Real Estate Market size in India

6 Aug, 2021

The real estate sector in India is one of the fastest-growing sectors in India. Therefore, there are a lot of opportunities for investors to invest in this sector safely. The main reason is that the demand exceeds supply in most of the cities. Investors from around the world are keen to invest in the real estate sector. It means that there is huge potential for investors here. Its size is expected to increase with time.

And this is just the beginning as there will be more and more demand from people moving into the city to work. It means that real estate prices for properties will keep growing. Here we bring you an in-depth analysis of India's real estate market size and how it is expected to grow in the coming years.

Real Estate Market Size in India and where is it Going?

According to a report, the size of the real estate market in India was approximately $ 1.72 billion (approx. Rs 12,000 crore) during 2019, and it is expected to grow up to $9.30 billion (approx. Rs 65,000 crore) by 2040. This growth is mainly contributed by the high demand and rising standard of living among the population in India. The strong economic growth, urbanization, increasing disposable income, access to credit facilities, increase in FDI, and growing population are some of the factors driving this growth.

Investors should note that although there is an indication of huge potential in the real estate market, it is advisable to invest only in the top cities. By 2050, this sector is all set to contribute 13% of India's GDP. This growth is supported by the fact that sectors like agriculture, finance, and education that constitute most of the economy are shrinking while the service sector is growing faster. Moreover, this trend is expected to get stronger as India develops more urban areas in the future.

Urban areas need more infrastructures, such as buildings and vehicles. This requires huge real estate investment. Some of the top cities you can invest in the next few years are Delhi/NCR, Mumbai, Kolkata, Chennai, Ahmedabad, and Bangalore.

Recovery Momentum in the Second Half of 2020

India's biggest cities, Delhi and Mumbai, have had a huge demand for residential property for over a decade now. But, the supply has not been able to meet that demand due to various reasons such as policy inefficiencies, lack of infrastructure, and construction delays. The office market demand in Real Estate brokerage Market size in India was at a peak in 2019, but the COVID-19 policy has caused uncertainty in the market. The same goes for residential demand.

During the 2017 and 2019 financial years, this market grew at a CAGR of almost 50% because of the high demand. The residential housing segment, in particular, has been one of the most sought-after real estate segments in India for a long time and has consistently grown at an above-average growth rate. The momentum is expected to start picking up by mid-2020 because of the growing economy and corporate investment. In addition, due to the huge potential of this real estate market, many investors are lining up to invest here.

Market Size is Booming, Thanks to Foreign Investments

Foreign investments are considered to be the main driving force for market growth in India. Most new investors are from other countries, especially Western nations such as the United States, Canada, UK, and Australia. Not only this sector, but the economy also depends heavily on foreign investments. In 2020, the sector attracted $5 billion foreign investment, and in 2021, it attracted $7 billion foreign investment. The government has set a target to double real estate investments from existing levels by 2020.

A policy has also been introduced that allows 100% overseas investment in commercial property development projects with prior FIPB approval. It will help the Indian real estate market expand further. India has been growing rapidly, so many investors have started investing here to earn a huge return on investment. As a result, investors are monitoring the real estate market in this country daily.

Foreign investment is expected to boom even further, especially because of the huge potential that the Real Estate brokerage Market size in India has. Most investors invest in sectors like property development, commercial offices, retail outlets, and malls. It helps businesses grow faster as they get access to funds that they can use for expansion purposes. These investments help the country's economy too because it creates a demand for residential property and commercial offices which in turn creates huge job opportunities.

$1 Trillion Market Size Soon

India's residential real estate market size is expected to touch around $1 trillion by 2030. There will be a lot of demand for residential property in big cities such as Delhi/NCR and Mumbai because of favorable policies introduced by the government and high employment generation from domestic and foreign investment.

The commercial office market has also been growing rapidly and will continue to do so in the future. Other cities like Chennai, Bangalore, and Hyderabad will also see an increase in property investments. The demand for affordable housing is growing rapidly because many of the people who live in low-income areas cannot afford to buy houses worth millions of rupees. This segment will continue to grow at a rapid rate because the government has come up with new policies to help the investors in this country.

Bottom Line

This was all for the article on India's real estate market size. It has grown tremendously over the past few years and will continue to grow in the next few years. The government is also trying hard to make this sector even more attractive for foreign investors to bring in investment from other countries and help its economy grow further.
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