Office Reits outperform BSE Realty Index amid 'heightened demand'

Global capability centres account for almost 29% of nationwide gross leasing volume

Office real estate investment trust (Reit) stocks did better than the BSE Realty Index in the 12 months up to June 2025, overcoming the underperformance they had clocked for almost two years. All three office Reit stocks delivered more than 15 per cent capital appreciation, according to a report by Cushman & Wakefield.

 

The BSE Index corrected in the same period. Reit stocks were helped by the strength of India’s office real estate market, which has seen “heightened demand” from global capability centres (GCCs), engineering and manufacturing, and financial sector firms. Customers preferring premium-grade assets has benefitted Reits, too, said the report.

 

GCCs accounted for 28-29 per cent of nationwide gross leasing volume on average over the last four quarters up to Q1 2025. Office Reit landlords were able to achieve a much higher share —between 40 per cent to 60 per cent of total leasing demand from GCC firms — rendering institutionally owned assets the preferred choice for many multinational occupiers. 

 

There are three office Reits in India — Mindspace Business Parks Reit, Brookfield India Reit, and Embassy Office Parks Reit — and one retail Reit: Nexus Select Trust. This is the lowest number of active Reits among Asian peers, which together have a total of 263 active Reits with a market value of $235.8 billion. Compared to market leaders Japan and Singapore, which together make up $158 billion of market value as of December 2024 — cornering more than 60 per cent of the Asian market — India's share stands at 4.6 per cent with a market value of $11 billion.

 

A fourth office Reit in India is expected to make its listing debut by this year’s end, the report said, pointing to Knowledge Realty Trust, which is backed by Blackstone and Sattva Developers. With 48 million square feet (msf) of pan-India grade A office space (37 msf operational and 11 msf under development), Knowledge Realty Trust is expected to become one of the largest real estate investment trusts listed in India. 

 

“India’s Reit market continues to carve a strong trajectory, with exceptional growth seen across the office sector. Multinational companies, especially GCCs, have driven record leasing activity, which now accounts for a significant share of the nation's grade A office stock,” said Somy Thomas, executive managing director, valuations and co-head, capital markets, India, at Cushman & Wakefield. “All three office Reits in India achieved occupancy rates close to 90 per cent at the end of Q1 2025.”

 

FY25 was a strong year for India’s office Reits, as they collectively garnered leasing volumes of more than 16 msf, which accounted for close to a fifth of the gross leasing volume (GLV) across the top eight cities in the country.

 

India, along with China and Thailand, is expected to continue to grow, bolstered by strong economic fundamentals and supportive regulatory frameworks, analysts at the firm said, adding that mature markets of Japan, Singapore and Hong Kong are expected to focus on enhancing operational efficiencies while grappling with the challenges posed by global monetary policy shifts.

 

Cushman & Wakefield’s report noted that data centre and hospitality Reits are expected to remain highly visible on investors’ radar, driven by AI advancements and recovery in the tourism sector, respectively. Additionally, M&A activity is likely to pick up as players seek scale and diversification to better weather market fluctuations.