India Presents Prime Office Assets Valued at Rs 4.5 Lakh Crore for REITs: Report
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New Delhi, Dec 3 (NationPress) India presents an impressive Rs 4.5 lakh crore worth of prime office assets for real estate investment trusts (REITs), aiming to revolutionize the commercial real estate investment sector, as stated in a report released on Tuesday.
The current landscape of India’s REIT market is still in its early phases when compared to leading global economies, with just four REITs listed, encompassing an area of 125 million square feet across retail and office sectors.
A report by Vestian indicates that 60 percent of the nation’s Grade-A office space is eligible for REIT investment. Over time, REITs are gaining traction among both foreign and domestic investors due to appealing dividend returns.
Since their launch, REITs have distributed Rs 16,800 crore in dividends, surpassing the total dividends provided by the Nifty Realty Index. Despite yielding better returns than the Nifty Realty Index, the market capitalization of REITs remains relatively modest.
Among the top seven cities in India, Bengaluru stands out, holding a 33 percent share of the total REIT-eligible stock, followed by Hyderabad and NCR with 21 percent and 15 percent shares, respectively.
Mumbai and Pune collectively account for 21 percent of India's REIT-eligible stock, while Chennai holds 10 percent and Kolkata contributes a mere 1 percent.
A significant 67 percent of the total REIT-eligible stock in India is certified as green, underscoring the growing emphasis on sustainability among Grade-A developers, as per the report.
Hyderabad boasts the highest percentage of REIT-eligible stock, making up around 74 percent of the city’s office inventory.
The outlook for REITs in India appears bright, with mutual funds and corporations gradually boosting their investments in REITs, the report noted.
Embassy REIT, Mindspace REIT, Brookfield India REIT, and Nexus Select Trust REIT have delivered returns of 24 percent, 18 percent, 6 percent, and 39 percent, respectively, since their inception.
In contrast, the BSE Realty Index has yielded higher returns of 317 percent over the last 66 months compared to REITs.
“However, a favorable regulatory environment, improved investment returns, and a rapidly growing office market are expected to energize the REITs sector in India,” the report concluded.
