Real estate investment trust (REITs) and the commercial real estate market may face short-term pressures on account of novel coronavirus, or COVID-19. However, with India being an IT outsourcing destination globally, commercial real estate will continue to be a resilient, low risk and high return asset class, Sanjay Dutt, Joint Chairman, FICCI Real Estate Committee and Managing Director and CEO, Tata Realty and Infrastructure, stated.
Dutt was one of the expert at a webinar organised by Savills India, a leading international property consultant, and Federation of Indian Chambers of Commerce & Industry (FICCI), titled 'India REIT:A potential investment window'.
Savills India and FICCI also released a research report that provided an overview of REITs, its importance to retail investors and its growth potential in India.
REITs are relatively secure as 80 percent of the underlying assets are required to be operational and income-generating. Moreover, the diminishing returns in other investment avenues such as public providend fund (PPFs), fixed deposits (FDs), recurring deposits (RDs) and government bonds when compared to the superior pre-tax yields of REITs makes it a lucrative option.
Apart from capital gains, returns from REITs include dividend which are currently over 7 percent.
India’s sole REIT, launched in early 2019, has outperformed the market, not merely in normal circumstances but even during the ongoing pandemic.
By FY21 end or Q1 FY22, about 100 million sq ft of office space will come under REIT as two public issues are in pipeline, an expert said. Mindspace Business Park, owned by K Raheja Corp and Blackstone, is launching its Rs 4,500 crore REIT public issue on July 27.
The report sees commercial leasing activity forming the backbone of REITs in India.