NEW DELHI: According to Colliers India, the penetration of Real Estate Investment Trusts (REITs) in India’s office segment could rise from the current 16% to 25–30% by 2030.
The report reveals that about 500 million sq ft (msf) of office assets in the country are suitable for REIT listing. Currently, 133 msf have been included under four operational office REITs, with an additional 371 msf of Grade A office space identified for potential future listings.
Big Opportunities in SBDs
The report underscores significant potential for REIT expansion, noting that 371 msf of Grade A office assets—46% of the current stock—could qualify for future REIT inclusion. Nearly 60% of these additional income-generating assets are found in secondary business districts (SBDs) in seven major cities. Bengaluru leads with 89.7 msf (24%) of the future stock, followed by Hyderabad (68.6 msf; 19%) and Delhi NCR (57.7 msf; 16%).
In micro-market analysis, Bengaluru’s peripheral business districts currently dominate existing REIT portfolios, while Delhi NCR’s central business district (CBD) holds the highest untapped REIT potential at 58% of the city’s future stock.
Operational Stability
Current office REITs in India show robust performance with occupancy rates exceeding 86%, bolstered by stable rental yields and long-term leases. Tenant demand is primarily driven by global capability centers (GCCs), technology firms, and BFSI companies, ensuring sustained interest in premium Grade A office spaces.
Growth Potential
“India’s office REIT market is still in its early stages, with only about 16% of Grade A assets listed so far. There is potential for an additional 371 msf of office space to be included in future REITs, predominantly located in SBDs. This represents a significant opportunity for developers and investors,” stated Badal Yagnik, CEO of Colliers India.
Looking Beyond Offices
While the office segment remains central, Indian REITs and InvITs are beginning to diversify into retail, warehousing, and logistics parks. Colliers predicts that assets generating income—such as hotels, rental housing, student accommodations, senior living, and data centers—could be integrated into the REIT framework in the upcoming years.
Globally, REITs in countries like Japan, Singapore, the US, and Europe have diversified into various asset classes, including healthcare, residential, and industrial sectors. India’s comparatively smaller REIT/InvIT market is anticipated to follow this trend, especially with SEBI’s supportive measures for Small and Medium REITs (SM-REITs).
Sustainability Commitment
It should be noted that 86% of operational REIT portfolios in India are already green-certified, adhering to international sustainability standards. In the coming years, REITs aim for complete green certification and a 30–35% increase in renewable energy usage, thus appealing to ESG-focused investors.
Future Outlook
“The momentum for REITs in India is steadily increasing, backed by investor confidence, strong occupant demand, and regulatory endorsement. With solid fundamentals in place, we expect that 25–30% of India’s overall office stock could fall under REITs by 2030,” said Vimal Nadar, Senior Director & Head of Research, Colliers India.
Currently, India has approximately 814 msf of existing office stock, of which 500 msf is suitable for REITs. With 34 msf of assets under construction already linked to current REITs, operational expansion is expected over the next 1–2 years.
