India’s Reit-Able Stock : Approximately two-thirds of real estate investment trusts (Reit) will be worthy on June 27, 2023. According to a survey by the real estate brokerage firm Colliers, the secondary business districts (SBDs) of India’s top six cities include the majority of the country’s grade-A office stock.

Hyderabad’s SBD has the greatest percentage of Reit-worthy stock among these SBDs, with a 28% stake, followed by Bangalore’s at 24%. SBDs contain Grade-A stock that is Reit-worthy in excess of 60%. In addition, the survey states that around half of the overall stock in PBDs across the top six cities is Reit-worthy.

“Understandably, the central business districts (CBDs) have a relatively lower share of Reit-able stock, at 10%, due to limited new supply and presence of relatively older buildings,” according to the study REITs- grabbing bigger ground in Indian Real Estate.

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India’s Reit-Able Stock

Reits have grown significantly in popularity as a viable alternative to traditional real estate platforms and offer enormous potential for luring capital into the industry, it continues.

Currently, the three mentioned office Reits collectively own over 74.4 million square feet (msf) of space, or about 11% of all currently available Grade-A office space.

“Despite impending externalities that might influence demand. The underlying office sector has shown resilience, especially in the top six cities, with robust occupancy levels. Office vacancy rates were steady in the first quarter of 2023 (Q12023) at 16.4%. Indicating a commercial office market that is fundamentally robust. According to the research, the forecast for the office sector is still positive and is being driven by technology and flexible space. The industry is expected to recover in the second half of the year.

In comparison to other regional marketplaces, reits in India are still in their infancy. Surprisingly, Indian Reits have a market capitalization that is less than 10% that of the US, Singapore. And other Asia-Pacific nations. Given the scale of the Indian office market. There is a significant opportunity to create new Reits and grow existing ones. The performance of Reits in India has been significantly influence by the total returns on listed Reits, including dividend yield. The regulatory framework has also changed and adapted to adhere to international best practises. Reits are projected to diversify into more asset sectors in the future. Including industrial, data centres, hotel, healthcare, and education. explains Piyush Gupta, managing director, Colliers India’s capital markets and investment services.

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57% of untapped Reits potential is on the table, along with 380 msf of Grade-A office space.

The current Grade-A office space has around 380 msf that may be classed as Reits. Bangalore, one of the top six cities, has the highest share stock, at 25%, followed by Hyderabad, at 19%. A further 41 msf of under-construction office property has the potential to be Reit-ed and is anticipated to reach the office market by the end of 2023.

The three office Reits in India have been successful in building a solid foundation to demonstrate to international investors their interest in investing money in development-based assets. The development of REITs has cleared the path for the emergence of additional asset classes. The investible universe for investors was expanded in May 2023 with the listing of India’s first Retail REIT on the stock market.

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Compared to the leading international marketplaces, the market valuation of Reits in India is less than 10%.

Comparatively speaking to its rivals in APAC, Europe, and America, India is still a comparatively minor market. Less than 10% of other nations’ market capitalizations. Such as the US and Singapore, are represente by the Reit market capitalization of India.

However, there is enormous opportunity for development in the Indian Reit market. India now has 11% of its office portfolio under Reits. But there is still plenty of space for growth to reach 68%. Putting it on par with other APAC nations like Singapore and Japan. Who have more than 50% of their office portfolios under Reits. According to the paper, a higher proportion of Reits in an office portfolio may cause the corporatization of the office industry and increase Reits’ trust among investors.

The market is ready to witness the listing of Reits in the industrial and warehousing sector after the debut of retail Reits. As it continues to gain momentum in other asset classes. India’s Reit-Able Stock

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