Knowledge Realty Trust Receives Bullish Call From Kotak On Healthy Office Space Demand
Kotak Institutional Equities has initiated coverage on Knowledge Realty Trust, calling it a key play on India’s recovering office market and assigning the REIT an ‘add’ rating with a target price of Rs 132.
Key Highlights of the Report
KRT is among the country’s largest office REITs, with a 46.4 million sq. ft portfolio spread across six cities. This includes 37.1 million sq. ft of completed assets with 92% committed occupancy, 1.2 million sq. ft under construction, and the remaining under future development. Kotak expects the REIT to clock a 14% CAGR in net operating income over FY2025–28E, driven by contractual rent escalation, better occupancy and new project buildouts.
Growth Drivers and Risks
The brokerage flagged slower-than-expected occupancy improvement as a key risk. Growth drivers cited include Rs 580 crore contractual rent escalations, leasing 3.2 mn sq. ft of vacant completed space, mark-to-market opportunity of 22%, and leasing 1.2 mn sq. ft of new Bengaluru development.
Kotak notes that India’s office stock has grown 35x over 25 years, reaching 887 mn sq. ft by March 2025, and is likely to cross 1 bn sq. ft by 2027E. Demand is expected to outpace new supply, tightening vacancy levels further. Global capability centres, in particular, are expected to remain the primary demand engine for Indian office space.
Key Downside Risks
The brokerage flagged key downside risks including decline in occupancy at leased assets, non-renewal or termination of leases, tenant concentration risks, and geographic dependence on select cities.
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Conclusion
Kotak sees Knowledge Realty Trust as a leveraged bet on India’s deepening office demand cycle, supported by GCC expansion, rental escalations and new leasing, but cautions that the recovery is still occupancy-sensitive. Shares of the company are trading 0.76% higher at Rs 125.27 apiece, as compared to a 0.14% decline in the BSE Sensex.
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