REITs rule capital raising; small caps lead realty gains with 17% return

REITs lead primary fundraising in real estate, contributing over 43% since FY18: Equirus Securities

In a rebound for India’s real estate sector, small-cap real estate companies have emerged as the top performers, delivering 17% return over the past 12 months, according to financial services firm Equirus Securities.

This growth notably outpaces the broader Sensex, which managed just 1.4%, and leaves large-cap real estate firms trailing in negative territory at –2.9%. REITs (Real Estate Investment Trusts) followed closely with 15.2% returns, while mid-cap players delivered 2.5% during the same period.

"Small Cap real estate companies have been the best performing segment in the past 12 months, garnering 17% returns, followed by REITs at 15.2%, midcap at 2.5%, the benchmark index Sensex posted a meagre 1.4%, whereas the largecap real estate listed companies posted a negative -2.9% returns," said the note.

 

Small Cap real estate companies have been the best performing segment in the past 12 months

On a longer-term scale, small cap realty stocks have continued to outperform mid-cap and large-cap peers since March 2021, underscoring investor interest in agile, high-growth players in the sector. In contrast, REITs have offered the lowest cumulative returns, highlighting the segment’s relatively stable but slower growth trajectory. 

small cap listed real estate companies continue to be the best performing segment since March 2021 followed by Mid Cap, large cap, benchmark Sensex and lastly the REITs, that posted lowest returns.

Fundraising Trends: REITs Lead Capital Market Activity 

Since FY18 a total of Rs 723,310 mn was raised in the real estate sector, out of that REITs accounted for over 43% around Rs 312,413 mn, followed by Rs 204,370 mn.

Equirus’ data reveals that since FY18, a total of ₹72,331 crore has been raised by real estate entities via primary capital markets. Of this, REITs alone contributed ₹31,241 crore, or 43% of the total capital raised, followed by Qualified Institutional Placements (QIPs) and IPOs.

 

In the last 12 months alone, real estate firms have raised ₹26,000 crore, a signal of increasing investor confidence amid regulatory reforms and infrastructure push.

Real estate companies raised over Rs 26,000 cr via capital market in the past 12 months

Warehousing Boom: Stock Doubles Across Tier 1 Cities

India’s warehousing sector, once confined to metro hubs, is now expanding aggressively into Tier 2 and Tier 3 cities. Since 2019, total warehousing stock in the top eight Tier 1 cities has more than doubled, rising from 213 million sq. ft. to 438 million sq. ft. in 2024. Pan-India warehousing stock reached 533 million sq. ft. this year.

 

The transformation is driven by e-commerce growth (with nearly 60% of demand from non-metro regions), improved connectivity through the Gati Shakti master plan, Dedicated Freight Corridors, and policy enablers like GST and the UIDF scheme.

 

Notably, Grade A warehouses—which offer modern, compliant infrastructure—make up ~80% of new absorption in Tier 1 cities and 30% in emerging cities, reflecting a marked shift in occupier preference toward quality infrastructure.