Mumbai can generate maximum rental income for REITs by 2019, says report of Cushman & Wakefield India
Real Estate in Mumbai
It is expected that the total estimate of rental income potential for Grade A commercial properties in top eight cities of India will be about Rs. 51,800 crore or USD 7.9 billion by the end f 2019, as per the reports of Cushman & Wakefield, a global real estate consultancy. However; the title of report is “Real Estate Investment Trusts (REITs): An Opportunity for Investors and Developers” and it was released on last Thursday.
It is expected that the upcoming supply of Grade A office properties of 160 million sq ft will add Rs 16,300 crore or USD 2.5 billion in the rental income between year 2016 and 2019. However; according to report of Cushman & Wakefield India, “The total estimated rental income between years 2015 and 2019 with existing inventory of Grade A office space will provide an opportunity to the REITs to generate the estimated rental income of about Rs 35,500 crore or USD 5.4 billion.
As per the report, it will provide a wide range of options to occupiers with the option of taping in the larger pool of human resource. Apart from that the listing of REITs in India will encourage the mid size development firms as they will be able to consider this avenue because REITs will provide them incentive and exits to develop high-grade buildings. On the time of implementation REITs were offering slew advantages and benefits to the different stakeholders of real estate market such as; investors, real estate firms, real estate developers and rest of real estate industry. REITs can invest in commercial properties in different smaller cities which can help in the rapid development because smaller cities put the pressure on the top few cities in India.
According to Sanjay Dutt, the MD of Cushman & Wakefield India, “It is expected that over all REITs system will provide a level-playing field to increase transparency in the real estate sector”. Mumbai has the potential to generate highest rental income for REITs till next three to four years while in 2016, in Bengaluru will get the potential to generate rental income equal to Delhi and NCR through the supply of Grade A office spaces. Probably this is correct time when real estate developers should stretch their balance sheets. It is expected that in near future REITs will help the real estate developers to resolve their fund-raising issues and allow real estate developers with an option to exit projects.
