'Reits have permanently altered the face of the Indian office market'

The second covid wave is going to impact the recovery of many sectors, including real estate. The commercial real estate sector, especially grade A offices, has shown resilience over the past year with good occupancy and rent recovery levels. But the second wave may hit growth prospects as companies may go slow on expansion plans as work from home continues. This may impact the performance of real estate investment trusts (Reits), which invest the majority of their assets in rent-generating commercial real estate, at least in the short term. Michael Holland, CEO, Embassy Reit, spoke to Mint about the medium-term outlook of the sector and why investors should make Reits part of their portfolio. Embassy was the first Reit to be listed in India in April 2019. According to Value Research, it has delivered a price return of -2.8% CAGR since listing, as of 19 April. However, Holland said the return, including dividend and capital appreciation, is 24% since listing (absolute, not CAGR). Edited excerpts…