India’s REITs remain resilient as 150 mn sq ft set to become eligible by 2031

New Delhi, Aug 20 (AHN) Indian REITs have remained resilient despite the ongoing geopolitical crisis, supported by long-term lease contracts, contracted rental income and a diversified tenant portfolio, a report said on Thursday.

The report from CareEdge Ratings said India’s REIT sector has substantial room to grow, with over 150 million sq. ft. of office space expected to become REIT-eligible by CY2031.

This could increase the sector’s asset value from approximately $33 billion to more than $50 billion, it forecasted.

Growth is likely to be supported by robust office demand, improved access to funding, and continued asset additions, while stable cash flows and prudent leverage strengthen the sector’s credit profile.

The ratings agency noted that office leasing remained strong despite the impact of the ongoing geopolitical crisis, with transactions reaching a record 29.9 million sq. ft. in Q1 2026, up 6 per cent year-on-year.

“While the geopolitical situation in West Asia remains a key monitorable, the near-term impact on the Indian real estate sector is expected to remain limited. Healthy demand, and stable leasing activity across commercial real estate should support the sector's overall performance,” said Rajashree Murkute, Senior Director, CareEdge Ratings.

As demand continued to outpace supply, vacancy declined over the period while rent escalation supported healthy rental income in the sector.

“Moving ahead the continued GCC expansion and India’s growing role in global supply chains are expected to support a positive medium-term outlook despite ongoing global uncertainty,” the report forecasted.

Six listed REITs have a combined GAV of nearly Rs 3.13 lakh crore and a market capitalisation of more than Rs 2 lakh crore as of May 2026.

Combined debt level increased to Rs 68,000 crore, largely for portfolio acquisitions and expansions. However, rental income growth of nearly 20 per cent CAGR kept leverage under control with Net Debt/EBITDA below 4.8 times and Net Debt/GAV below 30 per cent.

Grade A buildings accounted for the majority of the deals as GCCs were the main growth driver, contributing 48 per cent of total transactions, up from 44 per cent a year earlier, with Bengaluru recording the highest volume.

The report noted that flex space operators added further momentum in office leasing, with India’s flex stock at roughly 100 million sq. ft. in 2026.

Despite recent rent gains, Indian offices remain far cheaper than global hubs, keeping India attractive for occupiers.

Average occupancy across India’s listed office REITs climbed steadily from roughly 84 per cent in FY24 to 89 per cent in FY25, to about 92 per cent in FY26.

—AHN

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