REITs Lead Real Estate Fundraising, Smallcap Companies Outperform: Report
Smallcap real estate companies have outperformed other segments, delivering a 17% return in the past year, while REITs have accounted for 43% of total fundraising since FY18, according to a recent report by Equirus Securities.
Smallcap Real Estate CompaniesReitsReal Estate FundraisingWarehousing Sector GrowthCapital Markets Real EstateReal EstateJul 31, 2025
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.
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.
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.
Frequently Asked Questions
What is the performance of smallcap real estate companies compared to other segments?
Smallcap real estate companies have delivered a 17% return in the past year, outperforming other segments such as REITs (15.2%), midcap realty stocks (2.5%), and the benchmark Sensex (1.4%).
How much capital have REITs raised since FY18?
REITs have accounted for 43% of total capital raised via primary market sources since FY18, mobilizing ₹31,241 crore out of the total ₹72,331 crore raised in the sector during this period.
What has driven the growth in the warehousing sector in India?
Government policies 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 expand beyond metros.
What is the current total warehousing footprint in India?
The total warehousing footprint in India, including Tier 2 and 3 cities, stands at approximately 533 million sq. ft., with Tier 2 and 3 cities contributing about 95 million sq. ft., or 18% of the total stock.
How is e-commerce activity impacting the warehousing sector?
The rise in e-commerce activity, with nearly 60% of demand now originating from non-metro cities, continues to drive the structural expansion of the warehousing sector in India.
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