India office Reits report higher FY25 income, leasing on strong GCC demand
Bengaluru: Driven by strong demand from global capability centres (GCCs) and improved occupancy, India's top office Reits – Embassy, Mindspace Business Parks, and Brookfield India– have posted higher FY25 net operating income and leasing, signalling a robust rebound from pandemic-induced downturn.
The recovery also benefited from increased rental values as businesses enforced return-to-office policies, catalyzing demand and higher occupancy.
Reits, or real estate investment trusts, have had their share of challenges in recent years, many of them pandemic-induced. But with the office market turning around, they are gaining more acceptance.
Embassy REIT, India's first publicly-listed Reit that owns and operates a 51.1 million sq. ft portfolio of 14 office parks, clocked 6.6 million sq. ft of leasing in FY25, 60% of which was accounted for by GCCs across sectors. GCCs are offshore centres owned by multinational companies to run back-end work like IT infrastructure, human resources, supply chain and sales management.
Read more:
Mid-market global capability centres tend to grow faster than larger peers, without burden of legacy issues: Nasscom
'FY2025 was a bumper year for Embassy REIT on multiple fronts. We exceeded our leasing guidance by 22%, recorded a 10% increase in both revenue and NOI (net operating income), and most importantly, delivered 8% growth in distribution. This momentum sets a solid foundation as we head into FY2026," said Ritwik Bhattacharjee, CEO, Embassy REIT.
Distribution refers to the payment of income, including dividends, by the Reit to its shareholders.
A Reit is a trust that owns a pool of income-generating commercial office assets, such as office parks and shopping malls, held in a special purpose vehicle (SPV). It generates revenue by leasing out these properties and collecting rent from tenants.
Sebi regulations require at least 80% of a Reit's assets to be completed and income-producing.
Ramesh Nair, managing director and CEO of Mindspace REIT, said the company has outperformed on all fronts in FY25.
It achieved its highest-ever annual gross leasing of 7.6 million sq. ft, with net asset value (NAV) up 10%, driven by rising rentals across micro-markets.
Buoyed by the FY25 performances, office Reits are aiming to clock faster growth in the current financial year.
'We expect FY26 to be a steady year in terms of leasing, and growth in NOI and distribution. The vacancy level in our portfolio is 7%, and we will continue to focus on increasing the retention rate with tenants," Nair said.
The turnaround in the Reit space comes at a time when gross leasing of commercial office space touched a historic high of 79 million sq. ft in 2024, as per property advisory CBRE India. The January-March period of 2025 saw 18 million sq. ft of gross leasing.
All the Reits are also in the process of denotifying spaces in special economic zones, which will lead to increased occupancy levels, as tenants earlier exited due to higher compliance norms and few tax benefits.
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Robust demand for office spaces to give occupancies a leg-up
Brookfield REIT, in an earnings presentation, said that with 2 million sq. ft of ongoing conversions and a robust leasing pipeline, it is well-placed for sustained growth this year. Mindspace REIT has also converted 2.2 million sq. ft, of which 1.2 million sq. ft has been leased.
As per the latest Indian Reits Association figures, the Indian Reit market oversees gross assets under management (AUM) of around
₹
1.52 trillion, with a market capitalization surpassing
₹
95,000 crore as of February.
Embassy REIT's Bhattacharjee said the company has guided to double-digit growth in both revenue and NOI, with distributions coming in at 10%.
Reits derive cash flows from owned commercial realty assets as rental income, most of which is distributed among unitholders. Hence, the total return offered by a Reit is measured as a mix of regular distribution and capital appreciation of the units of the trust.
Brookfield India REIT, which raised
₹
3,500 crore in December through a qualified institutional placement (QIP), said in an investor presentation that it is looking to pursue acquisitions this year to significantly expand its asset portfolio.
India has nearly 400 million sq. ft of Reit-worthy office space, setting the stage for future listings, as per analyst estimates, which will lead to the growth of the product.
In March, a Reit sponsored by Blackstone Group and Bengaluru developer Sattva Group filed draft papers with the market regulator for an initial public offering (IPO) to raise around
₹
7,000 crore.
With a portfolio of 30 Grade A office assets across 48 million sq. ft, it will be one of the largest Reits once listed.
Ram Chandnani, MD, advisory and transaction services, CBRE India, said that this year, the office market is poised to surpass the leasing levels of 2024.
'In 2025, GCCs are expected to account for nearly 35-40% of total office space absorption," he said.
Read more:
Sebi's big bet on REITs, InvITs—are we fixing what isn't broken?
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