Office Sector Slowdown Impacts REITs
The end of a seven-year bull run in India’s office development is expected to squeeze rentals and hurt real estate investment trusts (REITs), putting top property investors in a spot. As rentals and office absorption rates fall, companies which own rent-yielding assets will find their revenues squee
Published -
May 11, 2020 1:51 PM
The end of a seven-year bull run in India’s office development is expected to squeeze rentals and hurt real estate investment trusts (REITs), putting top property investors in a spot. As rentals and office absorption rates fall, companies which own rent-yielding assets will find their revenues squeezed. With US and Europe hit hard by the pandemic outbreak, global companies, which contribute the bulk of the office space demand in India, may rework their plans, delaying leasing decisions and prompting rental renegotiations by new and existing occupiers. REITs are also likely to see lower yields due to deferment of new office leases and zero rent escalation in the near term, as the pandemic and lockdown curbs cripple companies worldwide. Slowing economic growth, weaker spending power of companies and an increase in work-from-home practices are some of the factors that will pressure rentals for commercial properties.
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