India's Small and Medium REITs Market Set to Exceed $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, with over 300 million sq. ft. of completed commercial office space.
Sm ReitsIndian Real EstateCommercial Office SpaceReitsInvestmentReal Estate NewsSep 05, 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 institutionalise 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, according to the Reserve Bank of India, 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.
Frequently Asked Questions
What is the expected market size of SM REITs in India by 2026?
$60 billion
How much commercial office space is expected to be completed by 2026?
50 million sq. ft.
Which city has the highest potential SM REIT-ready completed office stock?
Mumbai
What is the main benefit of the SM REITs framework?
It is expected to institutionalise the real estate market by fostering greater transparency and attracting a new set of investors.
How do SM REITs offer exit opportunities for investors?
They offer the potential to unlock price discovery and exit opportunities for investors in smaller, high-occupancy assets.
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