Indian REITs remain resilient despite geopolitical uncertainty: CareEdge Ratings

Long-term leases, stable rental income and strong GCC demand support the sector; over 150 meter square feet of office space could become REIT-eligible by CY2031.

AHMEDABAD, 24 AUGUST: Indian REITs have remained resilient despite ongoing geopolitical uncertainty, supported by long-term leases, contracted rental income and diversified tenant portfolios, CareEdge Ratings said in a press release.

CareEdge Ratings sees significant growth potential for the REIT sector, with more than 150 meter square feet of office space expected to become REIT-eligible by CY2031. This could take the sector’s asset value from around $33 billion to over $50 billion. As of May 2026, the six listed REITs had a combined gross asset value of around Rs. 3.13 lakh crore and market capitalisation of more than Rs. 2 lakh crore. While combined debt rose to around Rs. 68,000 crore, rental income grew at nearly 20% CAGR, keeping leverage under control. Office leasing also remained strong, with transactions reaching a record 29.9 million sq ft in Q1 2026, up 6% year-on-year. GCCs accounted for 48% of transactions, compared with 44% a year earlier, with Bengaluru recording the highest volume.

Average occupancy across listed office REITs rose from around 84% in FY24 to 89% in FY25 and about 92% in FY26, the press release mentioned. Moreover, rental income increased by an average 20% between FY25 and FY26, driven by contractual rent escalations, lease renewals and healthy leasing activity.

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. 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. Occupancy is expected to remain above 90% in FY27, supported by stable rental income, leasing momentum and the contractual nature of lease agreements.

(Disclaimer: The information provided here is investment advice only. Investing in the markets is subject to risks and please consult your advisor before investing)

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