How have small-cap real estate firms excelled in India with a 17% return over the last year?
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Synopsis
Discover how India's small-cap real estate firms achieved a remarkable 17% return in just 12 months, outperforming larger counterparts and benefitting from booming warehousing demands. This report dives into the trends fueling this growth and what it means for investors.
Key Takeaways
- Small-cap real estate firms have outperformed larger counterparts with a 17% return.
- REITs account for 43% of total fundraising in the sector.
- Warehousing stock has doubled from 213 million square feet in 2019 to 438 million square feet in 2024.
- Government initiatives are boosting warehousing expansion.
- Demand from e-commerce is driving growth beyond Tier 1 cities.
New Delhi, July 29 (NationPress) India's small-cap real estate companies have achieved an impressive 17% return over the past year, according to a recent report. Real Estate Investment Trusts (REITs) have significantly contributed, making up nearly 43% of total fundraising through primary sources since FY18.
According to Equirus Securities, a financial services firm, the total warehousing stock in the top eight Tier 1 cities has seen remarkable growth, more than doubling from about 213 million square feet in 2019 to 438 million square feet in 2024.
In the last 12 months, small-cap real estate companies have outperformed other segments with a 17% return, while REITs followed at 15.2% and midcap at 2.5%, as highlighted in the report.
In stark contrast, the equity benchmark index Sensex managed a mere 1.4% return, while large-cap real estate firms reported a negative -2.9%.
Small-cap real estate companies have consistently been the top performers since March 2021, followed by mid-cap and large-cap entities, with REITs lagging significantly.
Since FY18, Rs 723,310 million has been raised in the real estate sector, with REITs accounting for over 43%, roughly Rs 312,413 million.
The report indicates that India’s warehousing sector is exploring 'Emerging Opportunities' beyond major metropolitan areas.
This expansion is driven by enhancements in infrastructure, policy reforms, and a surge in consumption across Tier 2 and 3 cities.
As of 2024, the total warehousing stock reached approximately 533 million square feet, up from around 300 million square feet in 2019.
Government initiatives like GST and Gati Shakti are facilitating the growth of warehousing and improving connectivity.
The report emphasizes that e-commerce demand, predominantly from smaller cities, constitutes nearly 60% of the warehousing needs, indicating rapid expansion beyond Tier 1 hubs.
Notably, Tier 2 and Tier 3 cities now account for about 95 million square feet (or 18%) of the total stock—a remarkable fourfold increase since 2017.
Point of View
It's crucial to recognize the significant performance of small-cap real estate firms in India. Their impressive returns, amid a challenging economic landscape, showcase resilience and opportunity. This trend not only reflects the dynamic nature of the real estate sector but also highlights the potential for future growth, especially in emerging markets beyond metropolitan areas. We must keep an eye on these developments as they unfold.
NationPress
20/09/2025
Frequently Asked Questions
What are small-cap real estate companies?
Small-cap real estate companies are firms with a smaller market capitalization compared to larger companies, often providing higher growth potential and returns.
How have REITs performed in recent years?
REITs have performed well, accounting for nearly 43% of total fundraising in the real estate sector since FY18, with a return of 15.2% over the past year.
What drives the growth of the warehousing sector?
The growth is driven by infrastructure upgrades, policy reforms, and a surge in e-commerce demand, particularly from Tier 2 and 3 cities.
