel discussions. The first which was on ‘The journey from 4 cr to 40 cr investors’ was moderated by Latha Venkatesh, Executive Editor, CNBC TV18 and the panelists included Nilesh Shah; Swarup Anand Mohanty, Vice-Chairman and CEO, Mirae Asset Investment Managers (India); Lalit Keshre, Co-Founder & CEO, Groww and D P Singh, DMD, SBI Mutual Fund.

The second panel moderated by Nisha Poddar, Managing Editor, Times Experiences included panelists Soumya Rajan, Founder & CEO, Waterfield Advisors; Karan Bhagat, Founder, MD & CEO, 360 ONE; Sudhir Variyar, Deputy CEO, Multiples Alternate Asset Management; Ashish Gupta, Chief Investment Officer, Axis Mutual Fund and Vishal Agarwal, Partner & National Leader – Transaction Tax and PE Channel, Grant Thornton Bharat LLP. The panel discussed about wealth creation through AIFs and PMS.