The delay in government's decision to formulate guide-linesforRealEstatelnvestment Trust (REIT) in the country has prompted Indian property developers to look at foreign markets for raising funds. A REIT is a similar structure for investment in real estate as mutual funds provide for investment in stocks. According to industry sources, nearly ten to twelve Indian real estate companies are mulling the options for listings in foreign exchanges to raise a minimumof$2billion. Mumbai-based real estate company, Hiranandani Construction plans to raise $500 million to $750 million from London's Alternative Investment Market (AIM), industry sources confirmed. Yatra Capital, an India focused real estate investment company, has got listed in the Euronext Exchange while Unitech Group has plans to raise nearly $700 million from London AIM. According to sources, Bangalore-based EmbassyGroupis planning an IPO in the Singapore Stock Exchange for its newly floated REIT. Indian real estate major K Raheja Group, through its subsidiary Ishaan Real Estate Pic has raised nearly $342 million and has got listed in London Stock Exchange (LSE). Says Ankur Srivastav, managing director, DTZ Debenham Tie Leung, a global property consultancy firm, "public equity is lot cheaper when compared to private equity placement. Real estate developers in a bid to bring down their cost of capital are increasingly looking at foreign listings". A foreign listing will also give the company a global exposure and will have a favor-ableimpactonitsbrand. With the Reserve Bank of India (RBI) tighteningnormsand assigning higher risk weigh-tage to real estate credit, the cost of debt has gone up substantially. Besides, a private equity placement involves lot of interference from the investor in the working of the company and the return expectations from venture capitalists are comparatively higher. This has prompted the Indian developers to look at foreign listings to raise funds at a relatively cheaper cost. -Somasroy Chakraborty

Source:The Financial Express-Dec 28, 2006