GCC boom fuels India’s REIT growth story; here’s what it means for investors

As India emerges as a hub for Global Capability Centres (GCCs), a silent revolution is taking shape in the country’s commercial real estate market. The surge in GCCs is not only creating high-quality jobs but also opening a wealth of opportunities for Real Estate Investment Trust (REIT) investors. At present, there are more than 1,700 GCCs in the country.

While sharing his views on the sidelines of The Indian REITs Association (IRA) and Bharat InvITs Association (BIA) product awareness programme in New Delhi, Alok Aggarwal, Managing Director and CEO, Brookfield India Real Estate Trust and Chairman of the Indian REITs Association, said that the rapid expansion of GCCs is directly linked to the growth of REITs in India.

He further added that the number of GCCs in India is expected to nearly double to 3,000 in the next 5-7 years. The country has already seen a record 90 million sq. ft. of office space absorption, the highest ever. Alongside GCCs, technology firms, Indian corporates and banks are also taking up space, boosting demand for premium office properties.

In general, REITs are investment vehicles that own or operate income-generating real estate, enabling investors to earn a share of the income produced without directly purchasing the properties. The five publicly listed REITs in India are Brookfield India Real Estate Trust, Embassy Office Parks REIT, Mindspace Business Parks REIT, Nexus Select Trust, and Knowledge Realty Trust.

“GCCs account for nearly 35-40% of total office space absorption in India. They demand high-quality, tech-enabled workplaces and are willing to pay for it. This drives developers to build premium offices, and REITs benefit directly from this demand,” says Aggarwal.

Commercial real estate occupancies have climbed from the early 80% range to the late 80s in the past 12-18 months, thanks largely to GCC-led demand. “Wherever GCCs take space, they bring innovation and stability to the market. More absorption means more growth for REITs, which in turn benefits investors,” he adds, adding that the momentum is unlikely to fade anytime soon.

Beyond financial returns, REITs are contributing to India’s employment story. “If 90 million sq. ft. is being leased, and we assume 100 sq. ft. per employee, that translates to nearly 9 lakh new white-collar jobs in sectors like engineering, technology and management,” Aggarwal told Business Today.

But the ripple effect doesn’t stop there. Each white-collar job spurs 2.5-3 times more blue-collar opportunities in areas like security, property management and facility maintenance, multiplying the socio-economic impact of India’s commercial real estate growth.

When asked why one should invest in REITs? Aggarwal was clear: “REITs must be a part of every investor’s portfolio.” Unlike equities, REITs offer stability and consistent distributions, which grow annually. They are also well-suited for investors seeking passive income, with predictable yields and portfolio diversification benefits.

He points out that returns of 12-14% can be expected over the long term, combining both distributions and capital appreciation.

Like all investments, REITs are not risk-free. The pandemic showed how occupancies can be disrupted when offices shut down. Inflation and rising interest rates can also weigh on distributions. “But regulators have significantly de-risked the product. REITs are mandated to distribute 90% of their income, ensuring transparency and
steady investor payouts,” says Aggarwal.

While sharing his views on how to select the right REIT, Aggarwal suggested due diligence on a few key aspects: management track record and experience, quality of tenants and assets, net asset value (NAV) trends and consistency of distributions.

“All REITs in India are fundamentally strong, but these factors help investors make an informed choice,” he said.

While office REITs dominate the current landscape, Aggarwal is optimistic about new segments. “India is a consumption-driven market. Data centre REITs and logistics REITs are on the horizon, though they will take some time to materialise,” he said.

At present, five listed REITs command a combined market capitalisation of around Rs. 1.5 lakh crore, reflecting growing confidence in the asset class and its ability to deliver stable, predictable distributions.