[ecis2016.org]
The absence of a benchmark or an index in India to see changes in rents and assess the worthiness, especially over a period of time, of an office property had proved to be an obstacle for people hunting for the right deal as far as taking a commercial property on lease was concerned. But not any more. The Massachusetts of Institute of Technology (MIT) has joined hands with Mumbai-based firm Propstack to develop an index that will be India’s first for rentals of office property.
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With this index, India has joined the select group of countries to have such a tool for office rentals. This is also important from the point of view of bringing more transparency in the Indian commercial real estate market and provide data to the international audience which chose to stay away from India due to lack of sufficient data and transparency.
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Implication For REITs
This is an important development also in light of the fact that Real Estate Investment Trusts (REITs) are now becoming a reality in India and there will be higher demand for data and statistics for listing and returns calculation from commercial properties. A number of foreign REIT operators have already applied an got approval from SEBI for starting REITs and are likely to make use of this index.
The index has been developed for six India cities-Bangalore, National Capital Region, Mumbai, Pune, Hyderabad and Pune. The index for these cities has been developed based on data of past 12 years on rentals and their quarterly growth.
This index is of hep to companies and analysts for asset allocation process, research, performance measurement, and sometimes for investment also.
India’s property market, especially commercial real estate segment, has been seeing robust growth over the last few years because of improved macroeconomic factors. There is good GDP growth and a rising young labour force.
India Joins Ranks Of Matured Economies With This Index
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Such an index assumes greater significance in an emerging market country where rental markets are evolving rapidly and good quality empirical data is just beginning to become available. This index scores higher than data previously available on rental market history, which has been limited to mature economies.
This index developed by MIT and Propstack is based on actual rent contracts of only newly-signed leases and not on surveys of ‘asking rents’ or building operating income.
The index utilizes data provided by Propstack.com, a company that collects office lease agreements, among other data, from the major commercial real estate hubs of Mumbai, Pune, Bangalore, Chennai, NCR (National Capital Region, comprising of New Delhi, Noida and Gurgaon) and Hyderabad. The data collected by Propstack.com has elements like building name, the city and locality in which the building is located, the rent per square foot, the date and length of the lease, any lock-in period for which the tenant is obligated to pay rent and the size of the unit. Such detailed data has helped in putting together a comprehensive and reliable commercial property rent index.
Source: https://ecis2016.org/.
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Source: https://ecis2016.org
Category: Lifestyle
