India's office market speeds up institutionalisation with more Reits ahead

India's office real estate is shifting from fragmented ownership to institutionalisation with rising Reit penetration, global investors, and growing demand from multinational occupiers

India’s office real estate market is rapidly evolving into an institutionally owned asset class, driven by the rise of real estate investment trusts (Reits), growing global private equity and pension fund participation, and a shift away from its fragmented, developer-led past.

 

Upcoming listings over the next two years will add to the existing four listed office Reits — Embassy Office Parks, Mindspace Business Parks, Brookfield India, and Knowledge Realty Trust (KRT). Together, they are expected to deepen the institutional footprint amid surging demand from multinational occupiers, according to market watchers.

 

Developers such as Bengaluru-based Bagmane and Pune-based Panchshil Realty are exploring office Reit options, with Panchshil in talks with US investment manager Blackstone.

 

“Institutionalisation of the office sector through Reits has gained strong traction in recent years, and the trend will likely continue in the coming years. Over 133 million square feet (msf) of Grade A office space in India is currently listed under Reits — a sharp rise from 50 msf five years ago,” said Badal Yagnik, chief executive officer (CEO) of Colliers India.

 

Reit penetration — a key marker of institutionalisation — is expected to climb to 25–30 per cent by 2030, up from the current 16 per cent.

 

Demand from multinational tenants, especially global capability centres, is further accelerating this shift. “Corporates prefer institutional-quality landlords over smaller developers, which is why Reits will perform well in the long run. Rents are also rising by 4–5 per cent annually, benefiting Reits and institutional owners,” said Anshul Jain, CEO, India, Southeast Asia, and Asia-Pacific tenant representation, Cushman & Wakefield.

 

Anuj Puri, chairperson of Anarock, noted that of the 850 msf of Grade A office stock across the top seven Indian cities, nearly 520 msf is currently “Reit-worthy”.

 

Industry experts credit the move towards institutional landlords to greater transparency, professionalism, investor confidence, and the availability of well-managed, environmental, social, and governance (ESG)-compliant assets.

 

“When companies sign long-term leases, they help create organised, professionally managed office spaces. This includes planning building improvements and offering flexible office options across cities. As a result, India’s office stock is becoming more attractive to global investors and seen as reliable, high-quality business space,” said Shabala Shinde, partner and real estate industry leader at Grant Thornton Bharat.

 

Early bets by private equity firms such as Blackstone (with Embassy, Mindspace, and now KRT), Brookfield, and pension funds laid the foundation for this institutionalisation.

 

“Sovereign and pension capital demonstrated long-term confidence with GIC’s stake in DLF Cyber City Developers and Canada Pension Plan Investment Board’s ventures with RMZ and Phoenix Mills. These moves professionalised governance, created stabilised income portfolios, and proved that Indian office assets can deliver global-grade returns — paving the way for Reits’ success,” Shinde added.

 

Institutional investments in the office segment stood at $2,338.9 million in 2024, compared to $3,022.5 million in 2023 and $1,978.2 million in 2022.

 

The trend is set to continue. Brookfield Properties Reit CEO Alok Aggrawal said: “Institutionalisation is the way forward. In the US, 98 per cent of real estate is listed. More developers will launch Reits and scale up. Regulators have also introduced small and medium Reits, allowing developers unable to float large Reits to tap into capital markets. This is a very effective growth route.”

 

Since their debut, Reits have attracted investors with stable income and growing office demand. Public Reit traded volumes jumped 399.54 per cent between 2022-23 and 2024-25 to 1.63 billion units, according to Icra. Traded value rose 177.78 per cent to ₹31,206 crore during the same period, reflecting growing investor confidence.

 

However, challenges remain. Limited quality supply, regulatory delays, and leasing uncertainties could slow institutionalisation. “Infrastructure gaps and policy changes may also deter investors. Accelerating ESG adoption is crucial to sustain global confidence and growth,” said Ramesh Nair, managing director and CEO, Mindspace Reit.