Indian Realty Market to Touch $1 Trillion By 2030

Indian real estate market is expected to reach 1 trillion US Dollar by 2030, becoming the third largest globally, as per a recent survey. According to the survey, the real estate industry is estimated to reach $650 billion by 2025 and surpass 850 billion US dollar by 2028. By 2030, the real estate sector would touch 1 trillion US dollar as per the survey conducted by financial consulting firm KPMG associated with Naredco and APREA. The report mentioned the significant growth in Indian real estate industry since 2014.  The investors started to focus on construction as they’ve noted its consistent improvement in ranking globally.

Real estate sector in India becomes a major part of Indian economy and contributed 7% to the GDP in 2017, expected to grow up to 13% by 2025. The sector also contributed huge employment opportunities providing jobs over 5 crore people and it is third largest employer after agriculture and manufacturing.  The real estate and construction industry are expected to provide over 6.6 employment opportunities by2022 as per the NSDC (National Skill Development Council (NSDC) report.  According to the report, 2018 is going to be the turning point for the real estate segment with regulatory reforms, government policy for the house loan, affordable housing plan and infrastructure development. The current scenario helped to boost more investors into Indian real estate segment globally.

With the implementation of RERA, structural reforms in place, the report shows significant growth of global Private Equity (PE) in the Indian real estate market. Private Equity investments in Indian real estate has been increased by 15% in 2018, expected to touch $100 billion by 2026 benefiting mostly in Tier 1 and Tier 2 cities. It would help to provide confidence for investor into Indian realty sector after industry decline due to unsold inventory, delays of the project, and negative cash flows for some time.

However, the establishment of RERA act, the growth of regulatory developments and initiatives shows the strong real estate sector growth in India. After RERA came into force, there has been unexpected growth in the real estate industry. Since RERA act made Indian realty sector more transparent, both investors and home buyers interested to focus and rely on the builders. Real Estate Regulatory Act (RERA) restricted in promoting properties which do not exist, properties cannot be sold without RERA registration number, a builder cannot use investors’ fund for other properties.

Real Estate as an Investment in India

The report noted that average deal size tripled to 157 million US dollar comparing to $ 47 million in 2016 and most of the investors are from foreign (nearly 44 percent) especially from the US, Canada, and Singapore. The majority of foreign real estate investors have interested in the commercial project in Mumbai, Pune, and Bengaluru. The report also points that 4 billion US dollar has been invested by institutional investors in 2018.

According to the report, the average deal of foreign investment is $149 million as compared to $87 million dollars by domestic investors in India. The domestic investors have preferred in both commercial and residential projects while 90 percent of foreign investors have interested in commercial projects.

As per study report, Mumbai is the most attractive location by foreign investors covering 53 percent of the overall investment. Hyderabad and Bengaluru are most preferred destinations by domestic investors covering $959 million, $870 million accordingly.

Enforcement of RERA has given new phase for real estate industry and the real estate industry are been considered as the most reliable investing sector. RERA and GST implementation have brought about financial discipline and also helped to boost India as the global hub of real estate investment.

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