The Indian real estate sector has witnessed a remarkable turnaround in FY25, achieving its highest capital mobilisation in the past seven years, as revealed by a detailed analysis from Equirus Capital. With a total of Rs. 23,080 crore (US$ 2.63 billion) raised through 12 major deals, this fiscal year stands out as a milestone for the country’s property market. The surge in capital inflows signals renewed investor confidence and highlights the growing maturity of India’s real estate ecosystem, which continues to attract both domestic and international investors.

Since FY18, India’s real estate sector has collectively mobilised Rs. 72,331 crore (US$ 8.24 billion) across various investment categories. The breakdown showcases the rising dominance of Real Estate Investment Trusts (REITs), which contributed Rs. 31,241 crore (US$ 3.56 billion) to the total. Large-cap developers followed with Rs. 20,437 crore (US$ 2.33 billion), mid-cap developers raised Rs. 12,496 crore (US$ 1.42 billion), and small-cap players garnered Rs. 8,156 crore (US$ 928.2 million).

Among these categories, small-cap real estate stocks have been the top performers since March 2021, benefiting from increased investor participation and demand for mid-tier housing and commercial projects. On the other hand, REITs, which were initially slow to gain traction, have now emerged as the best-performing real estate asset class, delivering 21.30% returns over the past year. This shift underlines a structural transformation in the way investors approach India’s real estate market, focusing more on yield-based, transparent, and regulated investment instruments.

The Rise and Success of REITs in India

The Real Estate Investment Trust (REIT) model has become a cornerstone of India’s evolving real estate financing ecosystem. It enables investors to access income-generating real estate assets like commercial offices, retail malls, and logistics hubs without directly purchasing properties. REITs offer the advantages of transparency, liquidity, and consistent returns, making them attractive to both institutional and retail investors.

As of FY25, India hosts four listed office REITs that manage a combined 133 million sq. ft. of Grade-A office space, according to Colliers India. Additionally, around 371 million sq. ft. of office assets remain eligible for REIT listing, offering significant growth potential. The continued success of Embassy REIT, Brookfield India REIT, Mindspace Business Parks REIT, and Nexus Select Trust demonstrates the increasing acceptance of this investment structure in India’s capital markets.

The momentum in REIT listings is further bolstered by robust market fundamentals such as rising demand for premium office spaces, global companies expanding their India operations, and favorable regulatory policies that promote transparency and governance.

Retail REITs: The Future Growth Driver

The next big chapter in India’s REIT story is set to be written by retail REITs, which focus on shopping malls and mixed-use developments. According to Anarock Research, the Indian retail REIT market is projected to reach Rs. 60,000–80,000 crore (US$ 6.83–9.12 billion) by 2030, accounting for 30–40% of the total REIT market, which itself is expected to touch Rs. 2,00,000 crore (US$ 25 billion).

This growth will be driven by factors such as rising urban incomes, increased consumer spending, and the consolidation of high-quality malls across Tier-1 and Tier-2 cities. Developers are now focusing on creating premium retail destinations that attract both global and domestic brands, providing a steady revenue stream suitable for REIT inclusion.

With consumers spending more on lifestyle, fashion, and dining, retail REITs are expected to deliver strong rental growth and stable yields. Moreover, the entry of institutional investors in this space underscores long-term faith in India’s consumption-driven growth model.

Key Capital Infusions and Major Transactions

FY25 was marked by several headline-making transactions in the real estate sector. Embassy Developments announced a Rs. 1,160 crore (US$ 132 million) fund infusion aimed at expanding its commercial and residential portfolio. Similarly, Blackstone and Sattva Group jointly filed for a Rs. 6,200 crore (US$ 707 million) Initial Public Offer (IPO) for Knowledge Realty Trust, set to become India’s largest REIT issue to date.

Such developments reflect the growing appetite among investors for large-scale real estate projects and income-generating assets. The involvement of global private equity firms in these transactions further strengthens India’s position as a preferred destination for real estate investments in Asia.

Sectoral Trends and Investment Outlook

The Indian real estate market has matured significantly over the past decade. A combination of policy reforms, improved transparency, and strong economic growth has contributed to this transformation. The introduction of the Real Estate Regulation and Development Act (RERA), Goods and Services Tax (GST), and benami property reforms has helped formalise the sector, leading to better compliance and investor protection.

In FY25, the sector also benefited from favourable macroeconomic conditions, including stable interest rates and an uptick in demand for both residential and commercial spaces. The residential market, especially in metropolitan regions like Mumbai, Delhi-NCR, Bengaluru, Hyderabad, and Pune, has recorded high sales volumes, driven by rising incomes and changing lifestyle aspirations.

At the same time, the commercial office space segment remains robust, supported by global capability centres (GCCs), IT/ITES firms, and co-working operators expanding across India. The demand for high-quality Grade-A spaces continues to surge as multinational corporations view India as a cost-efficient yet talent-rich destination.

REIT Performance and Investor Sentiment

REITs have proven to be one of the most resilient investment options in India’s financial markets. They provide investors with steady yields ranging from 6% to 8%, along with potential for capital appreciation. Over the past year, REITs have outperformed many traditional asset classes such as bonds and mutual funds, reaffirming their position as a reliable income-generating asset.

The inclusion of REITs in Nifty indices and mutual fund portfolios has also expanded their accessibility and visibility among retail investors. This broader participation is expected to enhance liquidity and encourage more developers to consider REIT listings for their commercial portfolios.

Mid and Small-Cap Developers Gain Momentum

The rise of mid and small-cap developers is another positive indicator for the sector. These companies are increasingly active in Tier-2 and Tier-3 cities, where housing demand is strong, and infrastructure growth is creating new opportunities. Projects under the Smart Cities Mission, coupled with government initiatives promoting affordable housing, have given smaller players a strong growth platform.

These developers are now attracting private equity and institutional investments, helping bridge the funding gap for emerging urban centres. Their agile business models and local market understanding have made them key contributors to the sector’s expansion.

Conclusion

The record Rs. 23,080 crore capital mobilisation in FY25 demonstrates the resilience and resurgence of India’s real estate sector. The year’s performance signifies a strong comeback post-pandemic, driven by REITs, institutional capital, and renewed investor trust. As the country moves toward 2030, retail REITs are expected to play a pivotal role, supported by sustained consumer demand and urban development.

The outlook for India’s real estate remains optimistic, with increasing participation from global investors, a stable policy environment, and strong domestic fundamentals. The rise of REITs, mid-cap developers, and diversified asset classes indicates that the sector is not just recovering—it is reinventing itself to align with a new era of sustainable, transparent, and high-value growth in Indian real estate.