The most recognized sector globally, Real Estate is a major sector in the Indian Economy. Contributing about 13 per cent to the Indian GDP, Real estate is expected to grow at 30 per cent over the next decade. With the construction industry ranking third on the list of the major sectors in the Indian economy, the growth of Real Estate goes in sync with the drastic growth of the corporate environment and the increased demand of office space.
Keeping in mind the rise in demand for urban and semi-urban accommodations, it justifies the fact the Indian Real Estate sector is the second biggest employer after agriculture. Comprising of four sectors namely Housing, Retail, Hospitality and Commercial, all these sectors combined are expected to receive short term and long term investments.
With investments slated to flow in, especially from NRI’s, Indian Real Estate is on the path to become the leading contributor to the Indian Economy. Bangalore tops the list of favoured real estate investments destination for NRI’s, followed by Mumbai, Hyderabad, Chennai and Delhi.
The Residential property sector in India is on a steady rise, with India ranking 9th amongst the 55 countries evaluated in the Global House Price Index. The increasing prices in the residential real estate sector seem to have helped India jump the 13 spots on the Global House Price Index.
Market Size :
Estimated to touch US$ 180 billion by 2020, the housing market is slated to comprise 11% of India’s GDP by 2020. Growing at a Compound Annual Growth rate (CAGR) of 11.2 per cent since 2008, the market size of the Indian economy is set to increase steadily in the coming years.
With significant growth in retail, hospitality and commercial real estate sectors, the increased demand in infrastructure will be supplied by the new Urban infrastructure.
The Indian Real Estate sector is said to have grown 12% year on year to the tunes of US$ 4.18 billion in 2017 across 79 transactions in 2017.
Private equity investments in Indian retail assets increased by 15% crossing US$ 800 million. The real estate sector in India is headed towards an era of transparency with a significant rise in business done.
IT and ITeS companies along with retail, consulting and e-commerce firms are driving the high demand for office spaces in metropolitan cities of India. With an office space absorption of over 18 million square feet in 2018 and 20 million square feet in 2019, the demand and supply of office space are on an all-time high.
Not only this, there is an increased inflow of private equity funds of over 150% in the last four years. All these developments are an indication of the prospects of the Indian Real Estate sector.
Foreign investments :
The inflow of investments into the Indian Real Estate sector has been growing constantly with the rising demand for commercial and residential real estate. With investments in private equity expected to grow over US$ 100 billion by 2026 in Tier 1 and Tier 2 cities, the scope for development is exceptional here.
On a global level, India stands third in the US Green Building Council (USGBC) rankings for the top 10 countries for Leadership in Energy and Environmental Design(LEED) certified buildings, having 752 LEED certified projects sprawling across 20.28 million square meters of space. in the past 18 years, having received FDI inflows of over US$ 24.67 billion the growth of Indian Real Estate is phenomenal.
Government’s support to Real Estate :
The Central and State Governments of India have incepted several initiatives to promote investments and ignite consumer spending, introducing schemes to attract investors to invest in real estate in India. If we were to take an example, the Smart city project of the government with an aim to build over 100 smart cities in the next couple of years.
This initiative is an open opportunity for investors and developers to invest in these projects and enjoy the profits and benefits of successful projects. With the economy demanding infrastructure and increasing employment, the prospects for investors in infrastructure projects look good.
And there is no doubt about the demand, with a good economy and consumers in focus the financial prospects look good for buyers as well.
With SEBI approving the introduction of REIT’s into the Indian economy, investors can now enjoy the benefits of a globally renowned investment option. What will be interesting to watch is how a variety of investors will all now invest in this option.
It’s estimated that REIT’s will create US$ 19.65 billion in opportunities in the Indian economy over the years. Since developers are now faced with a highly well-informed consumer base and massive globalisation, Indian developers are now coming to terms with reality.
They have begun adapting the changing culture in Indian businesses with the world now in an era of transparency and meritorious business. It can be said that professionalism is taking over the business world, especially Real Estate by storm.
Homes247.in Experts View
The latest trends in the Indian Real Estate sector suggest an expected growth rate of 35% annually.
The Government of India has been introducing landmark economic reforms to support and encourage the Real estate sector.
As per the latest news in the Indian Real Estate sector, the Government is also inclined on continuing the Housing for All initiative with provisions in the Budget implemented immaterial of the general elections in the country.
Developers and investors from all over have been advising buyers and investors to invest in Real estate, both commercial and residential real estate.