Steady rentals, new listings, and controlled leverage to keep REITs financially strong
India’s listed real estate investment trusts (REITs) are headed for a significant growth phase, with their gross asset value (GAV) expected to rise by 35–40% by the end of fiscal 2027, compared to levels in September 2025. The expansion will be driven by large-scale asset additions, improving occupancies, and the listing of a new REIT over the next 12–15 months, according to an analysis by Crisil Ratings.
Despite the sharp increase in asset size, REITs are expected to maintain stable credit profiles, supported by steady rental income growth, high operating margins, and prudent leverage management.
What Is Driving the Growth in REIT Asset Values?
Crisil’s analysis covers five listed REITs in India, which together owned 152 million square feet (msf) of commercial and retail leasable area as of September 2025. The total portfolio size is projected to expand to 190–195 msf by the end of FY27, marking a 25–30% increase in leasable area.
This growth will be powered by two key factors:
- Inorganic acquisitions of completed, income-generating assets
- Listing of a new REIT in FY27, expected to add 15–17 msf of leasable space
While regulations allow REITs to hold up to 20% of assets under development, under-construction properties currently account for just 5% of total GAV.
Why REITs Prefer Acquiring Ready Assets
REITs in India have largely favoured acquiring operational properties rather than developing new ones, and this trend is expected to continue.
According to Gautam Shahi, Director, Crisil Ratings, the inorganic route offers clear advantages.
“Under-construction assets currently account for only 5% of the total GAV of REITs. Though this is well below the regulatory limit, REITs are likely to prefer the inorganic route for growth as it helps mitigate risks associated with project implementation and asset ramp-up,” he said.
Shahi added that more than two-thirds of the 25 msf addition expected over the next 12–15 months will come from asset acquisitions, while the rest will be completed projects already under construction and slated for commissioning by FY27-end.
Occupancy Levels Rising Across Office and Retail Assets
Strong leasing demand has ensured that asset additions are accompanied by improving occupancies.
- Committed occupancy increased from 88.4% in September 2024
- To 91.5% in September 2025
- Expected to reach 92–93% by FY27-end
This demand is being driven by:
- Expansion of global capability centres (GCCs)
- Continued leasing by IT/ITeS and BFSI sectors
- Rapid growth of flexible workspace operators
Additionally, the denotification of special economic zones (SEZs) for office use has expanded leasing options for occupiers, further supporting occupancy levels.
Retail Assets Get a Boost from Consumption Growth
REIT-owned retail assets are also expected to benefit from improving macroeconomic conditions.
Consumption demand is likely to rise on the back of:
- Recent tax cuts
- Easing inflation
- Lower interest rates
These factors are expected to support higher footfalls and tenant demand across mall and high-street retail assets held by REITs.
Strong Cash Flows and Healthy Profit Margins
One of the key strengths of India’s REIT sector has been its operating efficiency.
REITs have consistently maintained Ebitda margins of around 70%, a level that is expected to continue through the current and next fiscal years. This translates into strong and predictable cash flows, supporting distributions to unitholders and debt servicing.
Leverage to Rise, but Remain Under Control
Debt levels of REITs are expected to increase over FY26 and FY27, mainly to fund asset acquisitions. However, this will be balanced by equity fundraising, especially among REITs with relatively higher leverage.
According to Snehil Shukla, Associate Director, Crisil Ratings:
“Overall leverage of REITs is expected to remain under control, supported by an improvement in cash flows, driven by rising occupancy and rentals, and the expected listing of the new REIT at lower leverage.”
As a result, the loan-to-value (LTV) ratio of REITs is expected to remain stable at 26–28% by FY27-end, compared with 25% as of September 2025.
Why LTV Matters for REIT Investors
LTV is a critical indicator for REITs, as their business model relies on:
- Long-term commercial assets
- Periodic refinancing of debt
- Stable rental income streams
Most REIT assets are located in prime office and retail micro-markets, diversified across cities, tenants, and sectors, and backed by reputable sponsors, which strengthens lender and investor confidence.
Risks to Watch Going Forward
While the outlook remains positive, Crisil cautions that some risks need close monitoring, including:
- Impact of global economic slowdown on office leasing
- Geopolitical uncertainties affecting multinational occupiers
- Any larger-than-expected debt-funded acquisitions by REITs
Bottom Line: Long-Term Outlook Remains Strong
Overall, India’s REIT sector appears well positioned for scalable, disciplined growth, combining asset expansion with stable cash flows and prudent leverage. For investors seeking exposure to commercial real estate with regular income and institutional governance, REITs are likely to remain an attractive proposition through FY27 and beyond.
Also Read: India REIT Market Crosses ₹1 Trillion Milestone, Eyes a Multi-Year Growth Cycle
