HNIs Resorting To REITs, Fund Houses To Invest In Booming Office Real Estate

To seek a lion’s share in  India’s booming commercial office real estate, ultra-rich individuals are pulling up their socks. The HNIs are not only buying office space in large commercial complexes directly from developers, but they are now also investing through fund houses.

As the real estate sector gets more organized with real estate investment trusts (REIT) and large funds coming into play, HNIs are leaving no stone unturned to get a good share in the commercial office real estate. While the traditional practice of buying spaces directly from developers is still in play, the HNIs now are resorting to new means.

HNIs and NRIs seem to have realized that instead of taking on the headache of directly buying, managing and maintaining the commercial property, they can participate through a REIT with a specialist asset manager.

In fact, Indiabulls Dual Advantage Commercial Assets Fund, an alternative investment fund, is in fundraising mode. The fund will raise around Rs. 1,500 crore, out of which Rs. 500 crore is expected to come from co-investors who are mainly HNIs.

With REIT, HNIs reportedly are hoping to enjoy relatively risk-free investments, similar to investing in mutual funds. Apart from the traditional office and retail spaces, HNIs are also opening to warehousing and student housing for the better yield.

The trend of increase in the share of HNIs in the commercial office real estate is quite evident.

Like, Bengaluru-based Prestige Estates Projects Ltd is launching a large office project in the city, where it plans to sell around 50% of the stock to HNI investors. The developers had stopped selling to investors in the past few years. However, owing to high demand from HNIs, the company plans to resume sales.

“There are a lot of inquiries for good quality office space,” Prestige chief executive officer (CEO) Venkat K. Narayana told Livemint. “We plan to resume selling to investors with this new project, which is more than a million sq. ft in size.”

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