According to a joint report by Knight Frank India and the Confederation of Indian Industry (CII), the Indian real estate sector is projected to grow over three times and reach an estimated USD 1.5 trillion by 2034. This would constitute 10.5% of the total economic output at that time. The report, titled ‘Indian Real Estate: A Decade from Now’, highlights that the sector’s market size was approximately USD 482 billion in 2023, contributing 7.3% to the total economic output. The residential market is expected to lead with a value of USD 906 billion, followed by the office sector contributing USD 125 billion. The report also states that land for manufacturing activities is estimated to generate a value of USD 28 billion, while warehousing is projected to yield revenues of USD 8.9 billion.
The growth of the Indian real estate sector in the next decade will depend on various factors, including a growing young population, domestic manufacturing, infrastructure development, and urban expansion. The report suggests that under favorable conditions and assuming an annual 2% depreciation of the Indian Rupee to USD exchange rate, India’s GDP could potentially reach USD 10.3 trillion by 2034.
Gulam Zia, Senior Executive Director of Research, Advisory, Infrastructure, and Valuation at Knight Frank India, believes that the real estate sector will play a crucial role in India’s economic ascent in the coming decade. Zia mentioned that factors such as burgeoning wealth, robust consumer spending, infrastructural advancements, entrepreneurial fervor, and initiatives like ‘Make in India’ contribute to the sector’s transformative journey. He anticipates that the Indian real estate sector will grow to a USD 1.5 trillion powerhouse by 2034, constituting 10.5% of the nation’s economic output.
The report also highlights demographic trends, stating that India’s population is expected to reach 1.55 billion by 2034, with an estimated 42.5% residing in urban centers. To accommodate this urban population, India will require an additional 78 million housing units between 2024 and 2034. It is expected that a substantial portion of the population will fall into the lower-middle and upper-middle-income brackets by 2034, generating housing demand for the affordable and mid-segment categories. Additionally, the proportion of High-Net-Worth Individuals (HNIs) and Ultra High Net Worth Individuals (UHNIs) households is expected to rise from 3% to 9% by 2034, driving demand for luxury housing.
The office real estate market in India has also witnessed significant growth. In 2008, the top 8 cities in India accounted for 278 million square feet of office stock, which has now increased to over 900 million square feet. Tier 2 and 3 cities have also experienced rising demand and supply for office real estate, driven by factors such as business expansion, low costs, infrastructure development, the rise of the IT and services industry, and the availability of talent. The report predicts that an estimated 2.7 billion square feet of office space will be required by 2034 to accommodate economic activity and growth in formal employment. This represents an additional requirement of 1.7 billion square feet in the next decade. The potential revenue generation from India’s office real estate is estimated to be USD 125 billion in 2034.
The report also suggests that Global Capability Centers (GCCs) will potentially drive the office market in the next decade. By 2030, there could be an estimated 2,400 GCCs across India, as the country emerges as a global technology and services hub. Assuming a similar pace of growth, the number of GCCs in India may scale up to 2,880 by 2034.
Housing Sales Report
According to a report by PropTiger.com, India’s top eight primary residential markets experienced a significant increase in demand during the first quarter of 2024. Housing sales in value terms rose by 68% to nearly Rs 1.11 lakh crore (Indian currency) compared to the same period in the previous year.
The report, titled ‘Real Insight Residential – January-March 2024’, states that the gross transaction value or sales value represents the total value of properties sold in a city during the first quarter of 2024. This value is calculated by multiplying the total number of units sold by the weighted average price and further by the weighted average size of the properties. In terms of area, housing sales also saw a surge of 63% to 162 million square feet.
The data from PropTiger.com shows that housing sales grew by 41% to 1,20,640 units in the first quarter of 2024 compared to the same period in the previous year. Vikas Wadhawan, Group CFO, REA India and Business Head of PropTiger.com, highlighted that the growth in housing sales is positive for the overall economy, as many ancillary industries, such as cement and steel, rely on the real estate sector.
Ankita Sood, Head of Research at PropTiger.com & Housing.com, mentioned that the first quarter saw an extraordinary 68% surge in property sales’ gross transaction value compared to the previous year’s Q1. Major cities like Mumbai, Hyderabad, Delhi NCR, and Pune accounted for 76% of the total transaction value of Rs 1.11 lakh crore. This surge not only signifies increased demand but also reflects a remarkable 15-20% rise in property prices within key business districts. The momentum is expected to continue in the coming two quarters, driven by economic growth and strong demand.
