Mumbai, March 20, 2024 – The Indian REITs Association (‘IRA’), formed under the guidance of the Securities and Exchange Board of India (SEBI) and the Ministry of Finance, organized its first CEO roundtable in Mumbai today. Hosted by the founding members of the IRA, the event was attended by Mr. Alok Aggarwal, MD and CEO of Brookfield India Real Estate Trust, Mr. Aravind Maiya, CEO of Embassy REIT, Mr. Ramesh Nair, CEO of Mindspace Business Parks REIT, and Mr. Dalip Sehgal, CEO of Nexus Select Trust.
From understanding IRA’s mission and objectives to analysing growth opportunities and challenges, the meet was a platform to discuss topics critical to the advancement of the growth and development of the Real Estate Investment Trust (REIT) sector in India. Launched in September 2023, IRA was formed to drive key agenda items such as strengthening the operating and regulatory environment for the Indian REIT market, deepening the capital markets, and increasing investor education programs among others. The IRA aims to be a body of integrity and excellence, fostering industry best practices benchmarked to leading global REIT standards.
Appreciative of the government for the recent SEZ reforms, the IRA will continue to work closely with SEBI, the primary REIT regulator, and other authorities to create enabling policies that further the growth of REITs in the country.
The Indian REIT market has demonstrated noteworthy growth since the first REIT was listed in 2019 with ₹1,30,000+ crores in gross Assets Under Management (AUM), a market capitalization of over ₹85,000 crores, and a portfolio covering 115 million square feet of Grade A office and retail spaces nationwide.
In just five years, REITs have distributed more than ₹15,500 crores, surpassing the Entire NIFTY Realty Index combined, and have raised over ₹25,500 crores of equity capital through primary issuances, including initial listings and follow-on offerings. As of February 29, 2024, the number of unitholders in the four REITs has grown to over 200,000, highlighting the enthusiasm of retail investors seeking to own commercial real estate in a liquid, regulated, and professionally managed structure that Indian REITs provide.
India currently has ~400 MSF of REIT-able office space and ~70 MSF of REIT-able retail space, out of which only ~100 MSF and ~10 MSF, respectively, are part of Indian REITs. This showcases a tremendous growth opportunity in the REIT asset class in India.
Brookfield India Real Estate Trust (BIRET), Embassy REIT, Mindspace Business Parks REIT, and Nexus Select Trust are the founding members of the IRA. The Association comprises the Governance & Strategy Committee, Executive Committee, Engagement & Promotion Committee, and the Regulatory Committee, each aiming to drive growth, governance, and stakeholder engagement for the overall sector.
Global REIT Market Landscape
REITs are a global asset class first introduced in the United States in 1960 to allow retail investors to invest in commercial real estate in a liquid vehicle listed on the stock exchanges. Globally, there are 1000+ listed REITs with a collective equity market capitalization of approximately $2 trillion (as of December 2023).
Evolution of REITs in India
The journey of REITs in India commenced with the introduction of regulatory guidelines in 2014 and culminated in the public launch of REITs in 2019, with Embassy REIT’s listing. Following this, two more REITs were listed on the Indian exchanges – Mindspace Business Parks REIT in 2020 and Brookfield India Real Estate Trust in 2021. In May 2023, India’s first retail REIT, Nexus Select Trust, was listed.
The Indian REIT regulations mirror international REIT standards and have played a key role in facilitating the institutionalization of the Indian commercial real estate market. Indian REITs are required to invest 80% of their portfolio in income-producing properties, pay out at least 90% of net distributable cash flow to investors semi-annually, and are limited to a conservative debt-to-capitalization ratio of 49%.
Notes – India REIT Primer – March 2024
Media Contact: