Prospective small & medium REITs market is set to surpass $60 billion by 2026: CBRE Report

The market size of potential Small and Medium Real Estate Investment Trusts in India is expected to cross $60 billion by 2026.

Property consultancy platform CBRE unveils that,Mumbai has witnessed the highest potential SM REIT-ready completed office stock of approximately 75 mn sq ft as of June 2024, with having nearly 10-plus million square feet of upcoming supply by 2026.

Delhi-NCR  saw a completed SM REIT-ready potential stock of over 70 mn sq ft, followed by Bengaluru with more than 50 million square feet and Hyderabad with 30-plus million square feet. 

The report also added that, the potential market for the SM REIT in India is over 300 million square feet of completed commercial office space, with an additional 50 mn sq ft expected to be completed by 2026. There is an emerging growth of interest in SM REITs.

The CBRE report said, the total number of commercial space in India touches 800 mn sq ft,in this 88 mn sq ft is REIT-listed office.

Particularly, taking everything into account Delhi-NCR, Bengaluru and Hyderabad could add an additional supply of potential SM REIT-worthy stock of approximately 36 mn sq ft by 2026.

The report highlights that SM REITs show significant potential, building on the success of traditional REITs and InvITs, which have collectively amassed ₹1.3 lakh crore in asset value over the past four years, according to the Reserve Bank of India.

According to report, Fractional Ownership allows individual investors to co-own commercial or residential assets as an alternative investment. They can also acquire properties by special purpose vehicles or through private limited companies.

In March 2024, the Securities and Exchange Board of India (SEBI) introduced a regulatory framework for small and medium real estate investment trusts (SM REITs) by amending the SEBI (Real Estate Investment Trusts) Regulations, 2014. This framework includes fractional ownership platforms as a subclass within the REIT regulations, covering assets valued between Rs.50 crore and Rs.500 crore.

Rami Kaushal, Managing Director, Consulting and Valuation Services, India, Middle East and Africa, CBRE, mentioned, “The alignment of SM REITs with recent tax reforms under the Union Budget 2024-25 is a game-changer for the investment landscape. Reducing the holding period for long-term capital gains will make SM REITs more attractive and accessible, driving increased participation and further institutionalizing the market.”