INDIA Law and Practice Contributed by: Vivek Chandy, Archana Tewary, Kumarmanglam Vijay and Megha Arora, JSA
logistics and warehousing assets outside Tier- 1 cities and in cities developed as “smart cit - ies”. The government continues to emphasise the development of infrastructure in Tier-2 and Tier-3 cities, resulting in development and the appreciation of land value in these cities. There have been several high-value transactions in real estate in the past year, whereby large private equity funds have acquired completed assets and are in the process of moving or have moved such assets into REITs. Leasing docu - ments have become significantly more sophis - ticated and, in several cases, facilities over 1 million square feet have been taken on lease in single transactions. Inflation and increases in interest rates may have impacted the residential market, as the cost of acquisition for retail purchasers may have increased, including in smaller cities. Reports indicate that there has been an increase in demand for commercial real estate due to the increased development of global capability cen - tres in India and an increase in work-from-office mandates by companies in India. Real estate has been revolutionised by the adop - tion of disruptive technologies, notably block - chain and proptech, the latter of which stream - lines and connects the processes for participants in all stages of real estate transactions, including buyers, sellers, brokers, lenders and landlords. The Andhra Pradesh government has partnered with a Swedish start-up to build its blockchain- based solution. In recent years, NITI Aayog highlighted its efforts towards IndiaChain, a blockchain infrastructure for managing public records and building social applications, which will also be used for maintaining land records. Many state governments are working to inte -
grate blockchain-based ledgers in the digital land record system. Various state governments, such as the Karnataka government, are also implementing measures to digitise records and make the process of land surveys and other procedural aspects (including payment of taxes) easier. Many states have adopted technological solutions to facilitate the payment of registration charges and stamp duties, increasing transpar - ency. The sector is attracting private credit funds’ debt investment where traditional bank financing is unavailable, especially in early stages of devel - opment. In addition, family offices in India have become significant investors in real estate and private credit. A growing trend in the real estate market is the fractional ownership of commercial real estate, allowing retail investors to participate in a high- yield market. According to market data, the market size of fractional ownership properties in India is growing at an annualised rate of 10.5%, and is expected to expand to USD8.9 million in 2025. The Securities and Exchange Board of India (SEBI) amended the SEBI (REIT) Regu - lations 2014 to introduce a framework for SM REITs on 8 March 2024, to regulate fractional ownership platforms. 1.3 Proposals for Reform The government has taken steps to ease restric - tions applicable to real estate development under FEMA and made certain amendments to the policy applicable to FDI in real estate. While there are currently no significant indications from the government, foreign investors are hopeful that the next progressive step will be to liberalise multi-brand retail trading. The government has announced various initiatives to increase invest - ments in the warehousing and logistics sectors
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