India’s 7 top cities hold 526 mn sq ft REIT-worthy office stock valuing Rs 4.5 lakh cr: Vestian

New Delhi, Dec 3 (PTI) India’s top seven cities currently have 526.3 million square feet of rent-yielding office space stock, valuing Rs 4.5 lakh crore, that can be included in Real Estate Investment Trust (REIT) and get listed on stock exchanges, according to Vestian.

Real estate consultant Vestian on Tuesday released its report ‘REITs: Reshaping India’s Commercial Space’.

“India’s REIT market is currently at a nascent stage compared to major global economies with only four listed REITs, covering an area of 125 million sq ft across the retail and office markets,” the consultant said.

Gradually, REITs are becoming popular among foreign and domestic investors owing to attractive returns in the form of dividends, it added.

Vestian data showed that the country’s seven major cities have 884.1 million square feet of Grade-A office spaces, of which 526.3 million square feet valuing Rs 4.5 lakh crore are REIT-worthy. The three listed REITs, which are backed by office assets, have a combined portfolio of 110.7 million square feet of office space.

Among cities, Hyderabad has the highest share, around 74 per cent, of REIT-worthy stock in the city’s total office stock. Kolkata has the lowest share of around 24 per cent.

Hyderabad, Bengaluru, Chennai, and Delhi-NCR have more than 60 per cent of REIT-worthy stock in their respective total office stock. Mumbai and Pune have close to 50 per cent of REIT-worthy stock in their respective total office stock.

Commenting on the report, co-working firm UrbanVault founder Amal Mishra said the REITs in India currently hold a relatively small percentage of total prime office space.

“Given that REITs primarily invest in rent-yielding commercial assets, the dynamics of Grade A office supply and demand play a pivotal role in their growth. This presents a significant opportunity for REITs to expand their footprint in India, leveraging the rising demand for high-quality office spaces to enhance their portfolios and deliver value to investors,” he added.

Shesh Rao Paplikar, Founder & CEO of BHIVE Workspaces, said, “REITs in India hold immense potential as they continue to bridge the gap between institutional-grade real estate assets and retail investors.”

With a steadily growing appetite for stable and income-generating investments, REITs are poised to become a significant asset class in the country, he added.

“As institutional participation deepens and retail investors become more aware of the benefits of fractional ownership in prime real estate, REITs are likely to witness sustained growth,” Paplikar said.

In India, the journey of REITs began in 2014 with key structural policy changes, culminating in the first REITs listing on stock exchanges in 2019, the report said.

The four publicly listed REITs in India are Brookfield India Real Estate Trust, Embassy Office Parks REIT, Mindspace Business Parks REIT, and Nexus Select Trust.

Nexus Select Trust is backed by retail real estate assets, while the other three REITs are backed by office assets.