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Commercial realty offers investment opportunity worth $43-54b

Value of REIT – eligible stock is seen to be the highest in Bengaluru at $15.8b followed by Mumbai at $14.5 billion.

Indian commercial real estate offers investment opportunities worth $43-54 billion across top eight cities through Real Estate Investment Trust-eligible ready stocks, said a new report.

Approximately 315 million sq ft of office inventory is also eligible for REIT across the cities, said the report by RICS (Royal Institution of Chartered Surveyors) and Cushman & Wakefield.

The REIT – eligible inventory includes existing non-strata sold Grade A inventory, wherein Bengaluru, Mumbai and Delhi-NCR cumulatively account for over 67%. The report estimates that the value of REIT – eligible stock is seen to be the highest in Bengaluru at $15.8 billion primarily due to the high volume of investible Grade developments. Mumbai with $14.5 billion stands second due to higher capital values of commercial properties, despite having roughly half of Bengaluru’s REIT-able stock.

The estimated value of REIT – eligible stock in NCR is $11.04 billion, which is the third highest.

“We have come out with the IPO guidelines for the issuance of units of INVits. On same lines, we are working on the IPO guidelines for units of REITs,” said Barnali Mukherjee, chief general manager at market regulator Securities and Exchange Board of India (Sebi).

“Since there are no accounting standards for REITs and INVits, we have set up sub-committees looking at the financials to be brought out with the offer documents as also the continuous disclosure to be made; also set up a subcommittee for issuance of valuations,” she said. “On the valuations side, a separate chapter has been included in REIT regulations where lots of rights and responsibilities have been given to the valuer who has to comply with International Valuation Standards,” Mukherjee said.

Sebi has already received four applications for infrastructure investment trusts (INVits) –two of them have been processed and two are registered. The capital market regulators have come out with amendments on REIT regulations to bring more clarity and make it more acceptable but, as of now, it has not received any applications for REITs. “Whatever Sebi could do has already been done, in terms of removing key roadblocks such as capital gains tax and DDT and now we are looking forward to applications for REITs so that the REIT market can take off,” Mukherjee said said while delivering keynote address at RICS Real Estate Conference 2016.




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