Investors may soon be allowed to invest a large portion of its funds in under-construction assets, to make REIT (Real Estate Investment Trust) attractive. To deepen Indian capital markets, regulator SEBI has lined up wide-ranging relaxations to its norms for REITs while an easier set of compliance rules is in the works for foreign fund managers keen to relocate to India. Among the changes, which would be considered by SEBI at its next board meeting scheduled for this week, the regulator is looking to make Real Estate Investment Trusts REITs more attractive to investors by allowing them to invest a large portion of funds in under-construction assets. Besides, REITs would be allowed to have a larger number of sponsors, while regulations regarding the minimum public offer size and related party transactions could also be eased. Regarding REITs SEBI plans to remove the restriction on the SPV (Special Purpose Vehicle) to invest in other SPVs holding the assets, which in turn would allow REITs to invest in a holding company owning stake in SPVs. It is being proposed that the REIT would hold controlling interest and at least 50% equity in the holding company. The holding company can in turn hold controlling interest and at least 50% equity in underlying SPV. Another proposed move is to allow the REITs to have up to five sponsors, as against the current norm for maximum three. SEBI also plans to rationalize the requirements under the related party transactions, under which approval of 60% unit holders apart from related parties, is required for passing a related party transaction. Further, approval is required of 75% unit holders, apart from related parties, for passing special resolutions such as change in investment manager, investment strategy and delisting of units. Another current provision requires that units offered to the public should be at least 25%. This would be aligned with SEBI regulations about the public offer size of 25% or 10% initially with an eventual raising of public holding to 25% .One of the major proposals relate to allowing REITs to invest up to 20% in under-construction projects. Existing regulations require at least 80% of the value of REIT assets should be invested, in proportion to the holding of the REITs, in completed and rent-generating assets.