REITs Lead Real Estate Fundraising, Outpacing Other Market Segments: Report
NEW DELHI: Smallcap real estate companies have emerged as the top-performing segment in the realty space over the past 12 months, delivering a 17% return, according to a recent report by Equirus Securities. The performance outpaced other market segments, with REITs yielding 15.2%, midcap realty stocks posting 2.5%, while the benchmark Sensex managed just 1.4%. Largecap real estate firms underperformed, registering a negative return of -2.9% during the same period.
Equirus noted that the trend remains consistent even over a longer horizon, with smallcap real estate players leading gains since March 2021, followed by midcap and largecap players. REITs, despite their popularity, delivered the lowest returns in that timeframe.
REITs dominate real estate fundraising since FY18
Real Estate Investment Trusts (REITs) have accounted for 43% of total capital raised via primary market sources since FY18, highlighting their growing role in institutionalising the Indian real estate sector. Out of the total ₹72,331 crore raised in the sector during this period, ₹31,241 crore was mobilized through REITs. The past 12 months alone saw over ₹26,000 crore raised by real estate companies via capital markets.
This trend underlines investor appetite for income-generating commercial assets amid rising demand for high-quality office and retail spaces. REITs continue to attract capital due to their relatively steady yields and transparency.
Warehousing stock surges 2X amid policy push and e-commerce boom
India’s warehousing sector has witnessed a significant transformation, with total stock more than doubling from ~213 million sq. ft. in 2019 to 438 million sq. ft. in 2024 across the top 8 Tier 1 cities. The total warehousing footprint, including Tier 2 and 3 cities, now stands at approximately 533 million sq. ft., according to the report.
Government policy interventions such as GST, Gati Shakti, Dedicated Freight Corridors (DFCs), and the Urban Infrastructure Development Fund (UIDF) have accelerated infrastructure development, enhancing connectivity and enabling the warehousing sector to move beyond metros.
Tier 2 and 3 cities now contribute approximately 95 million sq. ft., accounting for 18% of total stock, marking a fourfold increase since 2017. Notably, Grade A warehouses constituted about 80% of new absorption in top Tier 1 cities in 2024, while their share in emerging cities stands at around 30%, indicating a clear occupier preference for quality infrastructure.
The rise in e-commerce activity, with nearly 60% of demand now originating from non-metro cities, continues to drive the sector’s structural expansion.
