Indian REITs Association Applauds SEZ Rules Amendment
The Indian REITs Association (IRA), formed under the supervision of the Securities and Exchange Board of India (SEBI) and the Ministry of Finance, expresses its appreciation for the recent government amendment allowing the segregation of a portion of the constructed area within a Special Economic Zone (SEZ) unit for non-processing purposes. This regulatory update enables the conversion of processing to non-processing areas on a partial and floor-wise basis, representing a significant amendment to the SEZ Rules of 2006.
Currently, the SEZ portfolios within REITs boast an occupancy rate of approximately 80%. The recent amendment is anticipated to raise occupancy levels, particularly in Grade A Business Parks. Additionally, it allows for the use of non-processing areas within these SEZs to set up businesses in the IT/ITeS sector, giving a boost to office demand. This strategic initiative not only brings together businesses serving both export and domestic markets but also contributes to overall 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 Gross Assets Under Management (AUM) of Rs 1.2 lakh crores, a market capitalization exceeding Rs 80,000 crores, and an extensive portfolio comprising 112 million square feet of Grade A office and retail spaces nationwide, the trajectory of REITs in India has been remarkable since the inception of the first REIT listing in 2019. The cumulative distributions by Indian REITs have surpassed Rs 14,300 crores since 2019, outperforming the combined dividends distributed by real estate companies constituting the entire Nifty Realty Index. The founding members of the IRA include Brookfield India Real Estate Trust (BIRET), Embassy REIT, Mindspace Business Parks REIT, and Nexus Select Trust.
