The strong and active interest of institutional investors in the Indian office landscape is playing a pivotal role in the evolution of the commercial real estate sector. Office asset ownership is constantly being redistributed between traditional landlords and institutional players. As of mid-2021, close to a third of all completed Grade-A office space is owned (either fully or partially) by institutional investors.
In little under 3 years, three REITs debuted in India and today they have a combined listed portfolio size that accounts for ~10% of the total Grade-A office stock. A fast-growing, investor-friendly economy, the resilient office market in major cities, and developers’ efforts to lower debt from their balance sheets are key factors behind the rising interest of institutional investors.
Largely during the Covid period of 2020 to H1 2021, the office market recorded investment inflows of USD 4.8 bn, accounting for a 56% share of private equity inflows across the Indian real estate sector. The same share averaged around 38% for the period 2015-19.
A strong investment appetite for brownfield assets, as early as the start of the last decade, enabled investors to consolidate their asset portfolios across main cities to finally list them on REITs. Even the retail investor's participation in REITS has been quite encouraging, especially given that the last two REIT listings were during the pandemic period. Read my complete article here on LinkedIn.