REIT-able office stock in the country to garner $35 bn of investments in near term
The Indian real estate sector will see cumulative institutional investments to the tune of $50 billion in 2019, which includes both foreign and domestic investments, thanks largely to the relaxation in investment norms relating to foreign direct investments (FDIs) and institutionalisation of investments in completed properties in the form of REITs, according to a JLL study.
India's commercial office segment has been the favourite asset class of institutional investors over the years. They have allocated 17.6 billion dollars in the form of direct investments during 2005-2019. JLL research indicates that 294 mn sq. ft. of office stock would be eligible for REIT. This would translate to an additional investment opportunity of $35 billion in the near term, the study said.
"Since the time the government opened the FDI in March 2005, the country has been able to provide a conducive environment for investors. As a result, we have witnessed reforms relating to ease investment regulations in affordable housing, infrastructure and construction sectors. Above all, like other developed countries, India not just regularised the real estate sector but also brought in a law to institutionalise investments in ready commercial assets through REIT rules," said Ramesh Nair, CEO & Country Head -- India, JLL.
As per JLL estimates, currently, there are approximately 325 to 330 co-working operators in the top seven cities in India. The study finds that the average size of transactions in the co-working segment increased from 37,000 square ft in 2017 to 52,000 sq ft in 2018 and further to 97,000 sq ft in the first half of 2019.
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