REIT’s can open new doors for Sri Lanka’s real estate market

Feb 24, 2016 (LBO) – Sri Lanka’s property market will see new market space opening up with the introduction Real Estate Investment Trusts (REITs), a new capital market tool, an investment specialist said.

“REIT’s will transform the capital market and give new shape to the real estate market,” Hardy Jamaldeen, director, Sterdian Capita Investment said.

REITs can own and manage properties and investors receive the income from these properties through dividend distributions.

Experts says that there are many benefits of investing in REITs which include higher dividend yields than for shares, they are bought and sold on exchange just like shares and lower costs than buying and selling property directly.

“Actually development transformation in Singapore was led by REIT’s. Initially it was privately owned but now the government owns it 100 percent.”

Analysts say that there are is a new market space opening up around this core to serve institutional investors, real estate firms with the boom in Sri Lanka’s property market.

“REIT’s is the way forward for developers to unlock capital to put into more investments and also to expand the market,” Jamaldeen said.

“But it will take about another year or so for REIT’s to come into play and another set of legislation also needs to be enacted.”

He was speaking at the capital markets conference “CAPM 2016” in Colombo, Tuesday.

Vajira Kulathilake, Chairman Colombo Stock Exchange said that new products in the form of infrastructure bonds and REIT’s will be introduced soon to broaden and add depth to the islands debt markets.

“We will go for REITs. This is very important to get exposure to the real-estate side of things and investments – people can’t have real estate at the moment because it is too expensive and REIT’s can be used to take real-estate to the general public.”