REITs Penetration in Indian Office Market Set to Soar to 30% by 2030

India’s four listed office Real Estate Investment Trusts (REITs) are projected to expand their coverage from the current 16% to 30% of Grade A office space in the next five years. This growth is driven by rising demand from Global Capability Centres (GCCs). According to Colliers’ report ‘REITs Unlocked: Accelerating India’s Real Estate Maturity,’ the four REITs presently manage nearly 133 million sq. ft. of Grade A office space, while another 371 million sq. ft., or about 46% of existing stock, holds potential for future REIT listings.

Colliers highlighted that new listings are fuelling the momentum, a broader occupier base, and increasing institutionalisation in the sector. Bengaluru accounts for 24% of additional Reit-able stock, followed by Hyderabad at 19%. Existing REITs also have about 34 million sq. ft. of under-construction supply, expected to be operational in the next 12-24 months. Overall, 223 million sq. ft., or 60% of Reit-able stock, is concentrated in secondary business districts across the top seven cities.

Strong demand is reflected in occupancy rates above 86%, largely driven by Global Capability Centre (GCC), technology, and Banking, Financial Services, and Insurance (BFSI) firms. Notably, 86% of operational office portfolios under REITs are already green-certified, with a target of achieving 100% certification and increasing renewable energy usage by 30-35% in the coming years.

The expansion of REITs in the Indian office market is a significant indicator of the maturing real estate sector. REITs provide a structured and transparent investment avenue, attracting both domestic and international investors. This growth is expected to enhance liquidity, improve asset management, and contribute to the overall economic development of the country.

The trajectory of REITs in India is not only a testament to the robustness of the office market but also a reflection of the evolving business landscape. The increasing presence of global companies setting up GCCs and the rapid growth of the tech sector are key drivers behind this trend. As more companies look for high-quality, sustainable office spaces, the role of REITs in meeting these demands becomes increasingly crucial.

In conclusion, the projected expansion of REITs in the Indian office market to 30% by 2030 underscores the sector’s potential and the confidence of investors in the Indian real estate market. With a focus on sustainability and institutionalisation, REITs are poised to play a pivotal role in shaping the future of the office market in India.