In a recent study on REITs by Windmill Capital, a wholly-owned subsidiary of smallcase Technologies Pvt Ltd, it was found that India recorded 6.85% YoY growth in total leasable area of listed Real Estate Investment Trust (REITs) from 87.6 mn sq ft as of 30th September 2021 to 93.6 mn sq ft as of 30th September 2022. 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 an exponential 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.
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. This is also validated in an upcoming report titled ‘Rise of the Indian Retail Investor’ by Zinnov Management Consulting & smallcase which indicates that retail investors allocate up to 2% of their investment portfolio in REITS as compared to 5 years back.
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.
TOTAL LISTED REITs LEASABLE AREA IN EIGHT INDIAN CITIES
| CITIES | As of 30th Sept, 2021 (in mn sq ft) |
As of 30th Sept, 2022 (in mn sq ft) |
% Growth (YoY) |
| BENGALURU | 27 | 27.8 | 2.96% |
| MUMBAI | 16.2 | 16.5 | 1.85% |
| PUNE | 13.9 | 14.2 | 2.16% |
| NOIDA | 7.4 | 11.9 | 60.81% |
| GURUGRAM | 4 | 4 | 0.00% |
| HYDERABAD | 12.6 | 12.7 | 0.79% |
| CHENNAI | 0.8 | 0.8 | 0.00% |
| KOLKATA | 5.7 | 5.7 | 0.00% |
| INDIA | 87.6 | 93.6 | 6.85% |
Source: Windmill Capital
Sharing a perspective on REITs, Vasanth Kamath, Founder & CEO, smallcase said, “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. Regulations have also encouraged retail investors with the reduction in minimum subscription (from INR 50,000 to INR 15,000). This increases the liquidity for the entire REITs market and allows greater participation from young retail investors.”
With regard to stock performance of listed REITs, Mindspace REIT delivered the highest absolute returns of 8.11% year to date till 31st October 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.
STOCK PERFORMANCES OF THE LISTED REITS AND RETURNS AS OF 31st OCTOBER 2022
| REIT | Listing Date | Since Listing* | YTD (From 3 Jan 22) |
| Embassy Office Parks | 01-Apr-19 | 2.58% | 1.40% |
| Mindspace Business Parks | 07-Aug-20 | 7.32% | 8.11% |
| Brookfield India Real Estate Trust | 16-Feb-21 | 10.07% | 7.30% |
| *Returns greater than 1 year are annualised | |||
Source: Windmill Capital
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 according to media reports.
