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

Indian Real Estate Industry

Latest update: June, 2018

Upcoming mall supply across top 7 cities

Notes: MNC - Multinational Corporation, BFSI - Banking, Financial and Insurance Services, CBD - Central Business District, SBD - Special Business District, NCR - National Capital Region
Source: Cushman and Wakefield

Upcoming mall supply across top 7 cities

Source: Cushman and Wakefield, CBRE

Last Updated: June, 2018

Introduction

The real estate sector is one of the most globally recognized 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.

India's rank in the Global House Price Index has jumped 13* spots to reach the ninth position among 55 international markets, on the back of increasing prices in mainstream residential sector.

Market Size

The Indian real estate market is expected to touch US$ 180 billion by 2020. Housing sector is expected to contribute around 11 per cent to India’s GDP by 2020. Retail, hospitality and commercial real estate are also growing significantly, providing the much-needed infrastructure for India's growing needs.

New housing launches across top seven cities in India increased 27 per cent year-on-year in January-March 2018.

India is expected to witness an upward rise in the number of real estate deals in 2018, on the back of policy changes that have made the market more transparent.

Sectors such as IT and ITeS, retail, consulting and e-commerce have registered high demand for office space in recent times. Office space demand in the country increased 23 per cent year-on-year in January-March 2018 with office space absorption at 11.4 million square feet during the quarter. Private equity inflows in office and IT/ITES real estate have grown 150 per cent between 2014 and 2017 backed by a strong attraction towards office sector.

Investments/Developments

The Indian real estate sector has witnessed high growth in recent times with the rise in demand for office as well as residential spaces. Private equity investments in real estate are estimated to grow to US$ 100 billion by 2026 with tier 1 and 2 cities being the prime beneficiaries. Private equity investments in Indian real estate increased 15 per cent year-on-year in January-March 2018 to Rs 16,530 crore (US$ 2.56 billion). 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$ 24.67 billion in the period April 2000-December 2017.

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

  • In May 2018, Blackstone Group acquired One Indiabulls in Chennai from Indiabulls Real Estate for around Rs 900 crore (US$ 136.9 million).
  • In February 2018, DLF bought 11.76 acres of land for Rs 15 billion (US$ 231.7 million) for its expansion in Gurugram, Haryana.
  • In February 2018, Japanese conglomerate Sumitomo Corporation announced its US$ 2 billion partnership with Krishna Group to develop real estate projects in the country.
  • KKR India Asset Finance Pvt Ltd has invested over US$ 500 million in residential real estate projects in India in 2017, taking its total investments in real estate projects in India to US$ 1 billion.

Government Initiatives

The Government of India along with the governments of the respective states has 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:

  • In May 2018, construction of additional 150,000 affordable houses was sanctioned under Pradhan Mantri Awas Yojana (PMAY), Urban.
  • In February 2018, creation of National Urban Housing Fund was approved with an outlay of Rs 60,000 crore (US$ 9.27 billion).
  • Under the Pradhan Mantri Awas Yojana (PMAY) Urban 1,427,486 houses have been sanctioned in 2017-18. In March 2018, construction of additional 3,21,567 affordable houses was sanctioned under the scheme.

Road Ahead

The Securities and Exchange Board of India (SEBI) has given its approval for the Real Estate Investment Trust (REIT) platform which will help in allowing all kinds of investors to invest in the Indian real estate market. It would create an opportunity worth Rs 1.25 trillion (US$ 19.65 billion) in the Indian market over the years. 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$ 0.0155 as on March 30, 2018

References: Media Reports, Press releases, Knight Frank India, VCCEdge, JLL Research, CREDAI-JLL

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

Posters

Brand India Pharma

THE GOLDEN SKY LINE

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


Towards a healthier India - Focus on accessibility, affordability, and quality

English

+ More Publications >

IBEF Publication

IBEF Blog - INDIA ADDA – PERSPECTIVES ON INDIA More

author_logo-ibef1.jpg INDIA'S GOVERNMENT E-MARKETPLACE: MAKING PROCUREMENT SIMPLE!
IBEF, Knowledge Centre

The Government e-Marketplace (GeM) is a national public procurement platform in India that was launched about two years back, in August 2016. Till date, the platform clai...

author_logo-ibef1.jpg Indian Logistics Sector: Shining bright!
IBEF, Knowledge Centre

The Indian logistics sector is on a big growth tide. According to the domestic rating agency ICRA, Indian logistics sector is expected to grow at a rate 8-10 per cent ove...

author_logo-ibef1.jpg India's Franchise Industry: The road so far and way forward!
IBEF, Knowledge Centre

Whether you are in a big metropolitan city or a smaller town, one look around you is bound to reveal bright signage with recognisable names all around. From heading to th...

author_logo-ibef1.jpg India: Strong in Tractor Manufacturing
IBEF, Knowledge Centre

In India, agriculture and its allied sectors are the primary source of livelihood for a large chunk of domestic population. In 2017, the Gross Value Added (GVA) in these...

author_Pragati_Khare1.jpg The role of HR in the Rise of India's Tech Industry!
Pragati Khare, Head HR, COMIO Smartphone

Improvements in human resources (HR) practices and technology are a key reason for the continuous rise of India's technology sector. However, the growth of the tech s...

author_logo-ibef1.jpg Indian BPM Industry: Way forward!
IBEF, Knowledge Centre

Most businesses are dynamic, with processes and objectives that are constantly developing. In order to keep the processes within a business streamlined and efficient as w...

ideas More

Ideas

Zuper: Dynamic Disruptor
Zuper is a B2B Software as a Service (SaaS) offering for organizations, irrespective of shape and size. It is the first in Asia to offer voice biometrics-based timesheet management of workforce. Zuper offers an end to end platform to bring together the power of people, process, product and promise. ...

JOIN IBEF.org

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

Error

Already a member?
Login / Retrieve Password