Indian REITs expanding rapidly as office demand surges

May 19, 2024

All metrics of office demand in India are showing positive momentum and responding to this, real estate investment trusts are rapidly scaling up their portfolios through acquisitions.

When Embassy Office Parks REIT was launched in 2019, it had a little over 24 million square feet. In five years, it has increased the completed area by 47 per cent, adding 12 million square feet through acquisitions. It now has over 45 msf of gross leasable area.

The three office REITs – Embassy REIT, Brookfield India Real Estate Trust, and Mindspace Business Parks REIT – between them hold around 100 msf of office space, about 12.5 per cent of the total office stock in India, with a combined market capitalization of $8 billion.

The office sector demand in India is growing in double digits. Monthly rental per square feet is inching towards the Rs 100 mark. Occupancies have been rising and are in the mid-80s. Most significantly global capability centres have focused their attention on India and around 800 GCCs are expected to be added over the next 6-7 years, pushing up demand for offices.


Embassy REIT’s acquisitions have been mainly from its sponsor, Bengaluru-based Embassy group and all its assets are located in the IT capital of India. Last month it made its entry into Chennai with another acquisition from its sponsor, a 5 msf business park that will take its total portfolio above 50 msf. It also has a future development area of 2 msf.

Brookfield REIT increased its operating area by 47 per cent last year mainly through acquisitions and a further 16 per cent growth is expected after an acquisition it announced last week.

It acquired 6.5 msf of space in FY24 in the National Capital Region and Mumbai, while it is adding another 3.3 msf of space by buying out Bharti Enterprises’ 50 per cent stake in a JV with its parent entity Brookfield. The REIT has the right of first offer of the remaining stake while other properties being developed by Bharti Realty in Delhi are potential acquisition opportunities.

Its parent Brookfield owns 54 msf of office space in India, which forms an opportunity pipeline for the REIT.

Last year Mindspace REIT made two small acquisitions in Chennai and Pune, while it developed a mixed-use asset belonging to its sponsor in Mumbai. It has other assets belonging to its sponsor on which it has the right of first offer. Its sponsor K Raheja Corp has around 15 million square feet of pipeline in the form of assets which are completed or at various stages of development. This is a potential growth opportunity for the REIT, while it is also exploring third party assets.

A recent report by CREDI-CRE Matrix forecast office demand to cross 70 msf in 2024 on the back of the government thrust on manufacturing growth as well as investments into digital and physical infrastructure. All this is expected to increase office absorption and more opportunities for REITs.

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