In a report launched today, it is estimates that by 2020 India will have REIT- eligible commercial – Office and Retail, properties that stand to provide investment opportunities estimated at USD 64 Billion (bn)  to USD 77 bn across top seven cities of India.  This was stated in a joint report titled “Revitalizing Indian Real Estate: A new era of growth and investment” by Cushman & Wakefield and Global Real Estate Institute (GRI) at the GRI India Summit 2016.

The C&W-GRI report estimates that the commercial office stock, which accounts for the majority  at 70% approx. of the total value of REIT-eligible stock, is estimated to have total value of USD 44 bn-USD 53 bn. Across the top seven cities of India, ready commercial office stock that is eligible for REIT investments amounts to 277 million square feet (msf), accounting for less than half (44%) of total commercial office stock in India. In addition to completed stock, approximately 68 msf of additional REIT-eligible stock expected to be completed by 2020 across the seven cities.

In retail assets, the estimated value of REIT-eligible stock (completed and under-construction malls) is estimated at USD 20 bn-USD 24 bn, with roughly 112 (52.0 msf) malls eligible for REITs. About 78% (41 msf) of these malls are completed and operational while the remaining (11 msf) are under construction and scheduled to be completed by 2018.

Anshul Jain, Managing Director, India, Cushman & Wakefield "The commercial office market is likely to be on an upward trajectory steered by an improving economic outlook, as well as strong demand from certain sectors such as IT-BPM, BFSI, FMCG and Pharmaceutical sectors going ahead. In such a buoyant environment, the Indian market is well-placed to witness the listing of REITs, led by the government's steps to ease policies for the investment vehicle. Over the last year, the government has not only streamlined the taxation policy of REITs, but also eased regulations such as increasing the number of sponsors (five sponsors, from three allowed earlier), easing the investment cap in under-construction assets (allowing up to 20% of the investment fund in under-construction assets, from 10% earlier), etc. These steps have infused optimism in investors who are confident not only about the implementation, but also the growth prospects of REITs in India.


In commercial office stock, the highest value of REIT-eligible stock (ready and under-construction) is seen in Bengaluru at USD 12.3 bn- USD 15.0 bn, led by the high quantum of ready and under-construction REIT-eligible stock that is not strata sold in the city. Besides steady supply, the city is likely to witness continued momentum in demand from IT-BPM companies. Bengaluru is distantly followed by Mumbai (USD 8.9 bn-USD 10.9 bn) and Delhi-NCR (USD 8.7 bn-USD 10.6 bn) in terms of value of REIT-eligible stock.

 “In conjunction with the imminent introduction of REITs, investors have already started increasing their exposure to commercial office assets. With a few large deals for office portfolios in the closure stages in the fourth quarter, the year 2016 is expected to record the highest annual investments of USD 3.6 bn (INR 244 bn) made in this asset class since 2008. REITs have a huge opportunity for developers and investors in India, given the potential in the Indian real estate market. In Bengaluru, approximately 60% of the total stock in the city is eligible for REITs. With a 20% cap of investment in under-construction assets, projects that are nearing completion are especially ripe for REIT investments,” Diwakar Rana, Managing Director, Capital Markets, India Cushman & Wakefield said.

Pune has the highest under-construction REIT-eligible stock (19 msf by 2020); hence, the city’s projects would hold weight amongst investors in the near future. Moreover, Pune is likely to emerge as a strong market led by IT-BPM companies and entities conducting offshore activities in sectors such as BFSI. These companies prefer Pune due to its competitive rentals, availability of local talent and close proximity to Mumbai. Hyderabad too is a prominent market that would be on investors’ radar, with the city expected to account for roughly 11% of the total under-construction REIT-eligible projects over the next four years. The city’s commercial market has been on a path of revival since 2014 after the bifurcation of the state, bringing political stability to Hyderabad. Corporates have been expanding in the city buoyed by proactive steps by the government to increase investments, besides good infrastructure and lower rentals. These factors are likely to enhance Hyderabad’s standing as a market on investors’ radar over next few years.

While in completed projects as of 2016, Delhi-NCR has the second-highest value of REIT-eligible stock, the city currently has the low under-construction stock that could curtail future investment opportunities for investors.

Key markets that are likely to attract investments are ORR in Bengaluru, SBD East (Viman Nagar, Hadapsar and Kharadi) market in Pune, Gurgaon, Mumbai’s Western suburbs and Madhapur in Hydrerabad. While some of these markets are seeing rise in occupier interest especially from IT-BPM sector, others are likely to see interest from companies from various sectors owing to availability of modern buildings offering contiguous space at competitive rentals.


In total retail stock, the highest value of REIT-eligible stock is estimated in Mumbai, with value of USD 6.1 bn- USD 7.5 bn. Mumbai is followed by Delhi-NCR, with REIT-eligible malls valued at USD 4.7- USD 5.7 bn, followed by Bengaluru with REIT-eligible malls valued at USD 2.8 - 3.4 bn. Although Bengaluru has higher REIT-eligible mall stock than Delhi-NCR in terms of area, the investment value of the REIT-eligible malls is curtailed in Bengaluru on account of lower average rentals in the market.

"As malls transform and reposition themselves from mere shopping centres to complete entertainment centres, they have a higher appeal for the aspirational Indian consumer. Capitalizing on the higher consumer spending expected, institutional investors are looking at bringing retail assets under the REITs umbrella in the near future. With foreign retailers entering the country and expanding aggressively, brands are preferring to be located in well-performing malls that to see higher occupancy levels. Hence, over the next few years, investors will be on a lookout for professionally managed, well-run malls, which would witness yields improving and rental values inching up, thereby improving returns for investors. ” Anshul observed.

The YTD private-equity investments in retail assets during 2016 increased three-fold to USD 569 mn, from USD 156 mn during the same period of 2015. Completed and leased malls with low vacancies, are being preferred by investors.  About 65% of the investments in retail asset made during YTD 2016 are concentrated in Mumbai, followed by Delhi-NCR at a distant second with 24% share.