India’s top seven cities — Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, NCR and Pune, hold nearly 526.3 million sq ft (msf) of REIT-worthy stock valued at nearly ₹4.50 lakh crore, as per a report by Chicago-based Vestian.

Nearly a third of these REIT-worthy stock or 171.2 msf valued at ₹1.35 lakh crore is in Bengaluru; followed by Hyderabad (21 per cent of the stock) which has a stock of 110.9 msf valued at ₹0.71 lakh crore. Other larger markets include NCR – stock at 78.3 msf or ₹0.63 lakh crore, Mumbai – stock at 70.3 msf or ₹1.14 lakh crore and Chennai – stock of 50.9 msf and valued at ₹0.35 lakh crore.

Hyderabad on top

According to the Vestian report, Hyderabad has the highest proportion of REIT-worthy stock, accounting for approximately 74 per cent of the city’s total office inventory; while Kolkata holds the lowest share at around 24 per cent. Majority of REIT-worthy assets are concentrated within the commercial hubs of these cities, driven by the presence of branded Grade-A office buildings in these prime locations, it adds.

Nearly 67 per cent of the total REIT-worthy stock in the country is green-certified. The Vestian report says green-certified buildings command a rental premium of 12 – 14 per cent over non-green buildings.

Currently, REITs are at a nascent stage in India compared to major global economies. There are four listed entities in the country covering an area of 125 msf, across the retail and office markets. “Despite producing better returns compared to the NIFTY Realty Index, the market capitalisation of REITs remains relatively low,” the report mentioned, adding that India has a market capitalisation of 13.7 per cent of the total listed real estate sector which is low compared to mature markets such as the USA (98.9 per cent), Australia (94.8 per cent), and UK (92.5 per cent).

According to Amal Mishra, Founder and CEO, UrbanVault, India’s economic expansion has driven a surge in demand for Grade A office spaces, especially for flexible and managed office spaces. But supply remains constrained. “Demand and absorption for Grade A offices are projected to grow steadily. And REITs currently hold a relatively small percentage of total Grade A office space. This presents a significant opportunity for REITs to expand their footprint, leveraging the rising demand for high-quality office spaces,” he said.

Real Estate – AIF

As per an ANAROCK report, the real estate sector has been one of the top beneficiaries of Alternative Investment Funds (AIFs); and till H1FY25 (since 2013), attracted ₹75,468 crore, accounting for 17 per cent of the ₹4,49,384 crore AIF investments across all sectors. In addition to AIFs, the sector raised ₹12,801 crore through Qualified Institutional Placements (QIPs) during the same period, representing another 17 per cent of total investments.

According to Kuldeep Jain, Founder and CEO of Build Capital, growing reliance on category-II AIFs show their role as investment vehicles — channelising significant capital on the industry. “This comprehensive approach not only facilitates project completion and delivery but also drives higher and secured returns for investors,” he said.

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