REITs in India-Opportunity Awaits

rsz_ramesh_nair_jll

Considering the capital-intensive nature of the commercial real estate sector as an investment avenue and also the limited investment opportunities with regards to high-grade office assets, REITs (Real estate investments funds) will be a big boon for the Indian real estate industry. In simple terms, a REIT is an investment tool that owns and operates real estate assets and even allows individual investors to invest in and earn income through partial/equity level ownership of commercial real estate without actually having to buy those assets.

REITs are modelled after mutual funds and provide their investors with all types of income streams – as well as the benefits of long-term capital appreciation. A REIT also trades on major stock exchanges and provides investors with a highly liquid stake in real assets typically offering high yields.

Over the last decade, globally, REITs have developed into a mature market force, providing easy access to high-quality assets along with stable return on investments. To illustrate – as of 2016, there were over 500 REITs operating across various countries, with total market capitalization of more than USD 900 billion.

Taking a closer look at REITs globally:

  • USA: The US Congress created the Real Estate Investment Trust (US-REIT) in 1960 to make large-scale, income-producing real estate investments accessible to smaller investors. Since then, US-REIT has dominated the market, and has a market capitalization which grew from USD 1.4943 billion in 1971 to USD 1 trillion by 2016.
  • Singapore: Since the launch of the first Singapore REIT in 2002, the REIT sector has become one of the biggest success stories of the Singapore Stock Exchange (SGX). Singapore REITs have since grown into a USD 53 billion market. Currently, the total ‘REITable’ stock available in Singapore’s CBD is 2.687million sq m.
  • Australia: The first REIT in Australia was the General Property Trust – a listed property trust started in 1971. A-REITs are the largest REIT market in Asia with a total market capitalization of almost €72 billion, accounting for 9.36% of the global REIT market capitalization. The Sydney CBD market has 3.060 million sq. m. of REITable stock.

Given the currently sluggish demand for residential real estate in India, the office sector provides some relief for real estate developers, given the declining vacancy levels and improving rents. With declining vacancies, superior quality buildings in CBDs, SBDs, and PBDs are likely to see maximum REITable assets.

Close to 283 million sq ft of office space in India is REITable. Currently, there are 901 REIT-worthy properties in India.

There is no doubt that REITs will provide access to highly lucrative assets, such as large-scale commercial properties and high-quality retail assets, that may be otherwise out of reach for individual investors. Once the first REIT listings go live in India, we will definitely see significantly increased institutional and retail investor participation in this market.

Ramesh Nair, CEO & Country Head, JLL India

Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.

61 thoughts on “REITs in India-Opportunity Awaits”

  2. Thanks for the sensible critique. Me & my neighbor were just preparing to do a little research on this. We got a grab a book from our local library but I think I learned more from this post. I’m very glad to see such great info being shared freely out there.

    Reply

  11. I’m impressed, I have to admit. Genuinely rarely should i encounter a weblog that’s both educative and entertaining, and let me tell you, you may have hit the nail about the head. Your idea is outstanding; the problem is an element that insufficient persons are speaking intelligently about. I am delighted we came across this during my look for something with this.

    Reply

  57. I have to point out my respect for your generosity for persons who must have help with the content. Your real commitment to passing the message all through became rather informative and have surely permitted guys and women like me to realize their dreams. Your amazing warm and friendly publication entails so much a person like me and substantially more to my office workers. Thanks a ton; from each one of us.

    Reply

  60. I not to mention my pals were looking at the excellent secrets and techniques from your web page and so then I had an awful suspicion I never thanked the website owner for those tips. Those men are actually joyful to study them and have actually been tapping into these things. I appreciate you for simply being so accommodating and then for settling on this sort of quality subject areas millions of individuals are really eager to know about. Our honest apologies for not saying thanks to earlier.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

Advertisement

Back to Shopping Carnival