Unlocking India’s Real Estate Potential: The Rise of REITs
The global landscape of REITs has undergone a transformation since the listing of first REIT in the US in 1961. As of December 2022, there are 893 listed REITs, globally, and a combined equity market capitalization of approximately $1.9 trillion. This class of investments has grown in the last 30 years, from 120 REITs in two countries to 893 in 41 countries and regions. Asia, especially, has played a big role in this growth, with the number of REITs in the region going up by a huge 58% since 2015.
India, too, has embraced the REIT market as an asset class. Out of total office stock of over 700 million square feet (msf), about 394 msf of office space is REIT worthy, setting the stage for substantial future REIT listings. High-quality tenants, robust occupancy rates, strong Pan-India annual net leasing momentum of approximately 40 msf and consistent rental growth amplify the attractiveness of these office assets. The success of the four listed Indian REITs has caught the attention of global investors, who recognize the potential in the market.
A standout feature of the Indian REIT landscape is its considerable untapped potential. Currently, only about 10% of India’s total Grade A office stock falls under the REIT umbrella, indicating significant room for expansion. While Grade A office spaces have been the primary focus, recent developments, including the introduction of a retail REIT, signal the potential for diversification into other asset classes such as logistics and hospitality, offering new opportunities for investors and REIT players.
Also Read: National Pension System: Tax benefits of investing in NPS
In contrast to their Western counterparts, Indian REITs offer a unique combination of growth potential and a
Read more on financialexpress.com
