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The first REIT (Real Estate Investment Trust) is likely to come to the Indian real estate sector for retail assets. For investors willing to monetize commercial spaces in shopping malls to yield revenue, this would be a great opportunity. Across the globe, REIT has been a popular instrument. Although India witnessed the introduction of REITs a few years back, the system wasn’t operational in full swing all these years.
The Indian stock exchange currently has three REITs listed on it. These include Brookfield India Real Estate Trust, Mindspace Business Parks REIT, and Embassy Office Parks REIT. These REITs operate on leased office spaces.
Since 2021, investments in the retail sector of real estate have been picking up pace. Investments worth $862 million have poured in so far in this sector. Besides, global investors are channelling their funds into the retail sector of Indian real estate. They either purchase a stake in the existing assets or choose greenfield development platforms for the same. Besides, the retail market turns out to be beneficial from the perspective of rapid urbanisation, favourable demographics, and rising consumption.
It is also a visible trend that real estate investments in retail assets are taking place in Tier 2 and 3 cities as well. So, this is not restricted only to the metro cities. Also, with key institutional players investing in real estate, developers can exit these projects fully or partially. They also have the opportunity to focus on other projects or reduce their debt. Several foreign funds are ready to acquire retail assets in India that are currently generating good rental income.
Experts believe that retail REITs are the next big thing in the real estate sector. Some of the prominent instances include the acquisition of Forum Malls by Nexus Malls as a part of deal between the Prestige Group and Blackstone. Besides, Lake Shore India Advisory has taken over Viviana Mall in Thane from the Ashwin Sheth Group. In India, REITs are relatively new. The pipeline has got some quality supplies, with new commercial complexes coming up all over the country. This is going to draw a higher amount of institutional investment.
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