The Indian REITs Association (‘IRA’), established under the guidance of the Securities and Exchange Board of India (SEBI) and Ministry of Finance, welcomes the latest amendment from the government permitting demarcation of a part of the built-up area within an SEZ unit for non-processing uses. The new regulations will allow partial and floor wise conversion of processing to non-processing areas, through a key amendment to SEZ Rules, 2006.
The SEZ portfolios across REITs currently maintain an occupancy rate of around 80%. The recent amendment is expected to elevate occupancy levels, specifically in Grade A Business Parks. It also permits the utilization of non-processing areas within these SEZs for establishing businesses operating in the IT/ITeS sector, providing further fillip to office demand. This strategic move not only consolidates businesses catering to both export and domestic markets, fuelling growth.
The founding members of the IRA in a joint statement said, “The Indian REITs Association welcomes this positive development on the SEZ amendment. The growth of Grade A commercial office spaces rests on the demand the industry is witnessing from Global Captive Centres and domestic businesses, and this move is expected to boost demand. We thank the Government for this amendment, that strengthens India’s attractiveness as an investment destination underpinned by the talent our country produces, and which the world’s best companies are looking to hire. This move paves the way for continued growth of Indian Office REITs.”
With a substantial ?1.2 lakh crores in gross Assets Under Management (AUM), a market capitalization exceeding ?80,000 crores, and an extensive portfolio encompassing 112 million square feet of Grade A office and retail spaces nationwide, the trajectory of REITs in India has been remarkable since the debut of the first REIT listing in 2019. The cumulative distributions by Indian REITs have surpassed ?14,300 crores since 2019, surpassing the combined dividends distributed by real estate companies constituting the entire Nifty Realty Index.
Brookfield India Real Estate Trust (BIRET), Embassy REIT, Mindspace Business Parks REIT, and Nexus Select Trust are the founding members of the IRA.