India's Small and Medium REITs Market Set to Boom, Exceeding $60 Billion by 2026
The potential Small and Medium Real Estate Investment Trusts (SM REITs) market size in India is expected to exceed $60 billion by 2026, driven by growing interest in commercial real estate investment.
Sm ReitsCommercial Real EstateIndiaInvestmentCbreReal Estate MumbaiSep 06, 2024
The forecast reflects a growing interest in SM REITs, which are expected to play a key role in shaping the future of India's commercial real estate landscape. The total completed office stock in India currently stands at over 800 million sq. ft., out of which REIT-listed office inventory is recorded at over 88 million sq. ft.
Furthermore, according to the report, Mumbai recorded the highest potential SM REIT-ready completed office stock of ~75 million sq. ft. as of June 2024, with around 10+ million sq. ft. of upcoming supply by 2026. Delhi-NCR recorded a completed SM REIT-ready potential stock of 70+ million sq. ft., followed by Bengaluru with 50+ million sq. ft. and Hyderabad with 30+ million sq. ft..
The introduction of the SM REITs framework represents a significant step forward for India's fractional ownership landscape. This framework is expected to institutionalize the real estate market by fostering greater transparency and attracting a new set of investors seeking portfolio diversification through real estate exposure.
Building upon the success of traditional REITs and InvITs, which have cumulatively accumulated INR 1.3 trillion in asset value in the past four years, SM REITs hold immense promise. They offer the potential to unlock price discovery and exit opportunities for investors in smaller, high-occupancy assets.
Anshuman Magazine, Chairman & CEO, India, Southeast Asia, Middle East & Africa, CBRE, said, “The introduction of the SM REITs framework marks a pivotal moment for India’s commercial real estate sector. By enhancing transparency and offering robust investor protections, SM REITs are set to redefine portfolio diversification.”
Rami Kaushal, Managing Director, Consulting & Valuation Services, India, Middle East & Africa, CBRE, said, “The alignment of SM REITs with recent tax reforms under the Union Budget 2024-25 is a game-changer for the investment landscape. Reducing the holding period for long-term capital gains will make SM REITs more attractive and accessible, driving increased participation and further institutionalizing the market.”
Frequently Asked Questions
What is the expected size of the SM REITs market in India by 2026?
$60 billion
What is the current total completed office stock in India?
Over 800 million sq. ft.
Which city has the highest potential SM REIT-ready completed office stock?
Mumbai
What is the expected impact of the SM REITs framework on the real estate market?
It is expected to institutionalize the market, foster greater transparency, and attract new investors.
Who is expected to benefit from the SM REITs framework?
Investors in smaller, high-occupancy assets, as well as high-net-worth individuals, non-resident Indians, and overseas citizens of India.
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