India's office REITs see strong growth
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The global capability centres (GCCs) have contributed to almost 40%–60% of total leasing demand of India's office asset REITs compare to 28%–29% share in overall office leasing over the last four quarters up to Q1 2025, suggesting institutionally owned assets are preferred by many multinational occupiers India's office REIT stocks outperformed the Bombay Stock Exchange (BSE) Realty Index as in the 12-month up to June 2025, all three office REIT stocks delivered more than 15% capital appreciation.In contrast, the BSE Index experienced a correction.According to Cushman & Wakefield 's comparisons of the five largest REIT markets in Asia - Japan, Singapore, the Chinese mainland, Hong Kong, China and India, India's and China's Real Estate Investment Trust (REIT) markets showed robust growth in 2024 and are expected to continue to attract strong investor interest this year.The report revealed that the Chinese mainland REIT (C-REIT) market achieved a 85% increase in market value at the end of 2024, surpassing Hong Kong and becoming one of the region's top three REIT markets.'The unprecedented growth in the C-REIT market highlights its role as a critical driver of regional expansion, while India's performance emphasizes the growing strength of the country's institutional-grade real estate ,' said Catherine Chen, Director, Investor Client Intelligence & Insights, Asia Pacific at Cushman & Wakefield.In the same period, India's REIT market demonstrated robust growth in the office sector, driven by strong leasing demand for institutional-grade office space. Meanwhile, mature markets such as Japan, Singapore and Hong Kong moved toward stabilization, underlining their long-term resilience.The financial year 2024–2025 (ending March 2025) was a strong one for India's office REITs. The three office REITs collectively garnered leasing volumes of more than 16 million sq ft, which accounted for close to a fifth of the gross leasing volume (GLV) across the top eight cities in the country.'Multinational companies, especially GCCs have driven record leasing activity, which now accounts for a significant share of the nation's Grade A office stock . There has also been a growing preference among occupiers for premium grade assets, thereby significantly benefiting REITs. All three office REITs in India achieved occupancy rates close to 90% at the end of Q1 2025,' said Somy Thomas, Executive Managing Director, Valuations and Co- Head, Capital Markets, India at Cushman & Wakefield.Interestingly, the REIT assets have managed to attract a considerable share of demand coming from global capability centers (GCCs), which is an important growth driver for India's office markets.As of June 2025, the Indian REIT market comprised three office REITs and one retail REIT, collectively managing an operational portfolio of over 105 million sq. ft. While the number of listed REITs remained constant over the past year, their combined portfolio grew by more than 12%,raising the institutional share to approximately 13% of India's total Grade A office stock.Apart from this, more than 23 million sq ft of new office space is under construction or is planned by the existing office REITs, and it is expected this new supply to be added to the total REIT portfolio in the coming years.After nearly two years of underperformance, India's office REIT stocks outperformed the Bombay Stock Exchange (BSE) Realty Index significantly.A fourth office REIT in India is expected to make its listing debut by the end of the calendar year 2025. With 48 million sq ft of Pan-India Grade A office space (37 million sq ft operational and 11 million sq ft under development), Knowledge Realty Trust, which is backed by Blackstone and Sattva Developers is expected to become one of the largest real estate investment trusts listed in India.Cushman & Wakefield's data showed a total of 263 active REIT products in the Asia market as of December 31, 2024, with a combined market value of US$235.8 billion, reflecting a year-on-year decline of 6.5%. The contraction was primarily driven by declines in the U.S. dollar values of the Japan, Singapore and Hong Kong markets due to the widespread softening in REIT stock prices and unfavorableexchange rate movements.In the mature markets, Japanese REITs experienced significant gains in dividend yield, led by stock price moderation and asset performance improvements, particularly among hotel REITs, which benefited from inbound tourism.In Singapore, positive total returns were observed across multiple property types in 2024, including data centres at 9.7%, and healthcare at 6.9%. Elsewhere in Asia, Thailand demonstrated robust performance with a 41% increase in market value, marking it as the second-highest growth market in the region. The Philippines, Malaysia and India reported increases of 37%, 21% and 13% respectively, supported by their favourable economic fundamentals and attractive real estate sectors.
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