Introduction
The real estate industry in India consists of property types such as residential, office, retail, hospitality, and industrial establishments. The major city-wise segmentation is Mumbai, Delhi, Pune, Chennai, Hyderabad, and Bangalore. The report provides market estimates for India’s real estate market value (USD billion) for all the above segments.
Table of Contents
- Direct and Indirect Effects on Sectors of the Economy
- Real Estate Demand for Properties by 2025
- Demand for Affordable Housing
- Residential Houses are In High Demand in the Country
- Office Real Estate Is a Testament to Profitable Growth
- Commercial Real Estate Investments
The real estate industry market size in India is estimated to be USD 0.33 trillion in 2024. It is expected to reach USD 1.04 trillion by 2029. It will grow at a CAGR of 25.60% during the forecast period (2024–2029).
The country’s real estate market has been affected by the COVID-19 pandemic. Besides, house registrations were stopped for a few days. The residential sector has been badly hit as home sales have been affected by strict lockdown measures in India’s major cities as home loan disbursement has slowed. However, the sector is recovering little by little due to an increase in home sales, new project launches, demand for new offices and commercial spaces, etc.
Direct and Indirect Effects on Sectors of the Economy
The growth of this sector is closely coupled with the increase in the corporate environment and the demand for office space as well as urban and semi-urban accommodation. The construction industry ranks third among the 14 major sectors in terms of direct, indirect, and induced impacts across all sectors of the economy.
In India, the real estate sector is the second largest employer after the agriculture sector. The sector is also expected to attract more non-resident Indian (NRI) investment in the short-term and long-term.
Bangalore, Ahmedabad, Pune, Chennai, Goa, Delhi, and Dehradun are the top property investment destinations for NRIs. Retail, hospitality and commercial real estate are also growing significantly, providing the necessary infrastructure for India’s growing needs.
Real Estate Demand for Properties by 2025
According to Savills India, real estate demand for data centers is expected to increase to 15-18 million square feet by 2025. Demand for residential properties has increased due to increased urbanization and rising household income.
India is one of the top 10 housing markets with rising prices internationally. According to IBEF (India Brand Equity Foundation), FDI in this sector (including construction, development & operations) is USD 55.18 billion from April 2000 to September 2022.
Demand for Affordable Housing
Affordable housing is in high demand in the housing market. According to the India Brand Equity Foundation, the current housing shortage in urban areas is estimated at 10 million units. An additional 25 million units of affordable housing will be required by 2030 to keep pace with the country’s growing urban population.
The Real Estate Regulatory Authority (RERA) administers housing programs like Real Estate Investment Trusts (REITs) and PMAY (Pradhan-Mantri Awas Yojana). Since 2014 Housing for All (HFA) program has started. By May 2, 2022, one million houses have been completed across the northern Indian state of Uttar Pradesh.
Residential Houses are In High Demand in the Country
According to Knight Frank, in 2022, over 328 thousand housing units will be launched in the residential market across India. Despite the huge demand for housing in the country, residential launches have been very high over the past few years. In 2022, the total number of houses completed in India’s urban areas under the Pradhan Mantri Awas Yojana (PMAY, Pradhan Mantri Housing Scheme) will reach 6.5 million.
According to HDFC Bank data, India’s housing supply is at 3.2 in FY2022. The previous year recorded the same. According to the Reserve Bank of India, in the 2022 fiscal year, banks in India will have nearly two trillion Indian rupees (USD 24.44 billion) in home loans, almost back to pre-Covid levels. This has revived homebuyer sentiment as more Indians invest in buying residential property.
Office Real Estate Is a Testament to Profitable Growth
The Indian office real estate market has driven the growth of the commercial real estate sector in the past decades. Office real estate has been at the forefront of these developments. Once dominated by information technology.
It has been found that office spaces are leased mostly by other sectors such as BFSI (Banking, Financial Services and Insurance), engineering, manufacturing, e-commerce and co-working sectors. The sector has consistently exhibited low and high absorption rates.
In the first quarter of 2022, the Central Business District (CBD) city of Bangalore is expected to absorb the highest amount of Grade-A office space in the Asia-Pacific region. Bangalore is the most expensive place to rent office space in India. The rental rate is INR 144 (USD 1.76) per sq. ft. per month.
Commercial Real Estate Investments
Commercial real estate investments have increased as a result of the Real Estate Regulation & Development Act (RERA) and Real Estate Investment Trusts (REITs). A REIT owns, manages, and finances income-producing real estate. Known as high-net-worth individuals (HNI) in India.
Office properties have emerged as the most popular sector for investment among international PE investors. Together they represent all equity investments in Indian real estate. Investors of all types are attracted to this industry by high rental rates and better profits. Tiny homes and larger families are fueling the rise of country flex and co-working spaces.
Conclusion
India’s real estate market is highly fragmented. There are multiple players operating in the market. This leads to oversupply in the market. Further, the market is dominated by a few pan-India branded players and multiple local players. For more information, visit Openplot.
Also read: India Real Estate Will Witness Strong Growth in 2024