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Real Estate Funding Hits 7-Year High: Why REITs Lead the Surge

India's real estate sector has hit a seven-year fundraising high in FY25. REITs have emerged as the dominant force, raising the most capital while delivering impressive returns. The sector is poised for significant transformation with retail REITs expected to drive future growth. Institutional investors are expanding aggressively into Tier-II cities, signaling broader market confidence.

Key Points: India Real Estate Fundraising Hits 7-Year High FY25

  • Real estate sector raised Rs 23,080 crore through 12 deals in FY25
  • REITs led fundraising with Rs 31,241 crore since FY18
  • REITs delivered 21.3% returns while other segments saw negative performance
  • Retail REIT market projected to reach Rs 60,000-80,000 crore by 2030
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Real estate fundraising hits 7-year high in FY25: Report

Indian real estate sector raises Rs 23,080 crore in FY25, highest in 7 years, with REITs dominating fundraising and delivering 21.3% returns.

"REITs achieved the highest returns in the past 12 months at 21.3 per cent - Equirus Capital Report"

New Delhi, Oct 23

India's real estate sector raised Rs 23,080 crore in capital through 12 deals in FY25, reaching a seven-year high, a report said on Thursday.

Total fundraising in the real estate sector since FY18 reached Rs 72,331 crore, with Real Estate Investment Trusts (REITs) leading the sector, raising Rs 31,241 crore, according to the report from the investment banking firm Equirus Capital.

REITs were followed by large-cap real estate firms at Rs 20,437 crore, mid-cap real estate firms at Rs 12,496 crore, and small-cap companies at Rs 8,156 crore.

REITs achieved the highest returns in the past 12 months at 21.3 per cent, surpassing all other real estate asset classes. Large-, mid-, and small-cap real estate stocks posted negative returns during the same period.

However, small-cap real estate stocks have outperformed other players in terms of returns since March 2021, with mid-cap stocks following. Large-cap stocks have underperformed these segments, with REITs being the lowest-performing equity instrument, the release noted.

Earlier this month an Anarock report said that India's REIT ecosystem, dominated by commercial office assets, is poised for a big shift, as the next wave of growth can come from retail malls, shopping centres, and mixed-use developments.

By 2030, India's retail REIT market may reach Rs 60,000–80,000 crore, representing approximately 30–40 per cent of the anticipated Rs 2 lakh crore REIT universe, the report said.

This shift in trend will mirror the path of mature economies, where retail REITs form 15 per cent to 25 per cent of total REIT market capitalisation

Institutional players are expanding aggressively in high-income, consumption-driven clusters of Tier-II cities such as Indore, Coimbatore, Surat, Bhubaneswar, and Chandigarh.

SEBI recently reclassified REITs as ‘equity’ for mutual fund investments to enhance diversification opportunities and support the growth of real estate as an investible asset class .

- IANS

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Reader Comments

P
Priya S
While the numbers look good, I'm concerned about how this benefits the common home buyer. Real estate prices in cities like Mumbai and Bangalore are already unaffordable for middle-class families. Hope this growth translates to more affordable housing projects too.
A
Arjun K
The expansion into Tier-II cities is a smart move. Cities like Indore and Coimbatore have huge potential with growing IT sectors and better infrastructure. This could help decongest metro cities and create more balanced regional development.
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Sarah B
As someone who invested in REITs last year, I'm quite happy with the returns. SEBI's reclassification of REITs as equity is a welcome move that will make them more accessible to retail investors through mutual funds. Good step towards financial inclusion.
V
Vikram M
The shift towards retail malls and mixed-use developments in REITs makes sense. With rising disposable incomes and changing consumer behavior, organized retail spaces will see good demand. Smart investors are already positioning themselves for this trend.
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Michael C
I appreciate the detailed breakdown of different segments. However, I wish the report had more data on residential real estate performance. That's where most Indians have their life savings invested. The commercial focus is good but residential market insights would be more relevant for the average person.

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