India’s real estate sector has received over $60 billion in institutional investments over the past decade, most of it funded by foreign players, according to a report by Colliers and the Confederation of Real Estate Developers Associations of India (CREDAI).
The sector is projected to become a $10 trillion market by 2047, while its share in India’s gross domestic product (GDP) is estimated to rise to 14-20 per cent over the same period. Currently, the sector’s share in GDP stands at around 7.3 per cent, the report said.
Foreign capital inflows are said to have improved over the years due to strong domestic growth prospects, improvements in the ease of doing business and continued relaxations on FDI.
The report also forecasts increased adoption of alternative financing strategies in the Indian real estate sector on the back of rising foreign capital and an equally strong contribution from domestic investors. “Green financing in the form of bonds and credit issuances, and relatively new funding avenues such as social impact funds, special situations funds and venture capital, will become increasingly prevalent in the coming years,” the report said.
“Alternative segments such as senior living, co-living spaces and data centers will also experience exponential growth, driven by evolving consumer preferences and technological integration, with a focus on sustainability and energy efficiency becoming standard across all developments,” said Boman Irani, President, CREDAI National.
The report notes that the country’s median age is likely to rise from about 30 years to about 40 by 2050. Meanwhile, around 50 percent of India’s population will reside in urban centres by 2047.
Manoj Gaur, President, CREDAI National, said, “With rapid urbanisation and supporting factors such as infrastructure growth and employment opportunities, the real estate appeal is likely to expand beyond tier-1 cities and create scattered growth hubs in smaller towns and cities.”
The report further noted that initiatives such as the Real Estate Regulatory Authority (RERA) and Real Estate Investment Trust (REIT) regulations have improved transparency, enhanced investor confidence and streamlined operations across the sector.
Small and mid-sized REITs/REIT asset classes are expected to expand beyond offices and retail to include warehouses, hotels and rent-producing residential properties in the coming years. “Over the long term, these avenues of financing will become prevalent in alternative real estate verticals such as data centers, hospitals, educational institutes, senior and student housing, etc.,” he added.
First published: September 23, 2024 | 18:22 IS
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