Small-cap real estate firms outperform in India, give 17 pc return in 12 months

New Delhi, July 29 India's small-cap real estate companies have returned 17 per cent in the past 12 months, and Real Estate Investment Trusts (REITs) account for almost 43 per cent of fund raising via primary sources since FY18, a report said on Tuesday.

"The total warehousing stock across top eight Tier 1 cities has more than doubled since 2019 from around 213 million square feet to 438 million square feet in 2024," Equirus Securities, a financial service firm, said in its report.

Small-cap real estate companies have been the best-performing segment in the past 12 months, garnering 17 per cent returns, followed by REITs at 15.2 per cent, midcap at 2.5 per cent, the report highlighted.

As per the report, in contrast to small-cap real estate companies, the equity benchmark index Sensex posted a meagre 1.4 per cent, whereas the large-cap real estate listed companies posted a negative -2.9 per cent returns.

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, which posted the lowest returns, the report noted.

Since FY18, a total of Rs 723,310 million was raised in the real estate sector, out of which REITs accounted for over 43 per cent, around Rs 312,413 million.

India’s warehousing sector has been expanding horizons with 'Emerging Opportunities' beyond the metros, as per the report.

The growth in the warehousing stock is fueled by infrastructure upgrades, policy reforms, and a consumption surge in Tier 2 and 3 cities.

The total stock reached around 533 million square feet in the year 2024 (CY 2024), from around 300 million square feet in CY 2019, the report said.

Government schemes like GST and Gati Shakti are boosting warehousing expansion and connectivity.

According to the report, the growth is largely driven by e-commerce demand (nearly 60 per cent) coming from smaller cities, and warehousing demand is rapidly expanding beyond Tier 1 hubs.

Tier 2–3 cities contribute around 95 million square feet (18 per cent) of the total stock — a four times increase since 2017.

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