Key Points

There will be a 25-30 per cent increase in REIT asset under management (AUM) in the coming years due to a wider range of asset classes and a steady stream of investable assets, said domestic investment bank SBI Capital Markets (SBICAPS) in its report.

Leasing for office spaces broke the previous record by 20 per cent in CY24, with rents increasing and vacancy decreasing. Momentum continues in CY25, with activity particularly strong in Bengaluru, Delhi-NCR, and Pune, according to the report by investment banking arm of State Bank of India (SBI).

GCC were the main demand source, with multinational firms using India for core activities rather than labour arbitrage. The report predicted 1.3 times growth for these facilities in the next few years. Flex spaces saw 43 per cent YoY growth in leasing in H1 CY25, recording the highest ever leasing in a six-month period ever.

"Formalisation of the sector, which started with RERA and IBC has reached a crescendo. These factors have increased the thirst for funds. Promoters have tapped into the QIP route aggressively in FY25 to raise equity," the report mentioned.

Alternate investment funds (AIFs) are increasingly involved in the high-risk, high-reward early stage of land purchase and construction finance.

Real estate was their largest investment sector in CY25, roughly double the next sector, the report said. With several regulatory actions in favour of institutional capital and sectoral cashflows stabilising, the trend of diverse fundraising (IPOs, AIFs, sovereign wealth funds etc.) will continue, the report added.

Commercial realty, especially offices, represent a high-growth segment where opportunities exist for every investor's risk-reward matrix, SBICAPS said. Regulatory ecosystem is conducive to widen the investor base and retail participation will increase as REIT AUM expands in the future.

- IANS