REITable office assets expected to be valued at $ 35 billion: JLL India

The Indian commercial real-estate market is estimated to provide 294 million sq ft of REITable space from the existing office stock. According to JLL’s latest report, India REITs - Heralding a New Era in Real-Estate Investments, these REITable assets are expected to be valued at $ 35 billion.

Rising transparency levels, progressive regulations and a robust commercial real-estate market in the country have made the segment a favourite among institutional investors, according to report. Investors have allocated nearly $ 17 billion in the form of direct investments as well as through entity-level investments from 2006-2019 in the office space.

The report states that 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, followed by Mumbai with a 17 per cent share of total REITable space at 49.7 million sq ft worth $ 8.6 billion. Delhi-NCR and Chennai follow Mumbai, both in terms of space and value. With large and quality IT spaces occupied by prominent global players, Bengaluru will be the most favoured city for REITable assets.

Emergence of new office-space occupiers, continued demand from IT and ITES, global inhouse centres along with the BFSI space are expected to keep demand for office space robust over the next three years. According to Dr Samantak Das, Chief Economist and Head of Research, JLL India, “Indian office space holds the potential to offer an additional 101 million sq ft for REIT from new office completion expected during 2019-21. This could help upcoming REITs to gain from an upside in rentals as well as capital appreciation. While the strong institutional flow of funds into real estate will continue to provide initial momentum towards the growth of REITs in India, active participation of insurance and pension funds in future will help the long-term growth of the market.”

India has already seen its first REIT listing from the Embassy Group-Blackstone JV in March this year. With a portfolio of 32.6 million sq ft, the listing is also Asia’s largest in terms of area. “Growing knowledge of REITs will ensure acceptability and gradual increase of interest from retail investors,” reckons Ramesh Nair, CEO and Country Head, JLL India. “We expect to see other asset classes like retail, warehousing and hospitality also offering REITable assets in time to come.”