Indian REITs Outperform US and Singapore in Yield: CREDAI-Anarock Report

Singapore, Sep 13 (PTI) Indian Real Estate Investment Trusts (REITs) are generating an average yield of 6-7.5 per cent for unitholders, surpassing many mature markets, including the US, according to a report by CREDAI and Anarock.

The report, titled 'Indian REITs - A Gateway to Institutional Real Estate,' was released at an event in Singapore. CREDAI, the apex body of Indian real estate developers, and property consultant Anarock jointly prepared the report.

Currently, there are five listed REITs in India: Brookfield India Real Estate Trust, Embassy Office Parks REIT, Mindspace Business Parks REIT, Nexus Select Trust, and Knowledge Realty Trust. Nexus Select Trust is backed by rent-yielding retail real estate (shopping malls), while the other four are office REITs.

'Average distribution yields of Indian REITs range between 6 per cent and 7.5 per cent, competitive with fixed-income instruments but with the added potential for capital appreciation,' the joint report stated.

When compared with other REIT markets globally, the report found that India still lags behind mature markets like the US, Singapore, and Japan in the diversification of REIT asset classes. However, the risk-adjusted yields in India remain attractive, according to the consultant.

Shobhit Agarwal, CEO of Anarock Capital, commented, 'Indian REITs are late to the party, but now lead the dance. Despite its late entry compared to global peers, India has strong fundamentals.' He added that the distribution yields are well above many mature markets such as the US and Singapore.

The average yield in the US is 2.5-3.5 per cent, in Singapore 5-6 per cent, and in Japan 4.5-5.5 per cent.

Shekhar Patel, President of CREDAI, said, 'Over 60 per cent of India's REIT market value today rests with a very small set of players, with a strong base in Grade A offices linked to IT and BFSI. The future, however, holds far wider promise. As India's cities grow, infrastructure strengthens, and the economy diversifies, REITs will expand into retail, logistics, housing, and new-age assets.'

This transformation will unlock unprecedented opportunities for investors, he added.

REITs are investment vehicles that own or operate income-generating real estate, enabling investors to earn a share of the income produced without directly purchasing the properties.

CREDAI, which has more than 13,000 members, is organizing its annual event, CREDAI-NATCON, in Singapore. More than 1,000 delegates, including real estate developers and property consultants, are attending this three-day conference that started on September 11.