Growing 16% annually, Indian realty market likely to hit $10 tn by 2047

Rapid urbanisation will create new realty hotspots in its wake

Bengaluru: The Indian real estate market is growing at a pace of 16 per cent per annum and is expected to touch $10 trillion by 2047, according to a joint report by realty consultants, Colliers and Confederation of Real Estate Developers' Associations of India (CREDAI). It also estimates that at this level the sector will contribute 14-20 per cent of the country’s GDP.

The report tabled on Monday at the annual national conference of CREDAI being held in Sydney, actually pointed out that conservatively the market size is expected to reach $1 trillion by 2030, but optimistically has the potential to complete by feat by 2047.

The report estimates that half of India will live in urban agglomerations by 2045 and the demographic changes the country is witnessing will be a key driver in the market expansion. Other factors that will propel this growth include infrastructure development, digitalisation, sustainability and investment diversification.

Besides the core segments of residential and office realty continuing to mature, high growth trajectories are expected from emerging niches such as data centres, co-living and senior living. “As India commences on a period of expansion across most economic sectors, real estate is set for a quantum leap with multiple growth opportunities arising along the accelerated journey phase. Favourable demographics and urbanisation trends are likely to accentuate the emergence of over hundred - million plus cities by 2047,” said Badal Yagnik, Chief Executive Officer, Colliers India.

The report also highlighted the spread of urban realty going beyond Tier-I cities, elevating smaller towns and most towns cannibalising their peripheral areas. Market consolidation, fair pricing and institutionalisation of the sector are other aspects of this growth story, the report touches upon.

It also notes the burgeoning foreign capital inflows, encouraged by ease of doing business and continual relaxations on the foreign direct investment front. While the last decade has seen institutional investments into the sector cross $ 60 billion (largely from foreign players), it could get further triggered by the adoption of alternate funding strategy by Indian realty, the report observed.

The demographic push

Noting that the rising life expectancy in the country is moving the median age to become 40 years by 2050 from the present 30 years, the report unpacks on what this means for residential realty. For one, a significant portion of the Indian population will come into the first-time homebuyer bracket, lending a lot of traction to housing development in the next few decades. On the other side, the rise in aged population will speed up investment into the senior living market

Emerging trends

The next few years will see expansion in asset classes under Real Estate Investment Trusts (REITs) and Small and Medium (SM) REITs, going beyond office and retail to include warehouses, hotels, and rent-yielding residential properties.

In the long-term, such financing avenues will become prevalent in alternate real estate verticals such as data centres, hospitals, educational institutes, senior and student living accommodations.

The Indian real estate sector is also set to increasingly accommodate digitalisation across aspects ranging from planning, design and construction to property and facilities management. Proptech (property technology) and Metaverse are likely to mature as well, along with increased demand for co-location and edge data centres closer to demand hubs.

The report also highlighted the role of infrastructure augmentation, policy-level pushes, and regulatory frameworks such as the Real Estate (Regulation and Development) Act, Pradhan Mantri Awas Yojana, and REIT Regulations, regulations for logistics and data centres, and other government programmes in providing a boost to investor and end-user participation.