Green Financing Could Fund Up to 17% of REIT Debt in Three Years
New Delhi | August 11, 2026: Green financing is becoming an increasingly important source of capital for India's real estate investment trusts (REITs), with its share of total REIT borrowings potentially rising to 15–17% over the next three years, according to ICRA.
The shift could have wider implications for India's commercial real estate market as REITs increasingly focus on energy-efficient buildings, sustainable operations and access to ESG-focused investors.
Green Borrowings Jump Sevenfold in Four Years
Indian REITs had around ₹8,400 crore of outstanding green borrowings as of March 2026, compared with approximately ₹1,200 crore in March 2022.
As a result, green debt's share of total REIT borrowings has doubled from 6% to around 12% during the same period.
ICRA expects this proportion to reach 15–17% within the next three years, indicating that sustainable financing could become a more mainstream funding route for listed REITs.
Why REITs Are Turning Towards Green Debt
ICRA expects sustainable financing to gain importance because of the growing number of green-certified assets held by REITs, stronger ESG commitments and increasing investor preference for sustainable investments.
Regulatory developments around green debt and sustainability disclosures are also expected to support the trend.
For REITs, access to green financing could provide another source of capital while helping them align their portfolios with changing investor and occupier expectations.
Nearly 88% of REIT Office Assets Are Green Certified
The sustainability trend is particularly visible in India's organised office market.
Across the top seven cities, REITs collectively hold around 163 million sq ft of operational office assets. Nearly 143 million sq ft, or about 88%, is already green certified.
The cities covered include Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai Metropolitan Region, Pune and Kolkata.
REITs Target Even Higher Green Certification
According to ICRA, all five listed office REITs have achieved 5-star GRESB ratings and currently have green-certified assets covering around 75–90% of their respective portfolios.
The sector has a roadmap to increase this penetration to around 95–100% over the medium term.
This could further expand the pool of properties eligible for sustainable financing.
Green Buildings Could Lower Property Operating Costs
For REITs, green certification is not only about meeting sustainability goals. It can also have a direct financial impact on property operations.
Energy-efficient buildings can potentially reduce electricity consumption, while efficient water systems and waste management can lower operating requirements.
ICRA estimates that green-certified assets can potentially help reduce borrowing costs by around 5–15 basis points, while also improving access to diversified pools of capital.
Renewable Energy and Recycling Are Expanding
Sustainability initiatives are also becoming more visible across REIT portfolios.
Renewable energy currently accounts for around 50–75% of total power consumption across major REIT portfolios, with long-term targets of reaching 80–100%.
Recycled water contributes around 37–49% of total water consumption, while approximately 95–100% of waste is diverted from landfills through recycling, composting and other recovery methods.
What This Means for India's Commercial Property Market
The rise of green debt could gradually change how large commercial properties are financed in India.
For REIT investors, greener portfolios could mean access to a wider range of capital and potentially lower financing costs. For office occupiers, green-certified buildings can also become more attractive as companies increasingly incorporate sustainability into their real estate decisions.
If ICRA's projection materialises, green debt could account for nearly one-sixth of REIT borrowings within three years, making sustainable finance an increasingly important part of India's commercial real estate ecosystem.