NEW DELHI: According to Crisil Ratings, the gross asset value (GAV) of domestic real estate investment trusts (REITs) is projected to rise by 35-40% by the end of fiscal 2027, up from September 2025, driven by new asset additions and the introduction of another REIT.
Stable rental income growth, along with diversification and regulated leverage, will support steady credit profiles.
REITs generally grow their asset base either through the development of new projects—limited to 20% by regulations—or by acquiring existing operational assets.
Gautam Shahi, director of the firm, stated, “Currently, under-construction assets make up just 5% of total GAV for REITs. Although this is below the regulatory cap, REITs are expected to lean towards acquisitions to mitigate risks associated with project execution and asset ramp-up. Over the next 12-15 months, more than two-thirds of the planned addition of 25 million sq ft of leasable area will likely come through acquisitions, with the balance being new constructions set to be completed by the fiscal 2027 end. Together with the listing of a new REIT covering an estimated 15-17 million sq ft, the total leasable area for REITs is expected to grow by 25-30% to approximately 190-195 million sq ft.”
Strong asset additions have coincided with robust occupancy rates. The overall committed occupancy for REITs increased from 88.4% in September 2024 to 91.5% by September 2025, and is projected to reach 92-93% by the end of fiscal 2027.
Over the past few years, REITs have maintained a healthy profit margin of about 70%, expected to remain stable to yield strong cash flows in the current and next fiscal year.
Meanwhile, REIT debt is anticipated to rise in the current and following fiscal period, driven by asset acquisition funding needs. However, sustained equity raising by higher-leveraged REITs, consistent with historical trends, will balance this, according to the ratings agency.
Snehil Shukla, associate director at the firm, mentioned, “Overall leverage among REITs is expected to remain manageable, supported by improved cash flows from rising occupancy and rents, as well as the anticipated listing of the new REIT at a lower leverage level. Consequently, the loan-to-value (LTV) ratio for REITs is projected to remain stable at 26-28% by the end of fiscal 2027, up from 25% in September 2025.”
LTV remains a crucial metric, considering REITs typically refinance their debt, benefitting from the long-term nature of commercial properties. Additionally, REIT assets are strategically located and well-diversified across various locations, tenants, and industries, backed by reputable sponsors.
