India is likely to see the listing of at least four Real Estate Investment Trusts (REITs) on bourses from the second half of this year through the end of next year or early 2025, depending on the performance of the stock markets, according to CBRE India head Anshuman Magazine.
REIT, a popular instrument globally, was introduced in India a few years ago to attract investment in the real estate sector by monetising rent-yielding assets. It helps unlock the massive value of real estate assets and enables the participation of retail investors.
"REIT trade is definitely there to grow and we are expecting one to two REITs by the end of this year and there are some in the pipeline," Magazine, chairman and CEO for India, South East Asia, Middle East and Africa at CBRE, told PTI here.
US-based CBRE is one of the leading real estate consultants in the world. It is also one of the major property advisors in India.
At least four REITs are listed on the Indian stock exchanges, of which three are backed by office assets and one backed by retail (shopping mall) properties.
The three listed office-backed REITs are Embassy Office Parks REIT, Mindspace Business Parks REIT and Brookfield India Real Estate Trust. Nexus Select Trust, which got recently listed on bourses, is India’s first retail-asset-backed REIT.
The four REITs listing are likely between the second half of this year through to the end of 2024 or even early 2025, he said.
Magazine explained that REITs allow people and retail investors to own property and participate in the real estate market.
"REITs provide exist to institutional investors. Large private equity funds and institutional monies which have fund life have a better return on investments," he said.
REITs encourage more institutional investments. It is a game changer for real estate. "REIT is one place we are seeing financial institutions owning real estate.”
Another funding-generating approach is the infrastructure InVIT covering highways. “No doubt more funding can be expected,” he said.
Magazine expects India’s growth story to continue as the country prospers. “India is going to see massive developments such as roads, airports, ports, rails, MROs, and logistics being among the main infrastructure developments," he said.
He said that the quality of residential development has gone through significant improvements while the demand is ever increasing for accommodation for students, or hostels, as well as co-living and co-working.
CBRE’s consultancy arm has been involved in a wide range of projects as well as feasibility studies while providing advice to developments of major airports, metros and railways stations as well as highways.
Project implementation is driven by demand. Millions of facilities, motels, office buildings, retail and F&B outlets coming up along railway stations.
CBRE has also been advising the civil aviation sector on MROs, a new industrial development taking place in India.
Japanese multilateral agencies play a big part in metro stations. These agencies have not only funded projects but funded studies, he observed.
No doubt the cement and steel prices have gone up but production capacities have been increasing to cope with the construction sector demand.
"In any case, if we are under supply, we have a huge catch-up to do. Infrastructure development would continue for the next 30-40 years,” said Magazine.
He also highlighted that MNCs, setting up offices in India, are playing a vital role in helping India manage its ESG-Climate plans. The MNCs have taken only platinum-rated or ESG-compliant office spaces.
MNCs are driving the change by taking up only platinum-rated or ESG-compliant spaces in office buildings.
Looking at India and its regional markets, Magazine underlined the large-scale role played by Singapore-based financial institutions and investors.
"Funds are extremely important and Singapore punches way above its weight.
Singapore is also the hub of all the other global players in APAC and we work with all of them,” said Magazine when asked about his expanded international role and its contribution to Indian prosperity.
“We work with corporates and financial institutions – a lot of our latest clients have regional HQ in Singapore which has also become a big centre for family offices. It is an extremely important financial hub for India,” he said.
India has been a back office of international corporations for a long time but it will not be forever. Skilled India has gone up the value chain to software, product development, engineering and designing as well as processing from being just call centres some decades ago, he said.
He clarified the back-office concept in the minds of people, pointing out that some of the smartest people are working in IT hubs and supporting the global operations of international operators.
But yet many challenges must be faced by a country of 1.4 billion where the skill set is being upgraded on a daily basis. “There is a continuous focus on education, skilling the young Indians,” he stated.
Though some geopolitical issues may impact Indian prosperity as the country gets economically integrated with the world, India’s contribution to the world will be skilled manpower in the coming years, he said.
CBRE, he said, has started expanding to Tier 2 cities which in the last two-three years have seen a spurt in retail sectors, logistics and industrial expansion. CBRE has placed teams in 15 tier-2 cities in the last two-three years.
Growth in tier-2 cities has all changed with the highway, rail and airport connectivity.
The CBRE which has a staff strength of 11,500 people has been adding about 1,000 people a year to its India operations.
"We are diversified such as construction and facilities management,” he pointed out, though staying cautious on making projections to future expansion related to CBRE businesses.
He also sees India’s role expanding as a global investor.
Heavyweight Indian corporations have been active globally for decades with investments in greenfield projects as well as acquisitions of major businesses.
Magazine expects to see more and more Indian investments in global markets as the Government changes rules and regulations, allowing companies to invest with no forex issues.