+
ICRA: India's office market can boost REIT market size sixfold
ECONOMY & POLICY

ICRA: India's office market can boost REIT market size sixfold

ICRA, a rating agency, mentioned that the Indian commercial property market has the potential to increase the office Real Estate Investment Trust (REIT) market size by 6.0-6.5 times. They stated that the country has REIT-ready office supply of Rs 5.8-6.2 trillion across the top seven cities. The REIT office supply has seen a 3.3 times increase in the last five years, reaching nearly 82 million sq ft across top seven cities, including Mumbai region, Bengaluru, Pune, Hyderabad, Chennai, Delhi-NCR, and Kolkata.

Rajeshwar Burla, Senior Vice President and Group Head, Corporate Ratings, ICRA, mentioned that the REIT-ready office space is estimated at around 510 million sq ft, constituting 53% of the total Grade A office supply as of September end. With a cap rate of 8.0-8.5%, the REIT-ready office market is valued in the range of Rs. 5.8-6.2 lakh crore. According to him, this creates significant potential for the Indian REIT market. Bengaluru holds the largest share of REIT-ready office supply at 31%, followed by the Mumbai Metropolitan Region (MMR) and Hyderabad at 16% and 15%, respectively.

As of September end, the total grade A office stock in the top six markets was approximately 956 million sq ft, with Bengaluru having the highest supply, followed by Delhi NCR and MMR.

Burla noted that there are currently three listed office REITs in India ? Brookfield India REIT, Mindspace REIT, and Embassy REIT ? accounting for 9% of the total office supply as of September end. The occupancy of office REITs is healthy at around 84%, with SEZ space making up 64% of the operational REIT portfolio. However, the occupancy for the REIT portfolio has been declining in the last 12 quarters due to high vacancies in the SEZ space following the removal of direct tax benefits. Burla expects that the recent government announcement allowing partial and floor-wise denotification of IT-SEZs will revive their attractiveness in the medium term and result in improved absorption.

ICRA maintains a stable outlook on India's commercial office sector, considering India's status as a preferred destination for global capability centres (GCCs).

ICRA, a rating agency, mentioned that the Indian commercial property market has the potential to increase the office Real Estate Investment Trust (REIT) market size by 6.0-6.5 times. They stated that the country has REIT-ready office supply of Rs 5.8-6.2 trillion across the top seven cities. The REIT office supply has seen a 3.3 times increase in the last five years, reaching nearly 82 million sq ft across top seven cities, including Mumbai region, Bengaluru, Pune, Hyderabad, Chennai, Delhi-NCR, and Kolkata. Rajeshwar Burla, Senior Vice President and Group Head, Corporate Ratings, ICRA, mentioned that the REIT-ready office space is estimated at around 510 million sq ft, constituting 53% of the total Grade A office supply as of September end. With a cap rate of 8.0-8.5%, the REIT-ready office market is valued in the range of Rs. 5.8-6.2 lakh crore. According to him, this creates significant potential for the Indian REIT market. Bengaluru holds the largest share of REIT-ready office supply at 31%, followed by the Mumbai Metropolitan Region (MMR) and Hyderabad at 16% and 15%, respectively. As of September end, the total grade A office stock in the top six markets was approximately 956 million sq ft, with Bengaluru having the highest supply, followed by Delhi NCR and MMR. Burla noted that there are currently three listed office REITs in India ? Brookfield India REIT, Mindspace REIT, and Embassy REIT ? accounting for 9% of the total office supply as of September end. The occupancy of office REITs is healthy at around 84%, with SEZ space making up 64% of the operational REIT portfolio. However, the occupancy for the REIT portfolio has been declining in the last 12 quarters due to high vacancies in the SEZ space following the removal of direct tax benefits. Burla expects that the recent government announcement allowing partial and floor-wise denotification of IT-SEZs will revive their attractiveness in the medium term and result in improved absorption. ICRA maintains a stable outlook on India's commercial office sector, considering India's status as a preferred destination for global capability centres (GCCs).

Next Story
Infrastructure Transport

Centre Approves Rs 111 Billion for Key Rail Expansion Projects

The Cabinet Committee on Economic Affairs has approved four major railway multitracking projects worth approximately Rs 111 billion. These projects will expand the Indian Railways network by 574 kilometres across six states and are targeted for completion by 2028–29.The projects span 13 districts in Maharashtra, Madhya Pradesh, West Bengal, Bihar, Odisha, and Jharkhand. Key routes include the fourth line between Itarsi and Nagpur, doubling of the Aurangabad (Chhatrapati Sambhajinagar)–Parbhani section, and the third and fourth lines between Aluabari Road–New Jalpaiguri and Dangoaposi–J..

Next Story
Infrastructure Urban

NDR InvIT Opens Rs 1.2 Billion Logistics Hub in South Goa

NDR InvIT Trust, an infrastructure investment trust listed on the National Stock Exchange, has inaugurated a 2.35 lakh square foot warehousing facility in South Goa. The new development, located at NDR Varama Sir on Verna Airport Road, will support a leading quick commerce company with 1.06 lakh sq ft of space and a third-party logistics firm handling fast-moving consumer goods (FMCG) with 1.24 lakh sq ft, according to a company spokesperson.With this expansion, NDR InvIT further consolidates its presence in Goa, where it now operates the state’s largest warehousing and industrial park portf..

Next Story
Infrastructure Energy

India Tightens Rules on Wind Turbine Parts and Data Use

India has imposed stringent new rules on wind turbine equipment manufacturers, requiring them to locally source critical components and comply with strict data localisation regulations, according to a Ministry of New and Renewable Energy (MNRE) notification issued late Thursday.Manufacturers must now procure key components—including blades, towers, generators, gearboxes, and special bearings—from vendors listed in the upcoming Approved List of Models and Manufacturers (ALMM), which the ministry will issue separately.A technical team set up by MNRE will conduct inspections, and a separate s..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?