Advertisement
The Gulf conflict has disrupted global supply chains, pushed...
REITs have changed the way commercial real estate is owned a...
What does it take to preserve a real estate legacy while bui...
What really powers the cloud? Behind every Google search, A...
A lot of what defines a home isn’t visible at handover. I...
Rating agency ICRA expects the share of green debt in the total borrowings of Indian Real Estate Investment Trusts (REITs) to climb to 15-17 per cent over the next three years, from around 12 per cent currently. Outstanding green borrowings among Indian REITs rose nearly sevenfold to approximately Rs 8,400 crore by March 2026, up from around Rs 1,200 crore in March 2022, doubling their share of total REIT debt from 6 per cent to 12 per cent over the four-year period. All five listed office REITs have achieved 5-star GRESB ratings, with green-certified penetration across their portfolios currently at 75-90 per cent, ICRA said.
Rating agency ICRA expects sustainable financing to assume a growing role in the funding strategies of Indian Real Estate Investment Trusts (REITs) over the medium term, projecting that the share of green debt in their overall borrowings will rise to 15-17 per cent over the next three years, supported by a high proportion of green-certified assets, strengthening ESG commitments, rising investor preference for sustainable investments and evolving regulatory frameworks.
According to ICRA, outstanding green borrowings among Indian REITs increased nearly sevenfold over four years, climbing to around Rs 8,400 crore as of March 2026 from approximately Rs 1,200 crore in March 2022. This doubled the share of green debt within REITs' total borrowings to about 12 per cent, from roughly 6 per cent at the start of the period.
Green financing has emerged as a key funding avenue for Indian REITs, the rating agency said. Of the approximately 163 million square feet of operational office assets held by REITs across the country's top seven office markets, Bengaluru, Chennai, Delhi-NCR, Hyderabad, the Mumbai Metropolitan Region, Pune and Kolkata, nearly 88 per cent, or around 143 million square feet, carries green certification. ICRA said this factor, combined with high-quality assets, strong tenant demand and stable occupancy levels, was supporting wider adoption of sustainable financing instruments across the sector.
Anupama Reddy, Vice President and Co-Group Head, Corporate Ratings, at ICRA, said Indian REITs had made significant progress in embedding sustainability into their long-term strategies. She noted that all five listed office REITs in the country had achieved 5-star ratings under the Global Real Estate Sustainability Benchmark (GRESB), and currently maintained green-certified penetration of 75-90 per cent across their portfolios, with a stated roadmap to raise this to 95-100 per cent over the medium term. Reddy said that as REITs continued to strengthen their sustainability credentials and expand their asset base, alongside rising investor appetite for ESG-linked investments and tightening disclosure requirements under the Securities and Exchange Board of India's green debt framework, green and sustainability-linked financing was expected to account for a growing share of REIT fund-raising going forward.
Indian REITs are also making measurable progress on other sustainability parameters, according to ICRA. Renewable energy currently accounts for 50-75 per cent of total power consumption across major REIT portfolios, with a long-term target of reaching 80-100 per cent. Recycled water accounts for between 37 and 49 per cent of overall water consumption, while between 95 and 100 per cent of waste generated across these portfolios is being diverted from landfills through recycling, composting and other resource-recovery initiatives.
Reddy said green-certified assets offered REITs multiple benefits, including lower operating expenses through improved energy and water efficiency, access to more diversified pools of capital, and a potential reduction in borrowing costs of between 5 and 15 basis points, along with stronger appeal among ESG-focused occupiers and investors. She said these factors could support higher occupancy, better tenant retention, stronger asset valuations and improved distributable cash flows over the long term. She added that the sector continued to demonstrate healthy operating performance overall, with occupancy levels across REIT portfolios exceeding 90 per cent and long lease tenures providing stability and visibility of future cash flows.
The press release did not specify a break-up of green borrowings by individual REIT, nor did it detail the specific mix of instruments, such as green bonds or sustainability-linked loans, through which this financing has predominantly been raised.
Source: ICRA
Advertisement
Facebook
Whatsapp
