During the first three quarters of 2020, institutional investments in Indian real estate experienced a significant short-term pullback. As asset valuation and revenue stability became difficult, most investors remained cautious, resulting in a dramatic drop in the number of transactions. However, major portfolio transactions in the fourth quarter resulted in total investments of $5 billion in 2020, which is slightly less than the previous year. It’s worth noting that listed REITs received a strong response in the primary markets, opening up a new investment opportunity for retail and institutional investors.
Institutional investors should be able to develop asset portfolios or co-invest with existing platforms prior to the IPO by listing new REITs. REITs’ evolution in India has been a huge success, with all the three listed REITs being oversubscribed. Global investors seeking a steady yield and regular returns have been drawn to good sponsor consistency, track record, accountability, and the ability to produce consistent returns. Landlords with income-producing core office assets are forming strategies to sell their properties to REITs. REIT asset acquisitions would increase as a result of a clause in the Union Budget 2021-22 that allows for low-cost debt financing from international portfolio investors. Due to stable rental yields and income visibility, office assets are expected to be the preferred choice.