Globally, REIT has been a popular instrument for many yeas, but in India, it was introduced a few years ago to attract investment in the real estate sector by monetising rent-yielding assets. It helps unlock the massive value of real estate assets and enable retail participation.
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Many global investors are investing in the retail sector either by buying a stake in existing assets or through greenfield development platforms.
“The retail market seems to benefit from favourable demographics, rapid urbanisation, and rising consumption,” the consultant said.
The report noted that investors are expecting healthy returns in the long run, considering the growth potential.
“Investors are looking for quality Grade A assets by established developers having less vacancy. Investors prefer leased-based assets over strata-sold assets to ensure fair market rentals and timely returns,” it said.
The consultant also mentioned that investment in retail assets is not just limited to metros, as significant activities have been recorded in Tier 2 and Tier 3 cities as well.
“Additionally, investments by these big institutional players help developers to exit the project partially or fully, reduce their debt, and focus on other developments. A lot of foreign funds are willing to acquire quality retail assets yielding good rental income,” the report said.
Investors are either buying or creating portfolios considering future public exit via REITs.