Realty cost may raise $25 billion via REITs in 3yrs

New Delhi: Real estate developers may raise more than $25 billion (nearly Rs 1.77 lakh crore) over the next three years by listing their rent-yielding commercial properties through the Real Estate Investment Trusts (REITs) route, according to realty consultant Anarock.

Earlier this year, global investment firm Blackstone and realty firm Embassy group launched India's first REIT to raise Rs 4,750 crore. Their joint venture firm Embassy Office Parks listed its rental assets on the exchanges.

"Commercial REITs may raise over $25 billion for Indian real estate over the next three years. This involves the listing of more than 150 million sft of rent-yielding Grade A office properties across top seven cities - covering 25-30 percent of the overall Grade A office space in these cities," said Shobhit Agarwal, MD & CEO, Anarock Capital.

Currently, the top seven cities -- Delhi-NCR, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad and Pune -- have close to 550 million sft Grade A office supply - of which 310-320 million sft is 'REITable' as of now, he added.

"The recent success of India's first listed REIT offers much-needed hope to the beleaguered real estate sector. The enthusiastic response to Embassy Office Parks' REIT launch - and its more-than-satisfactory performance - is priming investors for similar REIT opportunities, which in turn will open up more funding avenues for the sector," Agarwal said. Several large developers are keen to list their commercial assets, he added.

According to Anarock, Prestige Group is planning to list its first commercial REIT very soon and has already started segregating its residential, office, retail and hospitality businesses. It may also launch a retail REIT as and when the opportunity arises. Other players in the REIT fray are RMZ Corp, K Raheja Corp, Godrej Properties and Panchshil Realty.