REIT penetration in India to nearly double from current 16 pc by 2030: Report

New Delhi: Nearly 140 million square feet of India’s office and retail spaces have been listed in Real Estate Investment Trust (REIT) market and 25-30 per cent of the overall office stock in India could be listed by 2030 -- from the current levels of 16 per cent, according to a report released on Tuesday.

Office REITs in India are moving from a “nascent” stage to an “early growth” stage, with approximately 16 per cent of Grade A stock already listed on the equity markets, according to a report by Colliers.

Four office REITs cover nearly 133 million sq ft (msf) of Grade A office space. An additional 371 msf of office assets, representing about 46 per cent of the current Grade A stock, may be included in future REITs.

Among the top seven cities, Bengaluru accounts for 24 per cent of property that can be listed in REIT, followed by Hyderabad at 19 per cent. Existing REITs have approximately 34 msf of supply under construction, expected to become operational within 2 years, the report said.

Indian REITs are gaining momentum, especially in the office sector, supported by new listings, a broadened occupier base, and growing institutionalisation in the segment.

About 223 million square feet, or 60 per cent, of the new REITable office stock is located in Secondary Business Districts (SBDs). Bengaluru holds a 36 per cent share of these SBDs, while Hyderabad follows with 29 per cent. About 14 per cent of Grade A buildings in Central Business District (CBD) localities hold the potential to be listed as future REITs, the Collier’s report said.

Despite global uncertainties, occupancy rates in India’s commercial real estate sector are above 86 per cent, and there is strong demand for premium office spaces, it added.

"Rising demand from Global Capability Centres (GCCs) along with space uptake by technology & BFSI firms is driving occupancy levels. SBDs offer a significant opportunity for investors to capitalise into these high-demand areas,” said Badal Yagnik, Chief Executive Officer, Colliers India.

REITs in APAC, Europe, and America have diversified into various assets, including offices, retail malls, industrial warehouses, hospitals, residential apartments, and data centres.

Analysts feel that REITs and InvITs in India should also follow the same course. Rental housing segments like senior housing, co-living, and student housing have potential as future REIT investments in India, the report noted.

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