homevideos Newspersonal finance NewsREITs underperformed on back of rising interest rates, WFH & vacancies in property after COVID
REITs underperformed on back of rising interest rates, WFH & vacancies in property after COVID
While speaking to CNBC-TV18, Amit Bhagat, CEO & MD at ASK Property Fund said the most important and the most critical reason why REITs has not been performing is because of the increase in interest rates. He mentioned that REITs could stabilise if interest rate hikes slow down and investors will have to wait for declining interest rates regime.
Real Estate Investment Trusts (REITs) is a company that owns and operates income-producing real estate and owns many types of commercial properties or real estate offices. Simply put, it resembles a mutual fund with real estate as the underlying assets. They invest money in completed and revenue-generating assets and developmental properties, mortgage-backed securities, corporate debt of the real estate sector.
However, this has been an asset class that has underperformed in the last one year.
While speaking to CNBC-TV18, Amit Bhagat, CEO & MD at ASK Property Fund said the most important and the most critical reason why REITs has not been performing is because of the increase in interest rates.
Bhagat said, “When interest rates go up, the value of the REIT is subdued, when interest rates go down, the value of the REIT goes up. So, the interest rate has been one of the biggest reasons for REITs not performing to the expectation of the investor.”
He added, “Secondly COVID and aftermath if you look at it, vacancies have slightly gone up especially in these special economic zones. Today the vacancies are in the range of 15 percent approximately and that is because of the special economic zones, work-from-home, hybrid model which is continuing and the biggest reason is the interest rates. Because of all these reasons REITs have not performed to the expectation of the investors.”
Also Read: Equity inflows stand at Rs 7,280 crore in December — SIP contributions again hit record high
Bhagat mentioned that REITs could stabilise if interest rate hikes slow down and investors will have to wait for declining interest rates regime.
Watch video for more.
First Published: Jan 10, 2023 7:36 PM IST
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
Andhra Pradesh Lok Sabha elections: All about Congress candidates
May 8, 2024 2:11 PM
Finance Minister calls Sam Pitroda 'racist' — here's the full statement and reactions from BJP leaders
May 8, 2024 1:28 PM
PM Modi's 'Apni Kashi' set for massive 5km, 4-hour-long road show on May 13
May 8, 2024 11:25 AM