Reit penetration in office market can reach 25-30% by 2030: Colliers India

Colliers report highlights 371 mn sq ft of Grade A office stock in India holds REIT potential, led by Bengaluru and Hyderabad, with demand from GCCs and BFSI firms driving growth

From the current 16 per cent, India’s four listed office real estate investment trusts (Reits) are expected to cover 30 per cent of Grade A office space over the next five years, driven by rising demand from global capability centres (GCCs). 

 

The four Reits currently cover nearly 133 million square feet of Grade A office space, Colliers’ latest report, ‘REITs Unlocked: Accelerating India’s Real Estate Maturity’ said, while stressing that another 371 million square feet, around 46 per cent of existing Grade A stock, holds potential for future Reit listings.

 

The momentum is driven by new listings, broadening of occupier base and growing institutionalisation in the segment.

   

“Office Reits in India are at an early growth stage, with approximately 16 per cent of Grade A stock already listed on the equity markets. An additional 371 million square feet of office space can come under future Reits, much of which is concentrated in secondary business districts (SBDs) across the top seven markets,” said Badal Yagnik, chief executive officer, Colliers India.

 

Among the top seven cities, Bengaluru leads with 24 per cent of the additional Reit-able stock, followed by Hyderabad at 19 per cent. Existing Reits also have about 34 million square feet of under-construction supply, expected to become operational over the next 12-24 months.

 

Around 223 msf, or 60 per cent of additional Reit-able office stock, is concentrated in secondary business districts across India’s top seven cities. Bengaluru leads with 36 per cent, Hyderabad follows with 29 per cent, while 14 per cent of Grade A assets in CBDs hold Reit potential.

 

“Rising demand from global capability centres (GCCs) along with space uptake by technology & BFSI firms is driving occupancy levels. This in turn is expected to accelerate the growth of office Reits in India. For developers and investors, SBDs offer a significant opportunity to capitalise into these high-demand areas, unlocking value and driving long-term growth for their Reit portfolios,” added Yagnik.

 

Colliers highlighted that occupancy rates above 86 per cent reflect strong demand for premium office spaces.

 

Currently, 86 per cent of operational office portfolios under existing Reits are green-certified, aligning closely with global sustainability standards. In the coming years, Indian Reits aim to achieve 100 per cent green certification and raise renewable energy usage by 30-35 per cent.