Reports indicate that the Indian real estate market by 2030 is said to account for about 18% to 20% of the country’s GDP. Due to the rise in purchasing capacity of the nation’s consumers, it is said that the demand of real-estate for several data centers should increase to about 15-18 million sq. ft. by 2025.
The modern pace of lifestyle and opportunities is attracting more workers and skilled personnel towards urban India which is causing the residential properties to increase. According to data, India stands at number 10 when it comes to real estate appreciation in the global market.
The stocks from the organized sector of real estate are hinted to increase by 28%, which is about 82 million sq.ft. by the year 2023. ICRA also estimates in a report that firms in India have the space to raise about $48 billion with help of investment trusts when compared to the current capital of $29 billion.
Shining reports from the industry states that top-tier venture capital group, Blackstone, which already invested about $50 billion in Indian real estate is said to put an additional $22 billion by 2030. In India, the real estate market attracted an institutional investment of about $5 billion in 2020.
Real Estate Market Size-
We all understand that the real estate industry is one of the most globally appreciated sectors. The industry includes sub-sectors like housing, retail along with commercial and hospitality. Here, the growth equates its development with the sustainable efforts of the corporate sector.
The space required for offices in urban and semi-urban regions plays a pivotal role in shaping the real estate industry. Across all the verticals of an economy, the construction sector stands at rank three from the major 14 niches when relating direct, and indirectly coupled with induced outcomes.
Our nation generates the most amount of employment in the agricultural sector. The real estate industry generates the second most number of jobs in India. Considering the growth trajectory, the future holds more possibilities of non-resident Indians (NRI) investing on both long term and short term basis. Cities like Bangalore, Ahmedabad, Pune, Goa, Delhi along with Chennai and Dehradun should come top in the list when it comes to NRI real estate investment.
In 2019, the real estate market in India was about $1.72 billion. It is expected that the real estate industry in India should reach a market size of about $1 trillion by 2030. Due to impressive growth in business and industry in India, sectors like retail, and commercial purpose real estate are also increasing leading to a rise in demand in infrastructure.
There were about real estate deals of 1,700 acres in land in just a short period of time. Developers are noticing that the requirement for office spaces in SEZ to grow massively. Between June 2020 to December 2020, the office sector in about 8 top eight metropolitan cities recorded about 22.2 msf and new completion logged a figure of about 17.5 msf.
When it comes to sector centric acquisitions, Information Technology comprised about 41% market share in 2020. This was followed by the manufacturing and BFSI sector acquiring about 16% market share. The other services and the co-working division accounted for 17% and 10% respectively.
In 2021, about 40 million square feet was delivered to customers followed by about 46 million square feet in 2022. The manufacturing domain included about 24% office spaces, where it leased about 5.7 million square feet. The electronics and SME division leased the most in cities like Pune, Delhi NCR along with Chennai.
The automotive is leased in cities like Ahmedabad, Pune and also Chennai. Segments like 3PL coupled with ecommerce and retail leased about 34%, 26% and 9% office spaces, respectively. During the first half of 2022 the absorption of office spaces was about 27.20 million square feet.
Reports from sources include that about 3 houses are built per 1000 people in a year. But the required houses to be built should be about 5 houses per 1000 people. There are about 10 million units in the shortage category of the housing market. And by 2030, more 25 million units of affordable housing is needed to meet the criteria of the rising population.
The invested development in real estate-
There has been phenomenal growth in real estate in India with increasing demand in office spaces. In 2021, the Indian Government reduced the least application value of Real Estate Investment Trust from Rs. 50,000 to Rs. 10,000 to Rs. 15,000. This has allowed small market investors to delve into the opportunity.
Between April 2000 to December 2022, the FDI in the construction and development domain was at around US $55.18 billion. The inflow of investment in private equity in Indian real estate was about $3.27 billion between the month January 2022 to June 2022.
The home sales reached about 62,800 units in seven major metropolitan cities in quarter 3 of 2021. The figure was about 29,520 in 2020 and also suggested an impressive recovery post the COVID-19 pandemic.
The Government of India has provided vast support to the real estate industry with initiatives like Smart City Projects. In 2021, the Reserve Bank of India decided to not change the interest rate from 4% and worked as a catalyst for the growth of real estate in India.
The Union Budget 2021-22 suggested tax deduction up to the value of Rs. 1.5 lakh on housing loan interests and the tax holiday for affordable housing extended till the final quarter of 2021-22.
There are about 1,600 housing projects that are halted for certain reasons. Approval of Rs. 25,000 crore in the form of AIF or alternative investment fund by the Union Cabinet is set to revive the projects.
The way to go is ahead for real estate in India-
The Securities and Exchange Board of India or SEBI has given a green signal for the setting of the Real Estate Investment Trust or REIT platform. This will allow the micro and macro investors to put in their two cents in the real-estate market in India.
The coming generation should witness a growth of about Rs 1.25 trillion worth of values for the well-informed consumers of India. The vast capabilities of globalization has allowed real estate developers to invest in the sector and expect sustainable scalability.
One of the significant changes has been the shift of businesses managed by families to ones managed by professionally skilled individuals. The developers are facing a marked rise in demands in real estate which is allowing them to opt for a centralized process for getting resources and manpower and hire employees who are trained in project management along with engineering and also agriculture.
The Pradhan Mantri Awas Yojana is also aiming to provide affordable housing in the next few years.The most contributing factor is that the transparency in data in sectors is allowing consumers to make valid judgment calls before investing in any sectors. Any market if supported by the Government and backed by strong policies is set to grow and benefit the investors. The real estate industry is valued at an appreciated system and should be researched rationally by an investor as there is vast potential to grow in the next few years.