May 24, 2023: India’s rent-yielding Grade-A office market comprises 393.7 million square foot (msf) of Reit-worthy assets worth over $61 billion for future listing, says real estate advisory firm JLL India.
“India has witnessed the successful listing of three office asset-based real estate investment trusts (Reits), garnering a robust response from institutional and retail investors since 2019. It is noteworthy that two of these Reits received a strong response during the pandemic period, highlighting the acceptability of this investment product. Prominent institutional and anchor investors were attracted to these listings due to the presence of stable rent-yielding assets backed by established developer and asset management brands,” the global advisory firm said in a statement released on May 23,
The strong performance reviews of the listed Reits serve as evidence that professionally managed investments with transparent systems provide investors with more informed choices, it added.
“India’s office segment has been the sweet spot for global investors due to strong demand growth, coupled with lower vacancy levels and rising rentals. Institutional investments in office space stood at $ 28 billion during 2005-22, accounting for a 42% share of the total investments across all real estate segments. India’s first three Reit listings comprised primarily office assets. Going forward, India’s Grade-A office space offers 393.7 msf of Reit-worthy assets valued at over $61 billion, across the top seven cities in India. Bengaluru leads the office space with 32% share, followed by Delhi NCR at 15% and Mumbai at 14%,” says Samantak Das, chief economist and head of research & REIS, India, JLL.
Data show office spaces managed by Reits have expanding three-fold from 24.8 msf in March 2019 to 74.4 msf in March 2023. Revenues of Reits have grown at a compounded annual growth rate of 5.5% over the past three years, compared to 2% for comparable non-listed assets.
“Retail and hotels have experienced robust demand following the pandemic, resulting in revised asset pricing. Warehousing has also witnessed significant growth in recent years, with global funds aggregating these assets through platforms. The listing of these asset portfolios through Reits represents the next logical step. The strong response to the recent Nexus Select Trust Reits is a testament to the appeal of this investment vehicle,” said Lata Pillai, senior MD & head of capital markets, India, JLL.
The Indian real estate market is expected to witness further listings of alternative asset classes, while the office sector will continue to see steady growth in Reit listings, she adds.
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