JLL expects $10 bn of properties to go Reit way

Right now out of the $125-bn inflow into the Asia-Pacific realty market in 2014, India has hardly got $1.4 bn

Jones Lang LaSalle (JLL) Property Consultants, a global major in property advisory services, said they anticipate as much as $10 billion worth of commercial property that can be structured as Real Estate Investment Trust (Reit) when the requisite legislation in India comes into effect.

Alastair Hughes, chief executive officer, Asia Pacific, said they expect the legislation to be in place by mid-2015 and the real estate players are expected to be ready by the end of the year. “As we see, there are at least 18 established real estate players who are ready with  commercial properties that can be structured as Reits by the end of 2015 and that will see overseas capital coming into the market. Global investors are keenly looking to invest in India and we feel that Reit will be a good vehicle to come in,” Hughes told Business Standard.

He said of the $125-billion inflow into the Asia-Pacific realty market so far in 2014, India hardly got around $1.4 billion. If Reit gates are opened, there will be a manifold growth in the flow of quality money into India’s real estate sector. “The new government in India looks promising for the real estate sector and we are getting lot of interest from our investors. Bengaluru, in particular, is a good market that a lot of MNCs (multi-national companies) are closely looking at,” he added.

Hughes said the yields in Bengaluru are in the range of 10 per cent, while the capital value per square feet cost is pretty attractive and is working out at around $12 per square feet, compared to Mumbai at $70 per square feet and Delhi at $55 per square feet. “Bengaluru is ideal for a slew of technology and BPO (business process outsourcing) companies. There are quality assets that are being put up and when one compares with other destinations, it is cost effective and the yields are healthy as well,” he noted.

Anuj Puri, chairman & country head, said, given the healthy demand for quality office space in Bengaluru, demand is expected to outstrip supply over the next two quarters and the deficit in near term can touch 30 per cent.