Vacancies of office space in IT-SEZs to reduce from govt's move to amend SEZ rules: REITs players
![Vacancies of office space in IT-SEZs to reduce from govt's move to amend SEZ rules: REITs players](https://devdiscourse.blob.core.windows.net/imagegallery/27_06_2019_14_54_35_7405713.png)
- Country:
- India
Indian REITs Association (IRA) on Monday hailed the government decision to allow demarcation of a part of the built-up area within an SEZ unit for non-processing uses, saying this will help in filing the vacant office spaces in SEZs across major cities.
Brookfield India Real Estate Trust (BIRET), Embassy Office Parks REIT, Mindspace Business Parks REIT, and Nexus Select Trust, which are the founding members of the IRA, feel that the move would boost growth in India's office REIT market.
The new regulations will allow partial and floor wise conversion of processing to non-processing areas, through a key amendment to SEZ Rules, 2006, the association said in a statement.
''The SEZ portfolios across REITs currently maintain an occupancy rate of around 80 per cent. The recent amendment is expected to elevate occupancy levels, specifically in Grade A Business Parks,'' it added.
The amendment also permits the utilisation of non-processing areas within these SEZs for establishing businesses operating in the IT/ITeS sector, providing further fillip to office demand, IRA said.
''The Indian REITs Association welcomes this positive development on the SEZ amendment. The growth of Grade A commercial office spaces rests on the demand the industry is witnessing from Global Captive Centres and domestic businesses, and this move is expected to boost demand,'' said founding members jointly.
The amendment strengthens India's attractiveness as an investment destination, the association said, adding that the move paves the way for continued growth of Indian Office REITs.
In India, there are four listed Real Estate Investment Trusts (REITs). Out of four, Embassy Office Parks REIT, Mindspace Business Parks REIT and Brookfield India Real Estate Trust are backed by office assets. Nexus Select Trust is India's first retail-asset-backed REIT.
According to Colliers India, since 2020, the vacancies across SEZs have been on the rise, and currently vacancies are about 20 per cent across the top 6 cities.
''Ever since direct tax benefits were taken away for new units in SEZs in March 2020, SEZs lost their appeal as there were no major benefits provided for the occupiers. Furthermore, they had to be compliant with SEZ requirements. This led to occupiers' exits and relocations to non-SEZ office spaces,'' the consultant said.
Owing to this, the share of leasing for SEZ spaces in the overall office leasing dropped from 22 per cent in 2019 to 14 per cent in 2022 and 7 per cent during January -September 2023.
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)
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- Indian
- Indian Office
- Nexus Select Trust
- Indian REITs Association
- the association
- Grade A Business Parks
- Brookfield India Real Estate Trust
- Global Captive Centres
- Real Estate Investment Trusts
- Embassy Office Parks REIT
- Mindspace Business Parks REIT
- Mindspace Business Parks
- India
- Grade A
- Brookfield India Real Estate Trust
- Colliers India
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