NEW DELHI: The demand for real estate investment trust (REIT) in India is rising by a combination of factors — strong hiring by Global Capability Centres (GCCs) alongside increasing return-to-office mandates said a report by Jefferies.
Corporates are increasingly opting for REIT, the multinational investment company said in its report.
Jefferies backed its argument with data. It said that the office vacancy levels declined by 1.5 percentage point in 2024, though they are still 5 percentage point above the 2019 lows. Net office absorption in 2024 was at a record high of 50 m square feet and outstripped supply by 10 per cent.
A benign interest rate outlook is conducive for REIT performance in the months ahead, Jefferies affirmed its bullishness.
“Rentals have also started rising, though barring few marquee properties…,” Jefferies said.
Indian office REITs have outperformed the property sector and the broader markets substantially in 2025, due to improved fundamentals and a return to 8-10 per cent DPU (distribution per unit) growth, after two flattish years.
The office REITs have outperformed the BSE Realty Index by 22-31 percentage points so far in 2025 (year-to-date), after two years of underperformance.
According to Jefferies, strong office demand, declining yields, and decent valuations have led to resilient REIT performance — despite the weak market action in the past few months.
“Valuations are still at long-term average NAV (net asset value) discounts. A potential rise in office rents on tightening supply and further decline in yields could drive upside surprises, as NAVs can potentially inflect higher,” said Jefferies.
REITs or real estate investment trusts can be described as a company that owns and operates real estate to generate income. Essentially, they lease properties and collect rent thereon, and the rent collected is later distributed among shareholders.
