Chennai: India currently has $35 billion worth of office spaces that are eligible to be listed under the Real Estate Investment Trust (REIT), according to property consultant JLL India.
REIT is an investment tool that owns and operates rent-yielding real estate assets. It’s function is to allow individual investors to make an investment in this platform and earn income.
According to JLL’s latest report titled ‘India REITs – Heralding a new era in real estate investments’, Indian commercial real estate market is estimated to provide 294 million sq ft of REITable space from the existing office stock. “These REITable assets would be valued at $35 billion”.
Investors have allocated nearly $17 billion in the form of direct investments as well as through entity-level investments from 2006 to 2019 in the office space, it said.
With 33 per cent share of REITable space, Bengaluru will provide the highest REITable assets totalling 97.8 million sq ft, worth $10.7 billion, the report said. Mumbai is a distant second with 17 per cent share equalling 49.7 million sq ft space worth $8.6 billion.
According to the report, the emergence of new office space occupiers continued demand from IT/ITeS, global in-house centres along with the BFSI space are expected to keep office space demand robust over the next three years.
“Indian office space holds the potential to offer additional 101 mn sq ft of office space for REIT from the new office completion expected during 2019-21. This could help upcoming REITs gain from upside in rentals as well as capital appreciation,” said chief economist and head of research, JLL India, Samantak Das.
While strong institutional flow of funds into real estate will continue to provide initial momentum towards REITs’ growth in the country, active participation of insurance and pension funds in future will help in long term growth of the market, Das added.