Despite this growth being accompanied by higher leverage levels, Crisil Ratings expects the credit profiles of InvITs to remain stable, thanks to structural safeguards, high-quality assets, and predictable cash flows.

According to Crisil’s analysis, asset acquisition remains central to InvIT expansion, considering the finite life and yield constraints of infrastructure assets. Nearly ₹1.7–1.8 lakh crore worth of new assets are expected to be added by FY27, slightly lower than the ₹2 lakh crore added in the last two years.

Roads to Dominate, Renewables and Warehousing Lag

The road sector is expected to contribute approximately 80% of the incremental AUM, consistent with past trends. While renewables, power transmission, and warehousing will add to the portfolio, their contribution is expected to remain modest. This is due to high leverage of underlying assets, strong off-platform capital access, or limited availability of mature operational assets.

“Mature trusts acquiring assets are expected to form 80–85% of the incremental AUM over two fiscals, up from ~65% in the previous period,” said Manish Gupta, Deputy Chief Ratings Officer, Crisil Ratings.
“Acquisitions generally bring in higher debt, pushing up the leverage of InvITs.”

For instance, InvITs with a 2–5 year operating track record have seen leverage rise from 43% in FY23 to 47% in FY25, and this is expected to rise to ~50% by FY27.

Stable Credit Profiles Despite Rising Debt

Rising debt levels are being counterbalanced by the strong, predictable cash flows from long-life assets. In fact, credit stability is further anchored by asset diversification and low-risk additions, such as hybrid annuity model (HAM) roads and transmission lines, which allow InvITs to carry higher leverage without deteriorating credit quality.

“Even though DSCR has slightly contracted to ~1.7x from ~1.8x in FY23 due to increased leverage, it remains healthy,” noted Anand Kulkarni, Director, Crisil Ratings.
“Regulatory checks such as the need for six consecutive distributions before raising leverage beyond 49%, and caps on under-construction assets, help maintain balance.”

Back-ended Repayments & Regulatory Guardrails

Many InvITs are opting for back-ended debt repayment structures, capitalising on the long life of infrastructure assets to optimise distributions. However, experts caution that gradual amortisation of debt remains vital to manage credit risk effectively over time.

As InvITs grow in scale, complexity, and debt exposure, capital structure management will remain a key focus, even as the sector outlook remains stable.

Also Read: Infrastructure upgrade to fuel realty in MMR

The post Mature InvITs to Drive AUM Past ₹8 Lakh Crore by FY27 Despite Rising Leverage appeared first on Square Feat India.

Key Highlights

What’s Driving the Surge?

Global Capability Centres (GCCs)

• Contributing 30–40% to annual net leasing.
• Benefiting from India’s skilled talent pool and cost competitiveness.

BFSI Sector

• Expected to see double-digit net leasing growth.
• Driven by robust credit expansion, rising AUMs, and hiring.

Flex Operators

• Expanding agile, hybrid, and cost-effective workspace models.
• Targeting companies looking for flexible, low-commitment real estate.

“India’s commercial office market is entering a steady, growth-driven phase after its pandemic recovery,” says Gautam Shahi, Director, CRISIL Ratings.

Sectoral Trends: Winners & Laggards

• BFSI and Flex: Driving major growth in net leasing.
• IT/ITeS: Moderate growth of 5–6%, led mainly by GCCs; domestic IT demand remains subdued.
• Pune Micro-market: May face oversupply-driven vacancy uptick.
• Southern Cities (Bengaluru, Hyderabad, Chennai): Steady vacancy despite high supply.
• NCR & MMR: Vacancy to fall by 200–250 bps due to strong demand.

CRISIL’s Take

“Declining vacancy levels, contracted rent escalations, and recent rate cuts by the RBI will boost cash flows. Developers maintaining prudent leverage will see stable credit profiles,” says Snehil Shukla, Associate Director, CRISIL Ratings.

Expert Comment

Industry Viewpoint
“Net leasing breaching 50 msf is a major confidence boost for the commercial real estate sector. GCCs continue to anchor demand, and flex players are redefining how occupiers approach office space. However, supply needs to be carefully managed to prevent micro-market imbalances.”
— Ravi Mehra, MD, South India Commercial Realty Forum

Monitorables Ahead

• Global economic headwinds or geopolitical tensions impacting GCC leasing.
• Over-leveraging by smaller developers.
• Unchecked supply in slower micro-markets (e.g., Pune).

Outlook

With steady demand, improving cash flows, and stable leverage, the sector is set for credit profile improvement and long-term sustainability—a positive sign for investors, lenders, and developers alike.

Also Read: Residential Sales to Maintain Steady 10–12% Growth Path: CRISIL Ratings

The post Net Office Leasing in India to Cross 50 Million sq ft in FY26 appeared first on Square Feat India.