India recorded 6.85% YoY growth in total leasable area of listed Real Estate Investment Trust (REITs) from 87.6 mn sq ft till September 30, 2021 to 93.6 mn sq ft by September 30, 2022, according to an study on REITs by Windmill Capital, a wholly-owned subsidiary of smallcase Technologies Pvt Ltd.
As per the study, Mindspace REIT delivered the highest absolute returns of 8.11% year to date till October 31, 2022. For the same period, Brookfield India REIT was the second best performing listed REIT with 7.30% absolute returns followed by Embassy REIT with 1.40% during the same period.
“India’s REITs market is poised for accelerated growth as both investors and sponsors are drawing confidence from evolving regulatory framework, transparency, institutionalised ownership and ability to deliver robust returns,” said Vasanth Kamath, Founder & CEO, smallcase.
According to corporate filings of listed REITs, Bengaluru continues to dominate the REITs market with 27.8 mn sq ft of total leased area under REITs as of 30th September 2022. Noida witnessed maximum growth in total leasable area under REITs from 7.4 mn sq ft as of 30th September 2021 to 11.9 mn sq ft as of 30th September 2022, registering 60.81% YoY growth.
“Regulations have also encouraged retail investors with the reduction in minimum subscription (from Rs 50,000 to Rs 15,000). This increases the liquidity for the entire REITs market and allows greater participation from young retail investors,” said Kamath.
Additionally, according to listed REITs’ expansion plans, current leasable area is expected to grow by more than 10% in the coming quarters.
REITs have emerged as a strong investment alternative, due to market volatility and inflationary pressures which have led investors to view REITs as an asset diversification strategy.
Mumbai is expected to witness the highest addition of 7.7 mn sq ft of REIT leasable area in the city followed by Chennai 5 mn sq ft as per the Windmill Capital study.
Blackstone Group is planning to list the next REIT in the country and India’s first retail REIT ‘Nexus Select Trust’ along with Select Citywalk and other shareholders.