India's REIT Market Emerges as Fastest-Growing in Asia Pacific
India's real estate investment trust (REIT) market grew 31% YoY in 2023, outpacing the rest of Asia Pacific.
ReitIndiaReal EstateInvestmentAsia PacificReal Estate NewsAug 12, 2024
According to a report by Cushman & Wakefield, the Indian REIT market's growth is attributed to the introduction of Blackstone's Nexus Select Trust, the country's first publicly listed retail REIT. The report also highlights the positive outlook for office markets, with employees returning to work and large deals back in the market, along with high occupancy rates in existing portfolios.
The Indian REIT market is still in its nascent stages, with only four REITs currently operating. However, the initial public offerings (IPOs) of these REITs have garnered significant investor interest, indicating the product's attractiveness to investors. There are 225 active REITs across Asia, with traditional market powerhouses like Japan, Singapore, and Hong Kong dominating the market.
However, the emerging Chinese mainland and Indian REIT markets are adding new layers of opportunity and growth to the region. India's strong performance highlights its emergence as a significant player, offering investors attractive opportunities for diversification and growth.
Nexus Select Trust, which has a portfolio of 17 urban shopping centers across 14 tier-1 and tier-2 cities, has witnessed a 30% rise in stock price in one year since its IPO. The trust plans to double its portfolio by 20 million square feet in the next five years through strategic acquisitions.
Top office REITs, such as Embassy and Mindspace, have also given 9-10% CAGR returns in the last two years, reassuring investors and trustees alike. REITs are a global asset class that were first introduced in the United States in 1960 to allow retail investors to invest in commercial real estate in a liquid vehicle that was listed on stock exchanges.
Globally, there are 893 listed REITs with a collective equity market capitalization of approximately $1.9 trillion (as of December 2022). While India brought in regulatory guidelines for REITs in 2014, the product became a reality with the launch and listing of Embassy REIT in 2019.
Mindspace Business Parks REIT was listed on exchanges in 2020, followed by Brookfield India Real Estate Trust in 2021. Nexus Select Trust was listed in May 2023.
The future looks bright for the REIT market in India, with more developers listing their portfolios and institutional demand for high-quality assets continuing in office and retail segments.
Frequently Asked Questions
What is the growth rate of India's REIT market in 2023?
31% year-on-year
What is the current number of REITs operating in India?
4
What is the plan of Nexus Select Trust for the next five years?
To double its portfolio by 20 million square feet through strategic acquisitions
What is the global equity market capitalization of listed REITs?
Approximately $1.9 trillion (as of December 2022)
When was the first REIT listed in India?
2019 (Embassy REIT)
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