The Secondary Business Districts (SBDs) of the top six cities of the country house two-thirds of the REITable Grade A office stock. Amongst these SBDs, the SBD of Hyderabad holds the highest quantum of REIT-worthy stock with a 28% share, while Bangalore stood at 24%, according to a report by Colliers. Over 60 % of the Grade A stock within SBDs is REIT-worthy. However, of the total Grade A office stock available in Peripheral Business Districts of the six main cities of the country, 50% is REITable.
The latest report from Colliers has indicated that the REITs which have become a good alternative to real estate have been enjoying significant market. Out of the 667.2 million sft office stock, 74.4 million sft is REIT-worthy. Moreover, out of the available 379.5 million square feet of REITable office stock, 41 million square feet is under construction.
Currently the office sector is looking very promising with technology and flex-space. It is expected to pick up further by the end of this year. “REITs in India are still at a nascent stage compared to other regional markets. The market capitalization of Indian REITs is less than 10 percent compared to US, Singapore and other countries. Considering the size of the Indian office market there is a huge potential for expansion of a large number of REITs. In the coming years, REITs are likely to expand to other asset classes like industrial, data centre, hospitality, healthcare and education,” said Piyush Gupta, MD, Capital Markets and Investment Services, Colliers India. About 380 million square feet of existing Grade A office space is eligible for REITs. While Bangalore has 25 % REITable stock, Hyderabad has 19%.
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