WHY INDIA OFFICE REALTY IS PEPPING UP AMIDST GLOBAL DOOM

MARQUEE GLOBAL NAMES RUSH TO INVEST IN COMMERCIAL REAL ESTATE AS ECONOMY PICKS UP.

- RUKMINI RAO

EARLY LAST YEAR, the late legendary investor and vice chairman of Berkshire Hathaway, Charlie Munger, warned about trouble in the U.S. real estate market in an interview with Financial Times. “We have a lot of troubled office buildings, a lot of troubled shopping centres, a lot of troubled other properties. There’s a lot of agony out there.” Late last year, as he had prophesied, Moody’s Analytics CRE Q4 2023 preliminary trend report said office vacancy in U.S. had risen to a record 19.6%. “Despite increasingly optimistic consensus on likelihood of a macroeconomic soft landing along with positive news from the labour market, the permanence of dynamic hybrid models has muted office demand, making 2023 the most downbeat since the great financial crisis,” says the report.

In contrast, India’s office space has been showing robust growth after Covid with net absorption in top seven office markets touching nearly 42 million sq. ft. in 2023, the second-highest ever (peak was in 2019). Institutional investment into Indian real estate was around $5.8 billion. Over half went into office spaces. There has been huge traction in listing of real estate investment trusts (REITs) and deal action in the secondary market. The latest being global private equity giant Blackstone, a co-sponsor of India’s first REIT by Embassy Group, offloading its remaining 23.59% stake for over $830 million, according to estimates. Even after the sale, foreign portfolio investors own 40% in Embassy’s REIT portfolio, up from 26.85% in November 2023, showing foreign interest in India’s office assets.