By Pankaj Bansal According to an August report by the Indian Real Estate Industry (IRI), the real estate market is on track to reach $1 trillion in size by 2030 and contribute 13 percent to the GDP by 2025, according to a report.
The report predicts that the market will grow to $9.30 Billion (roughly Rs 65,000 crore) by 2040.
According to the Department of Promotion of Industry and Internal Trade Policy, the real estate sector is third in terms of FDI flow.
It is also second largest employment generator and third largest to stimulate economic growth.
This sector, which deals with housing, retain and hospitality, is growing with a multi-fold increase of demand and growth in mandate from semi-urban and urban accommodations.
Real estate ranks third among the 14 major industries in terms of their direct and indirect, or induced, impact on all sectors of the economy.
The second largest sector for employment generation is the real estate sector, after agriculture.
It can generate short-term employment as well as long-term.
What is driving India’s real estate sector so aggressively?
Is it the shift in society’s mindset towards long-term investment? Or is it that the government has relaxed norms and policies in order to attract real estate investment? Both should be true.
The Securities and Exchange Board of India (SEBI), in July, lowered the minimum application value of Real Estate Investment Trusts to Rs 50,000 from Rs 50,000 to Rs 10,000-15,000 in order to make the market more accessible to small and large investors.Even the co-living market, mainly in metros, will almost double to $14 billion, from $6.70 billion.
Another report from Savills India states that data centers are also in high demand.
It is expected that the area will grow by 15-18 million square footage by 2025.
The Central government also gave impetus to this sector by deciding that 20 million affordable homes will be built in urban areas of the country by FY 2023.
This is being done by Prime Minister Narendra Modi’s Pradhan Mantri Awas Yojana scheme (PMAY) under the Ministry of Housing and Urban Affairs.
According to various reports, Indian realty sector attracted $5 billion in institutional investments in 2020.
This is equivalent to 93% of transactions recorded in the previous years.Private equity also recorded investments of $3,240 million in around 20 deals in Q4 FY 2021.
According to the DPIIT report, the construction sector is third in terms of FDI Inflow.Between April 2020 and June 20,21, $51.5 billion in FDI was attracted to the sector.In Q3 FY 2021, the sector housing saw 62,800 units.
This is an increase of 113 percent YoY across all seven top cities, compared to 29,520 units in the Q3 2020.
Mumbai accounted for 33% of total sales.
The National Capital Region accounted for 16%.
A JLL Report shows that between January and March, Noida accounted to 55% of net absorption.Gurugram accounted for 38%.The demand for office space in Delhi-NCR is also increasing.
Low mortgage rates and incentives offered by developers fueled a revival in residential real estate demand in Q4 2021.Blackstone, India’s largest private investor, has plans to invest $22 billion more in the next 10 year.
The government initiatives will be the game-changer, combining all of the above.Real estate is looking forward to the 100 smart cities project.Fiscal 2021-22 has been extended to allow tax deductions of up to Rs 1.50 Lakh on interest on housing loans and tax holiday for affordable housing projects.
Income tax relief for home-buyers and real estate developers for primary purchase/sale residential units with a value of Rs 2 crore between November 12, 2020 and June 30, 2021 has been very successful.
The government also established the Alternate Investment Fund, (AIF), which is expected to revive around 1,600 stalled projects in top cities across the country.
The Union cabinet approved the establishment of Rs 25,000 crore to this end.The approval of 425 SEZs and the creation of an AIF in the National Housing Bank will further boost the real estate market.
SEBI has also approved the Real Estate Investment Trust platform (REIT).This will allow all types of investors to invest on the Indian real estate market.This will create a $19.65 billion opportunity in India’s real estate market over the next few years.
Realizing that 10 million housing units are in short supply in urban areas, and also knowing that 25 million affordable housing units will be needed by 2030, who can stop the real estate sector from contributing at least 13 percent to the GDP of India’s economy?
(The writer is Director of M3M India.India’s second largest real estate brand in terms of sales.These views are my own.
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