Even as foreign investors, primarily from the Asia-Pacific region, are expecting the country's maiden REIT to be launched in the first quarter of 2018, domestic investors are still in a wait-and-watch mode.

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According to a survey by PwC and Urban Land Institute, the maiden REIT is likely to be listed towards the end of the first quarter of 2018, providing a long-awaited exit route for investment funds now active in the market or a strategy for those planning to enter the domestic market.

"Despite the lingering cynicism that the country's suffocating bureaucracy would effectively snuff out the chances of any early introduction of the first REIT, there now seems a real prospect that the maiden REIT will be listed in March 2018," says the report.

The report further says the main problem for REITs, therefore, appears no longer to be a regulatory logjam but rather how to price the assets at a level that will appeal to both sponsors as well as REIT investors.

"We've interviewed around 600 realty professionals, including investors, developers and lenders, among others, across Asia. What we noticed from them is that they're very keen on India's REITs. But, domestic investors and developers are still sceptical about the entire thing," PwC India partner for tax and regulatory services Anish Sanghvi told PTI.

He noted that government has addressed almost all the concerns raised and thus there is no reason why we should not see at least one REIT soon.

"But they still do not want to venture into this space fearing the outcome of such an issue," Sanghvi rued.

According to the report, REITs in Japan, Australia and Singapore are yielding 370-450 bps above their 10-year government bonds. Since benchmark Indian government bonds now fetch close to 7 per per cent, a

REIT should fetch at least 300-400 bps above the G-secs yield.

The report further says demand there is still a high demand for a legitimate institutionalised investment opportunity at the retail level, which may persuade investors to pay up for REIT at higher levels.