India's Small-Cap Real Estate Firms Lead the Market with 17% Returns
India's small-cap real estate companies have delivered 17% returns in the last 12 months, with REITs contributing nearly 43% of the funds raised through primary sources since FY18. The growth in the warehousing sector is driven by infrastructure upgrades and rising consumption in tier 2 and 3 cities.
Real EstateSmallcapReitsWarehousingInvestmentReal EstateJul 29, 2025
The report highlights that the total warehousing stock across the top eight Tier 1 cities has more than doubled since 2019, from around 213 million square feet to 438 million square feet in 2024. This significant growth underscores the robust expansion of the real estate sector in India.
Small-cap real estate companies have been the best-performing sector in the last 12 months, generating 17% returns, followed by REITs at 15.2% and midcaps at 2.5%. In contrast, the equity benchmark index Sensex delivered a mere 1.4% return, while large-cap real estate listed companies posted a negative -2.9% return.
Since March 2021, small-cap listed real estate companies have consistently outperformed other segments, including mid-caps, large-caps, benchmark Sensex, and REITs, which have delivered the lowest returns. This trend indicates a strong investor confidence in small-cap real estate firms.
A total of Rs 723,310 million has been raised in the real estate sector since FY18, with REITs accounting for over 43% of this amount, or about Rs 312,413 million. This substantial contribution from REITs reflects the growing importance of these investment vehicles in the real estate market.
India's warehousing sector is not only expanding in the top cities but is also making significant inroads into tier 2 and 3 cities. The increase in warehousing stock is driven by infrastructure upgrades, policy reforms, and rising consumption in these smaller cities. Government schemes such as GST and Gati Shakti are playing a crucial role in promoting warehousing expansion and improving connectivity.
The total warehousing stock reached around 533 million sq ft in CY 2024, up from around 300 million sq ft in CY 2019. This growth is primarily driven by e-commerce demand, with around 60% of the demand coming from smaller cities. The warehousing demand is rapidly moving beyond tier 1 hubs, with tier 2-3 cities contributing about 95 million sq ft (18%) to the total stock – a four-fold increase from 2017.
Equirus Securities' report emphasizes the importance of these trends and the potential they hold for the future of the real estate sector in India. The combination of robust growth in small-cap real estate companies and the expansion of warehousing in tier 2 and 3 cities presents a promising outlook for investors and developers alike.
Frequently Asked Questions
What is the performance of small-cap real estate companies in India?
India's small-cap real estate companies have delivered a 17% return in the last 12 months, outperforming other segments and benchmarks.
How much have REITs contributed to the funds raised in the real estate sector since FY18?
REITs have contributed nearly 43% of the funds raised in the real estate sector since FY18, amounting to about Rs 312,413 million.
What is driving the growth in the warehousing sector in India?
The growth in the warehousing sector is driven by infrastructure upgrades, policy reforms, and rising consumption in tier 2 and 3 cities. Government schemes such as GST and Gati Shakti are also promoting warehousing expansion and connectivity.
How has the total warehousing stock in India changed over the years?
The total warehousing stock in India has more than doubled from around 213 million square feet in 2019 to 438 million square feet in 2024, with a further increase to 533 million sq ft in CY 2024.
What is the significance of the growth in warehousing demand in tier 2 and 3 cities?
The growth in warehousing demand in tier 2 and 3 cities is significant as it indicates a shift in consumer behavior and economic activity. Around 60% of the e-commerce demand comes from these smaller cities, contributing to the overall expansion of the warehousing sector.
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