Real estate developers building commercial properties are shifting gears in light of recent policy developments. They are now focusing on leasing their commercial properties instead of selling them on an outright basis. With the likely launch of real estate investment trusts (REITs) next year, developers now have the option of monetizing their commercial assets through lease rental discounting (LRDs).
REITs pool capital from investors to purchase and manage income-yielding real estate assets or mortgage loans and can be traded on major stock exchanges like normal stocks. REITs are similar to mutual funds and allow a large number of small investors to invest in real estate. While investors get a chance to participate in commercial real estate’s growth, developers get much-needed liquidity through a new source of capital.
REITs also offer developers the option of better control and valuation over a period of time. Developers who would earlier opt for rental discounting are now building their own portfolio that can be listed under a REIT. On the other hand, builders keen on strata selling are now holding on to their commercial assets due to the prospect of a better yield of 7-8 percent with REITs.
Indian real estate and the commercial real estate (CRE) market are attracting the attention of foreign investorsand domestic institutional investors who are infusing more funds into the sector. In fact, the total investment in the real estate sector crossed Rs. 16,000 crore in the first six months of 2017, the highest ever for the first half in any year. Major foreign investors backing India’s realty story include Canadian Pension Plan Investment Board (CPPIB), Caisse de Depot et Placement du Quebec, Brookfield Asset Management, Singapore’s sovereign wealth fund GIC and the Blackstone Group.
All eyes are on the launch of the first REIT slated for next year and its success is likely to decide the future of this market in India. Listing of CRE portfolios under the REITs would act like a booster shot for the sector providing liquidity option to investors in the future. Experts estimate that India’s real estate market will go from strength to strength with foreign investments increasing to $10 billion by 2020.
The retail real estate market in India is as vibrant as ever with popular micro markets commanding high rentals and receiving high footfalls. The majority of expensive micro-markets are located in Delhi-NCR and Mumbai and continue to witness strong demand from retailers. Here’s a snapshot of the top five expensive retail micro markets in the country:
Continue reading “Top 5 Expensive Retail Micro-Markets in India”
Regulatory reforms and conducive investment climate have catapulted Indian real estate on to the global stage. Indian realty is catching the fancy of both foreign and domestic investors resulting in some big-ticket deals in the first half of this year. According to research reports, overall investments in Indian realty amounted to $ 1.99 billion during H1 2017. While the residential sector accounted 54 percent or $ 1.07 billion of total investments, commercial real estate accounted for 40 percent or $796 million and retail received 6 percent or $119 million of total real estate investments. Continue reading “Indian Commercial Realty Attracts $796 million Investments in H1 2017”