Boom time ahead for India real estate IPOs

India’s developers are heading back to the equity markets and the nation is set to see its first real estate investment trust this year.

Recent reports suggest Embassy Holdings and Blackstone Group are set to launch the first float of an Indian REIT in the third quarter. The new vehicle will own and manage business parks. Indian financial services firm IIFL Holdings Ltd has also registered REIT plans with the Securities and Exchange Board of India.

Meanwhile, Mumbai’s largest real estate player, Lodha Group, is reported to be planning a $1bn IPO, which would value it at $10bn. A number of smaller developers, including Lavasa Corporation, which announced a planned $125m IPO, have floats in the pipeline.

Growth in IPOs is a consequence of the greater institutionalisation of India’s real estate market, driven by increased foreign investment, the development of a REIT regime and the introduction of legislation to improve transparency.

A small number of major global real estate investors, including Blackstone, GIC Private, Canada Pension Plan Investment Board and Brookfield, have invested heavily in India, focusing mainly on the business parks and logistics sectors.

India’s REIT legislation has been more than a decade in the pipeline but observers say the REIT market could become one of the largest in the region. REITs were preceded this year by Infrastructure Investment Trusts, which have a similar regulatory framework.

The introduction of the Real Estate (Regulation and Development) Act in 2016 forced India’s real estate developers to become more transparent and accountable, which in turn has made the sector more attractive.

Further reading:
Savills India
APREA REITs

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Simon Smith