60% of India's Grade-A Office Space REIT-Worthy: Vestian Report
Vestian’s latest report, ‘REITs: Reshaping India’s Commercial Space’, reveals that 60% of the country's Grade-A office space qualifies as REIT-worthy, signaling significant growth potential in India’s commercial real estate investment market. However, India’s REIT market remains in its infancy, with only four listed REITs covering 125 million sq. ft. across retail and office sectors.
REITs are gaining traction among domestic and foreign investors due to their attractive dividend returns, with ₹16,800 crore distributed since their inception. Despite outperforming the NIFTY Realty Index in returns, REITs' market capitalization in India is only 13.7% of the total listed real estate sector—lagging behind global markets like the USA (98.9%), Australia (94.8%), and the UK (92.5%).
Among the four listed REITs, Nexus Select Trust REIT has delivered the highest returns (39%) since inception, followed by Embassy REIT (24%), Mindspace REIT (18%), and Brookfield India REIT (6%). Comparatively, the BSE Realty Index has provided a 317% return over the past 66 months.
The report highlights a favorable regulatory environment, promising ROI, and rapid office market growth as key factors likely to drive the REIT market. Bengaluru leads with 33% of India’s REIT-worthy stock, followed by Hyderabad (21%) and NCR (15%). Hyderabad has the highest share of REIT-worthy office inventory at 74%, while Kolkata trails at 24%.
The presence of branded Grade-A office buildings in prime commercial hubs is driving the concentration of REIT-worthy assets in major cities, setting the stage for India’s REIT market to expand further.
