Real Estate: With over 42% Indians urbanites in 10 years, property sector to be worth USD 1.5 trillion
Virendra Pandit
New Delhi: With India urbanizing at a breakneck speed, its real estate sector will be worth USD 1.5 trillion by 2034, growing three-fold from USD 482 billion now, a media report, quoting a sectoral study, said on Friday.
The sector’s share in India’s economic output is likely to rise to 10.5 percent in the next 10 years from 7.3 percent, according to the ‘India Real Estate: A Decade From Now’ report by the Confederation of Indian Industry (CII) and real estate consultancy Knight Frank.
In 2015, the sector’s share in economic output was USD 279 billion.
Residential property demand is growing fast in India, alongside the need for office space and an expanding hospitality and retail industry catering to the needs of a population with an improving income. “Expanding e-commerce is catalyzing the demand for warehousing and storage facilities in India providing a thrust to the industry,” said the report on Friday.
India’s growth in the next decade will depend on a growing young population, manufacturing, infrastructure, and urban expansion. “Under favorable conditions for these drivers and assuming an annual 2 percent depreciation of the rupee to the dollar exchange rate, India’s gross domestic product could potentially reach USD 10.3 trillion by 2034,” it said.
The residential market is expected to be worth USD 906 billion by 2034 and the office sector USD 125 billion.
The report estimated that in 10 years 42.5 per cent of Indians will be living in urban centres. To meet the requirements of this population, India would need an additional 78 million housing units in the next 10 years.
A large number of the population will be in the lower middle and upper middle-income brackets that would need affordable housing as it transitions towards the mid-segment.
The share of high-net-worth and ultra-high-net-worth individual households is expected to rise from 3 percent to 9 percent by 2034, “driving significant demand” for luxury housing.
An additional 1.7 billion square feet of office space would be required by 2034 to accommodate economic activity and the growth of the formal economy, according to the report about commercial real estate.
In office space, substantial growth would be driven by global capability centers (GCC). India has around 1,700 GCCs now.
“By 2030, there will be an estimated 2,400 GCCs across India as it emerges as a global technology and services hub. Assuming a similar pace of growth, the number of GCCs in India may scale up to 2880 by 2034,” it said.
Private equity (PE) in real estate will substantially increase: from around USD 3.1 billion in 2023 to USD 14.9 billion by 2034. “Emerging sectors such as data centers, healthcare, hospitality, co-living, and co-working spaces present promising avenues for private equity investors, driving the growth narrative in India for the coming years.”.
