GAV Of India's Reits Seen Growing Up To 40% By FY27 On Asset Additions: Crisil

(MENAFN- KNN India) New Delhi, Dec 26 (KNN) The gross asset value (GAV) of India's listed real estate investment trusts (REITs) is expected to increase by 35–40 per cent by the end of fiscal 2027 compared with September 2025, driven by asset additions and the listing of a new REIT, according to an analysis by Crisil Ratings.

Growth will also be supported by standard annual rental escalations and improving occupancy levels. Crisil said sustained growth in rental income, diversification of asset portfolios and controlled leverage are likely to keep REIT credit profiles stable over the medium term.

Portfolio Expansion Largely Inorganic

The analysis covered five listed REITs with a combined leasable area of 152 million square feet (msf) of commercial and retail space as of September 2025, along with a new REIT expected to be listed in fiscal 2027.

While regulations allow up to 20 per cent of REIT assets to be under development, under-construction assets currently account for only about 5 per cent of total GAV.

According to Gautam Shahi, Director, Crisil Ratings,“Under-construction assets currently account for only 5 per cent 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.”

“More than two-thirds of the 25 msf leasable area addition over the next 12-15 months is likely to be through the inorganic route, while the remaining would be under construction ones slated for commissioning by end of fiscal 2027,” he added.

The addition of a new REIT with an estimated 15–17 msf of space is expected to expand the overall REIT leasable area by 25–30 per cent to around 190–195 msf.

Occupancy and Demand Trends

Asset additions have been accompanied by improving occupancies. Committed occupancy across REIT portfolios rose from 88.4 per cent in September 2024 to 91.5 per cent in September 2025 and is projected to increase further to 92–93 per cent by the end of fiscal 2027.

Crisil attributed the expected improvement to sustained demand for office space from global capability centres, the banking and financial services sector, and flexible workspace operators. Demand is also likely to benefit from the denotification of special economic zones for office use.

On the retail side, consumption growth supported by recent tax cuts, easing inflation and lower interest rates is expected to aid leasing momentum.

Cash Flows and Leverage Outlook

REITs have maintained healthy Ebitda margins of around 70 per cent over the past few years, a level Crisil expects to be sustained in the current and next fiscal year, supporting strong operating cash flows.

While aggregate debt levels may rise in the near term due to funding requirements for asset acquisitions, equity raising-particularly by higher-leveraged REITs-is expected to partially offset this increase.

Snehil Shukla, Associate Director, Crisil Ratings, said“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 be under control at 26-28 per cent by the end of fiscal 2027, compared with 25 per cent as of September 2025.”

Risks to Watch

Crisil noted that LTV remains a key metric as REITs typically refinance debt to align with the long-term nature of commercial real estate assets. The agency also highlighted the advantages of portfolio diversification across locations, tenants and industries, and the presence of established sponsors.

However, it cautioned that the impact of geopolitical developments and a potential global economic slowdown on domestic leasing activity, as well as any larger-than-expected debt-funded acquisitions, will require close monitoring.

(KNN Bureau)

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