Late last week, SEBI notified the rules for Real Estate Investment Trusts (REITs). With this, mutual fund-like collective investment schemes for real estate become legally possible in India for the first time. Sooner rather than later, we will see Real Estate funds being offered to the public. In these funds, investors will be able to buy into a pool of real estate investments with an amount as small as ₹2 lakh. A professionally-managed and properly regulated way of investing small amounts of money in real estate will be an entirely new thing in India.
However, real estate investments in India, whether through REITs or otherwise, are overshadowed by a huge problem: the utter lack of reliable and transparent data on real estate prices and trends. Read or watch any media article on real estate where prices or price trends are discussed. You'll find either unsubstantiated statements about price trends, or statements from a random selection of people on what we might call the sell-side of real estate, whether they are brokers, or developers or self-declared consultants. And here the sell-side includes the advertorial-like real estate content that both the print and electronic media now produces in copious quantities.
If you read any article on real estate from a publication in the US, Europe or even many parts of Asia, you will be stuck by the precision and the long history of real estate price and volume data. In the US, you can get a 40+ year history of total number of housing and commercial property starts, finishes, offered for sale and sold along with the pricing. This data is available down to county level. And these are not someone's plucked-out-of-air estimates, they are actual numbers, down to the last house. In India, all you get are anecdotes about how much so-and-so bought a house for in the 90s.
While the history cannot be created in India, the only effort at generating any real data is the National Housing Bank's Residex index. The Residex is a limited, yet useful effort, tracking (or at least revealing) only housing and then only city-level prices without volume.
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