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Real Estate Industry in India

August, 2013


The Indian real estate and construction industry is an integral part of Indian economy and plays an important role in the development of the country’s infrastructure base. The contribution of the real estate sector to India’s gross domestic product (GDP) has been estimated at 6.3 per cent in 2013, and the segment is expected to generate 7.6 million jobs during the same period. It is also expected to generate over 17 million employment opportunities across the country by 2025.

The sector comprises of four sub-sectors- housing, retail, hospitality, and commercial. While housing contributes to five-six percent of the country’s GDP, the remaining three sub-sectors are also growing at a rapid pace, meeting the increasing infrastructural needs.

Riding high on the back of rapid urbanisation, positive demographics and rising income levels, the Indian real estate sector has attracted significant investment over the past few years. The growing stability of the market is reflected by the continuous growth of the core investors, with over Rs 7,705 crore (US$ 1.14 billion) invested in ready office space during the last three years.

Market Dynamics

The real estate sector of India is expected to post annual revenues of US$ 180 billion by 2020 as compared to US$ 66.8 billion in 2010-11, registering a compound annual growth rate (CAGR) of 11.6 per cent. In fact, the demand is expected to grow at a CAGR of 19 per cent between 2010 and 2014, with tier I metropolitan cities projected to account for about 40 per cent of this.

Mumbai, NCR and Bengaluru account for 46 per cent of total office space demand in India. Demand growth projected to be the highest in Tier 2 cities such as Kolkata and Chennai during 2010-14.


The prime office space segment across the country’s key cities- Mumbai, the National Capital Region (NCR), Pune and Bengaluru has witnessed a fresh supply infusion of more than 20 million square feet (sq ft) in the first six months of 2013, witnessing a growth of 16 per cent on year-on-year (y-o-y) basis, as per a report by CBRE.

The country is ranked 20th among the top global markets for real estate investment in 2012, with investments worth US$ 3.4 billion during the year, according to a latest report by Cushman & Wakefield. It is also estimated that foreign direct investment (FDI) into real estate in India will increase to US$ 25 billion over the next 10 years.

Construction development sector (including townships, housing, built-up infrastructure & construction-development projects) has attracted a cumulative FDI worth US$ 22,247.50 million from April 2000 to June 2013. FDI flows into the construction (infrastructure) activities during the period stood at US$ 2,198.77 million, according to the department of industrial policy and promotion (DIPP).

Some of the major investments in the Indian real estate sector are:

  • Peninsula Land has signed an agreement to buy a five-acre property in the Byculla area of Mumbai from its joint owners, Mahindra Lifespaces, the realty arm of Mahindra Group, and the Kanorias, for around Rs 650 crore (US$ 96.45 million)
  • Godrej Properties Ltd (GPL) has entered into an agreement to develop 37 acres in Panvel, Maharashtra. The company will receive 35 per cent of the profits from the development
  • Cushman & Wakefield has entered into an agreement to acquire Singapore-based project management specialist company Project Solution Group (PSG). The acquisition is aligned with the firm's global strategy to strengthen its operations in the Asia-Pacific
  • Reliance Industries is expanding its presence in Africa's real estate sector. The firm acquired 10 prime plots of land in Nairobi, Kenya, for around Rs 202 crore (US$ 29.97 million)
  • Germany-based SEA Group, engaged in the living space solutions segment, plans to invest Rs 40 crore (US$ 5.94 million) over the next two years in its Indian operations