India’s Real Estate Sector Hits a 7-Year Fundraising High in FY25: What’s Fueling the Surge?

India’s real estate sector is experiencing a powerful resurgence. According to reports from Equirus Capital, the industry raised ₹23,080 crore in FY25 — the highest in the past seven years. This surge, driven by REITs, large developers, and renewed investor confidence, signals a structural shift in how capital is flowing into Indian real estate.

Fundraising Snapshot

Since FY18, the sector has mobilized ₹72,331 crore, with FY25 alone accounting for nearly a third. The breakdown:

- REITs (Real Estate Investment Trusts): ₹31,241 crore

- Large-cap developers: ₹20,437 crore

- Mid-cap players: ₹12,496 crore

- Small-cap companies: ₹8,156 crore

This capital was raised across 12 major deals, including IPOs and strategic infusions, such as Embassy Developments’ ₹1,160 crore equity conversion and the upcoming ₹6,200 crore IPO by Knowledge Realty Trust, a Blackstone-Sattva Group JV.

Performance Trends

REITs delivered the highest 12-month return at 21.3%, outperforming all other real estate asset classes.

Over the long term, small-cap real estate stocks have been the best performers since March 2021.

Interestingly, REITs have been the lowest-performing equity instrument in the sector over the long term, despite their recent 12-month outperformance.

Spotlight on Tier-II Cities

Institutional investors are increasingly targeting Tier-II cities like:

- Indore

- Coimbatore

- Surat

- Bhubaneswar

- Chandigarh

These cities offer a compelling mix of affordability, infrastructure growth, and rising demand.

Regulatory Tailwinds

SEBI’s move to classify REITs as ‘equity’ for mutual fund investments is a significant regulatory boost. This change is expected to:

- Enhance retail investor participation

- Improve liquidity

- Promote real estate as a mainstream asset class

What Lies Ahead?

India’s real estate sector is no longer just about physical infrastructure — it’s about financial innovation, urban expansion, and investor confidence. With regulatory support, rising demand in non-metro cities, and the evolution of REITs, the sector is poised for sustained, inclusive growth.

Have insights or experiences in real estate investing? Let’s connect and exchange ideas.

#RealEstate #REITs #IndiaGrowth #CapitalMarkets #Tier2Cities #UrbanDevelopment #Leadership #SVPInsights

Source: Business Standard