Indian real estate thrives: Analysts anticipate $36bn REIT listings in 2021 and beyond

To date, the office market in seven major cities boast potentially 284 million square feet of space 

Bengaluru is the biggest source for prospected assets available for securitisation, amounting to 31 percent or 88 million sq ft of potential REIT assets. ToweringGoals/Shutterstock

In India, the Real Estate Investment Trust (REIT) sector is expected to enter a stretch of long-term growth, with approximately USD36 billion listings anticipated in 2021 and beyond, reported The Economic Times, citing data published by global real estate services firm JLL. 

The surge of REIT listings in the country is predicted to lead to a substantially higher number of buyers and sellers, which, in turn, will further multiply market liquidity and yield compression, and stimulate the securitisation of real estate assets. 

Samantak Das, chief economist and head research & REIS at JLL, said: “India’s current office markets across seven major cities have potential space of 284 million sq. ft. that could be securitised with an estimated value of USD36 billion. 

This estimate was based on buildings that meet two important criteria – single ownership and large floor space with high occupancy rate.”  

With office deals accumulating USD3.1 billion in 2020, he explained that the office market has been at the forefront among the asset classes in the country, highlighting its value to upcoming REIT listings. 

Brookfield Properties’ Candor TechSpace in Sector 21, Gurugram, India will be among the office developments that will benefit from this optimistic outlook, particularly with the PropertyGuru Asia Property Awards (India) 2020 Best Breakthrough Developer, Best Office Development, and Best Green Development prestige titles under its belt. 

The report from JLL also noted Bengaluru as the biggest source for prospected assets available for securitisation, amounting to 31 percent or 88 million sq ft of potential REIT assets, with an estimated worth of USD11.16 billion. 

The city is home to massive IT spaces with global occupiers, enabling the sector to be the frontrunner for newly listed REITs and permitting the aggregation of assets into managed structures, particularly since large funds or developers own the majority of assets. 

“The listed markets in India performed well, providing confidence in the future of the India REIT sector,” added The Economic Times. 

The prediction for the growth in listings came shortly after the impressive launch of the country’s third sponsored REIT in early 2021. 

Following India’s listing of its first REIT in 2019, a system to enhance corporate governance, liquidity, and transparency was formed to help REITs flourish. 

More: Indian real estate gets dose of reforms for increased transparency 

“India’s REIT evolution has been both rapid and revolutionary for the real estate sector. The fact that the closing of transactions was made possible even amidst a pandemic has demonstrated the maturity of the market and transformed India’s real estate corporate finance landscape and market liquidity,” said Priyank Shah, the director of capital markets in Asia Pacific at JLL. 

The structural composition will provide plenty of opportunities for institutional investors to be part of, perhaps by co-investing with existent platforms before the Initial Public Offering or gathering complementary portfolios for securitisation into REITs. 

Regardless of the current socio-economic climate, India’s current REIT system has laid the groundwork for continued success, in comparison to other mature sectors. 

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