How Embassy Office Parks REIT Is A Hope For Cash-Strapped Indian Real Estate?

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    India’s first Real Estate Investment Trust saw a successful launch last week. As per the stock exchange data, the IPO of Embassy Office Parks REIT was fully subscribed on Wednesday, the last day of the three-day initial share sale.

    Embassy Office Parks is a joint venture between Embassy Group and private equity firm Blackstone Group.  The REIT was reportedly oversubscribed on Wednesday after the issue of up to 158 million units at a price of Rs 300 per unit aggregating up to Rs 4,750 crore.

    The initial success of the REIT IPO launch has sent a wave of excitement and hope in the Indian real estate sector. The experts are eyeing the oversubscriptions as a sign of consumer as well as retail investor’s confidence in the commercial real estate segment.

    The positive response to the REIT is expected to help build further confidence amongst global investors and attract them to consider India as an investment destination just like Singapore and Hong Kong.

    “The listing of India’s first REITs was one of the most awaited events for the real estate sector as it has taken over a decade and half to come to fruition,” Business Standard quoted Shishir Baijal, Chairman and MD, Knight Frank India, as saying. “The over subscription of REITs is therefore a very encouraging sign for the real estate sector at large and specially for the commercial segment.”

    These are the several ways in which REITs can be the game changer in commercial real estate:

    • REITs are likely to fuel demand for office spaces from sectors like logistics, manufacturing and consumer goods, besides IT, IT-enabled services and the
    • Markets like Bangalore and Chennai can gain further traction owing to fair pricing and growth of IT companies.
    • REIT may ease the capital stress to some extent.
    • It can make commercial real estate an a better investment platform, a much more beneficial prospect for the long run.
    • While the office sector is expected to dominate REIT listings initially, it is also expected to touch retail and logistics sector in the long-run, thereby opening up avenues for the real estate sector at large.

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