Blackstone, Sattva Group, and Panchshil Realty Set to Launch India's Fourth Commercial REIT in FY25

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The Blackstone Group, in partnership with Bengaluru's Sattva Group and Pune's Panchshil Realty, is gearing up to introduce India's fourth commercial Real Estate Investment Trust (REIT) in the fiscal year 2025, according to sources familiar with the matter. This proposed REIT is anticipated to become the second-largest commercial trust in South Asia, boasting a projected portfolio exceeding 40 million square feet.

The collaboration aims to submit the proposal to the market regulator by mid-FY25, signaling a significant development in India's real estate investment landscape. This initiative follows Blackstone's exit from Embassy REIT, India's first publicly listed REIT, in December.

The forthcoming REIT will include an estimated 1-1.5 million square feet of office space slated for development in early FY25. This endeavor underscores the extensive partnership between Blackstone and the Sattva Group, extending across various cities such as Bengaluru, Hyderabad, and Pune. Notably, the Sattva Group holds equal equity stakes with Blackstone in jointly managed commercial developments spanning approximately 33 million square feet between Bengaluru and Hyderabad.

Blackstone's robust portfolio, encompassing 45 million square feet across nine office parks and four office buildings in key Indian cities, underscores its formidable presence in the commercial real estate sector.

The launch of India's fourth commercial REIT is poised to redefine the country's real estate investment landscape, offering investors new opportunities while catalyzing growth in the commercial property segment.

Experts anticipate a resurgence in the office real estate market in 2024, which bodes well for REITs. As these investment vehicles expand into diverse asset classes such as industrial properties, data centers, hotels, healthcare, and education, they are poised for rapid development. The positive outlook for REITs is further supported by projections of declining interest rates, which are expected to bolster REIT prices and attract investors seeking stable income opportunities.

In 2023, India witnessed significant leasing activity in the office real estate sector, with a gross absorption of 61.6 million square feet, marking a 7 percent increase compared to the previous year.

The impending launch of India's fourth commercial REIT signals a promising era for real estate investments, offering investors a diversified and potentially lucrative avenue to participate in the country's evolving commercial property market.