Brookfield India REIT Swings to Six-Month Profit as Office Market Outperforms

Brookfield India Real Estate Trust reported a net profit of INR 625.9 million ($7.4 million) for the first half of 2024, reversing a year-earlier loss of INR 250.5 million, as Asia’s most populous country continues to lead all regional markets in office leasing activity.

The REIT sponsored by Canadian giant Brookfield achieved 1 million square feet (92,903 square metres) of gross leasing in the June-ended quarter, driven by a strong revival in demand in special economic zones, according to a financial update. BIRET’s adjusted net operating income grew 40 percent year-on-year as same-store NOI climbed 18 percent on the same basis.

More than 70 percent of third-quarter office demand in Asia Pacific came from India, distantly followed by China’s 17 percent, Colliers said Friday in a release. The consultancy said India recorded 17.3 million square feet of new leases in the period, with more than half of the Grade A space uptake coming from Bengaluru and Hyderabad.

“Driven by robust demand and strong occupier interest in premium spaces, average rentals in major office markets across India are in the growth phase, having risen by up to 10 percent annually in Q3 2024,” said Arpit Mehrotra, managing director for office services at Colliers India. “After seeing significant recovery gains, the Indian office market is set to enter an expansionary phase, wherein rents are expected to firm up further.”

Well-Timed Additions

BIRET has been adding assets to its portfolio to take advantage of the market upswing. In May, the trust announced its acquisition of a 50 percent interest in four commercial properties in Delhi and Gurugram from Bharti Enterprises for INR 60 billion.

The REIT assumed debt under the terms of the deal, and the equity consideration was fulfilled through a preferential allotment of BIRET units to Bharti at INR 300 per unit, making the Delhi-based conglomerate the second-largest unitholder in BIRET with an 8.53 percent stake.

Developed by Bharti’s real estate arm and co-owned with a Brookfield private fund, the properties include assets in the Aerocity mega-project at New Delhi’s international airport, as well as an office tower and a mall in Gurugram. The four assets comprise 3.3 million square feet in total.

BIRET’s 10-asset portfolio also includes half-stakes in Downtown Powai in Mumbai and Candor TechSpace Sector G1 in Gurugram after the trust acquired the two assets last year through a joint venture with Singapore’s GIC. The buys added 6.5 million square feet to the portfolio, which currently has 28.9 million square feet of total leasable area.

Supply Keeps Pace

With over 14.4 million square feet of new completions in the third quarter, new supply in India kept pace with demand and helped maintain vacancy levels at around 17 percent, Colliers said.

The positive economic growth outlook in most APAC countries is spurring an increased emphasis on “flight to quality” and ESG-aligned workspaces, said Vimal Nadar, senior director and head of research at Colliers India.

“This trend is particularly evident in India, where space uptake in premium office spaces is supported by occupiers’ appetite for best-in-class facilities and green certifications,” Nadar said. “In response, developers are actively upgrading and incorporating sustainable elements into newer developments.”

BIRET highlighted its own commitment to ESG by pointing to its third consecutive 5-star rating under the Netherlands-based GRESB’s sustainability assessment.

“In addition, four of our office parks totalling 15.4 million square feet are able to deliver 40 percent renewable power for their occupiers through the first of its kind agreement in India under the Inter State Transmission System bilateral arrangement,” said BIRET CEO and managing director Alok Aggarwal.

Also this week, the trust announced a plan to raise up to INR 35 billion through an issue of units to institutional investors to reduce debt and fund future growth.