India's REIT Market Poised for Explosive Growth: 77% Office Space Untapped
India's real estate investment trust (REIT) market is sitting on a goldmine of opportunity. A new report released on Thursday reveals that just 23 per cent of the country’s REIT-eligible office stock, which is about 520 million square feet across the top seven cities, is currently listed.
That leaves a massive 77 per cent of untapped potential, even as India’s listed REITs are already showing strong performance due to steady leasing activity and rising rents.
India may have entered the REIT space late with its first listing in 2019, but it is catching up quickly. According to Anarock Research, the market capitalisation of India’s REITs has already overtaken some mature global REIT markets. “The combined portfolio of the three listed Indian REITs — Embassy Office Parks, Mindspace Business Parks and Brookfield India — stands at just 117.2 million sq ft. That’s only 23 per cent of the total REITable office market in the country,” said Anarock Group Chairman Anuj Puri.
Cities such as Bengaluru, Hyderabad and Chennai currently hold the largest share of REIT-eligible office space at around 313 million sq ft. However, only 18 per cent of it is listed. In Delhi-NCR, about 30 per cent of the 82 million sq ft eligible stock is part of REIT portfolios. Mumbai and Pune together have around 118 million sq ft of REIT-suitable stock, but just 27 per cent of it has been brought into listed REITs so far.
In 2023, the total REIT-eligible office space across the top seven cities was around 383 million sq ft. That number has now grown by 36 per cent to reach 520 million sq ft. This increase is mainly due to a fresh supply of new offices and the upgrade of older Grade A properties to meet current market standards.
The key takeaway is that India's REIT market is only getting started, with a long runway ahead for growth and investment. This presents a significant opportunity for investors and developers to tap into the vast untapped potential and capitalize on the growing demand for high-quality office space in India’s major cities.
