Mumbai Leads with 75 Million Sq Ft of SM REIT-Ready Stock
India's small and medium Real Estate Investment Trusts (SM REITs) market is projected to surpass $60 billion by 2026, according to a CBRE report released on September 5. The report identifies over 300 million square feet of completed commercial office space as potential SM REIT-ready stock, with an additional 50 million square feet expected by 2026.
Mumbai leads with the highest SM REIT-ready stock of approximately 75 million square feet as of June 2024 and is expected to add over 10 million square feet by 2026. Delhi-NCR follows with over 70 million square feet, Bengaluru with more than 50 million square feet, and Hyderabad with over 30 million square feet. CBRE estimates Delhi-NCR, Bengaluru, and Hyderabad could collectively add 36 million square feet of SM REIT-worthy stock by 2026.
Interest and Regulatory Reforms Drive Growth
CBRE notes a growing interest in SM REITs, building on the success of traditional REITs and InvITs, which have accumulated around ₹1.3 lakh crore in asset value over the past four years. In March 2024, SEBI established a regulatory framework for SM REITs, including fractional ownership platforms for assets valued between ₹50 crore and ₹500 crore. This allows investors to co-own assets through special purpose vehicles or private limited companies.
The Union Budget 2024-25 introduced tax reforms aligning with SM REITs, reducing the holding period for long-term capital gains, making them more attractive and accessible to investors.
“This alignment with recent tax reforms is a game-changer, making SM REITs more attractive and accessible, and driving increased participation in the market,” said Rami Kaushal, Managing Director, Consulting and Valuation Services, India, Middle East and Africa at CBRE.
With the favorable regulatory environment and growing interest, SM REITs are set to play a significant role in India's real estate investment landscape.
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