Real Estate
The Indian real estate market size is expected to reach US$ 180 billion by 2020.

Real Estate Industry in India

Latest update: August, 2015

Key drivers for retail growth in India

•Booming consumerism in India 

•Organised retail sector growing 25-30 per cent annually 

•Entry of MNC retailers 

• India's population below 30 years of age having exposure to global retail are expected to drive demand for organised retail 

Upcoming mall supply across top 7 cities
Trend in Hospitality market
Occupancy rate Vs. Stock in major Indian cities


Last Updated: August, 2015

SECTORAL REPORT | August, 2015


The real estate sector is one of the most globally recognised sectors. In India, real estate is the second largest employer after agriculture and is slated to grow at 30 per cent over the next decade.

The real estate sector comprises four sub sectors - housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth of the corporate environment and the demand for office space as well as urban and semi-urban accommodations.

The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy.

It is also expected that this sector will incur more non-resident Indian (NRI) investments in both the short term and the long term. Bengaluru is expected to be the most favoured property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun.

Market Size

The Indian real estate market is expected to touch US$ 180 billion by 2020. The housing sector alone contributes 5-6 per cent to the country's Gross Domestic Product (GDP).

In the period FY08-20, the market size of this sector is expected to increase at a Compound Annual Growth Rate (CAGR) of 11.2 per cent. Retail, hospitality and commercial real estate are also growing significantly, providing the much-needed infrastructure for India's growing needs.

Real estate has emerged as the second most active sector, raising US$ 1.2 billion from private equity (PE) investors in the last 10 months. Foreign investors have bought tenanted office space worth over US$ 2 billion in India in 2014, a four-fold rise compared to the previous year, in order to increase their rent-yielding commercial assets in Asia's third largest economy.

Mumbai is the best city in India for commercial real estate investment, with returns of 12-19 per cent likely in the next five years, followed by Bengaluru and Delhi-National Capital Region (NCR). Also, Delhi-NCR was the biggest office market in India with 110 million sq ft, out of which 88 million sq ft were occupied. Sectors such as IT and ITeS, retail, consulting and e-commerce have registered high demand for office space in recent times.

Delhi’s Central Business District (CBD) of Connaught Place has been ranked as the sixth most expensive prime office market in the world with occupancy costs at US$ 160 per sq ft per annum.


The Indian real estate sector has witnessed high growth in recent times with the rise in demand for office as well as residential spaces. According to data released by Department of Industrial Policy and Promotion (DIPP), the construction development sector in India has received Foreign Direct Investment (FDI) equity inflows to the tune of US$ 24.1 billion in the period April 2000-June 2015.

Some of the major investments in this sector are as follows:

  • Google Capital has invested in Bengaluru-based online property search platform,
  • Omkar Realtors and Developers Private Limited is in discussions to raise Rs 400 crore (US$ 60.25 million) from KKR India, the local arm of PE firm Kohlberg Kravis Roberts and Co.
  • Goldman Sachs bought shares worth Rs 255 crore (US$ 38.41 million) in Vatika Hotels Private Limited, a company owned by real estate and hospitality firm Vatika Group.
  • SoftBank, Falcon Edge Capital and a few others invested US$ 90 million in Locon Solutions Private Limited, which runs - a realty website.
  • The Qatar Prince, Hamad bin Khalifa Al Thani, plans to invest Rs 1,000 billion (US$ 15.06 billion) over the next five years in at least 10 smart cities of India.
  • Real estate firm Supertech has planned to invest about Rs 2,000 crore (US$ 301.27 million) in Gurgaon over the next few years by launching several luxury and affordable projects.
  • PE firm Warburg Pincus invested Rs 1,800 crore (US$ 271.14 million) in Piramal Realty for a minority stake in the company.
  • China’s Fosun International Limited is seeking to invest US$ 100 million in Locon Solutions, the owner of

Government Initiatives

The Government of India along with the governments of the respective states have taken several initiatives to encourage the development in the sector. The Smart City Project, where there is a plan to build 100 smart cities, is a prime opportunity for the real estate companies. Below are some of the other major Government Initiatives:

  • India’s Prime Minister Mr Narendra Modi approved the launch of Housing for All by 2022. Under the Sardar Patel Urban Housing Mission, 30 million houses will be built in India by 2022, mostly for the economically weaker sections and low-income groups, through public-private-partnership (PPP) and interest subsidy.
  • The Government of India has relaxed the norms to allow Foreign Direct Investment (FDI) in the construction development sector. This move should boost affordable housing projects and smart cities across the country.
  • The Securities and Exchange Board of India (SEBI) has notified final regulations that will govern real estate investment trusts (REITs) and infrastructure investment trusts (InvITs). This move will enable easier access to funds for cash-strapped developers and create a new investment avenue for institutions and high net worth individuals, and eventually ordinary investors.
  • The Government of Maharashtra announced a series of measures to bring transparency and increase the ease of doing business in the real estate sector.
  • The State Government of Kerala has decided to make the process of securing permits from local bodies for construction of houses smoother, as it plans to make the process online with the launch of a software called 'Sanketham'. This will ensure a more standardised procedure, more transparency, and less corruption and bribery.

Road Ahead

Responding to an increasingly well-informed consumer base and, bearing in mind the aspect of globalisation, Indian real estate developers have shifted gears and accepted fresh challenges. The most marked change has been the shift from family owned businesses to that of professionally managed ones. Real estate developers, in meeting the growing need for managing multiple projects across cities, are also investing in centralised processes to source material and organise manpower and hiring qualified professionals in areas like project management, architecture and engineering.

The growing flow of FDI into Indian real estate is encouraging increased transparency. Developers, in order to attract funding, have revamped their accounting and management systems to meet due diligence standards.

Exchange Rate Used: INR 1 = US$ 0.01506 as on September 11, 2015

References: Ministry of Finance, Press Information Bureau (PIB), Media Reports and Publications, Department of Industrial Policy and Promotion (DIPP), CREDAI

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

Real Estate India

Real Estate Clusters
Real Estate Clusters in India


Brand India Pharma


India is the leading real estate investment market in Asia. Construction margins in India are also double that of the world average - a perfect combin...

+ More >

Brand India Pharma

IBEF Publications

IBEF Publication

India Now Magazine

India Now Business and Economy

+ More Publications >

IBEF Publication

Perspectives More

Loading blogs ...

ideas More


eToilets, the self-flushing, self-monitoring technology-based sanitation solution, is no longer a dream, but has been brought into reality by Eram Scientific Solutions (ESS).


Join now. Enjoy FREE subscriptions downloads, updates and more.


Already a member?
Login / Retrieve Password

Copyright © 2010-2015 India Brand Equity Foundation

All material, information, data, images or content on this website is subject to copyright or other applicable intellectual property laws and no part of it can be reproduced in any form (including paper or electronic form) without prior written consent and approval from IBEF. Infringements are subject to prosecution under the applicable laws. For consent related queries and conditions,
please write to

IndiaAn initiative of the Ministry of Commerce & Industry, Government of India