India’s real estate sector is expected to expand to $5.8 trillion or $5,833 billion by 2047, according to the latest report by real estate consultancy Knight Frank India and industry body NAREDCO. The report said real estate output value will contribute 15.5 per cent to the total economic output in 2047 from an existing share of 7.3 per cent.
By 2047, when India reaches 100 years of independence, the size of India’s economy is estimated to range between $33 trillion to $40 trillion, according to the report titled ‘India Real Estate: Vision 2047’.
According to the report, in the next 25 years, cumulatively there will be an estimated 230 million units of housing requirement in India. In terms of market value, the residential market has the potential to generate an output equivalent of $3.5 trillion in 2047.
It is expected that with the changing income profiles, the demand for housing will emerge across all the price categories. In the next few years, while the demand for housing will remain concentrated in affordable housing, it will gradually shift towards mid-segment and luxury housing.
The share of lower-income households will reduce from the existing 43 per cent currently to 9 per cent in 2047. Thus, a significant share of the population will shift to lower-middle and upper-middle-income categories. This will enable a significant demand for mid-segment housing. Additionally, the share of HNIs and UHNIs households in India which will likely increase from the existing 3 per cent to 9 per cent in 2047 will generate a significant demand for luxury housing in India.
Niranjan Hiranandani, national vice-chairman of NAREDCO, said, “PMO’s ambitious project ‘Housing for All’ will propel the sustainable demand for residential housing across the spectrum. A strong foundation for the upward cyclical growth of the real estate sector is being laid by the Government of India and the regulatory authorities. The northbound growth in the Indian Real Estate sector is driven by the favourable domestic economic environment with economic resilience, bolstered infrastructure growth plans, alternative investment models, and domestic consumption power.”
He added that growing GDP will stimulate commercial and industrial real estate growth, attracting global investors towards Grade-A assets. Emerging alternative asset classes will also play a critical role in pooling investments and boosting investors’ confidence.
Private equity (PE) investments in the Indian real estate sector have consistently grown over the past two decades. Projections for 2023 indicate that PE investments in Indian real estate are poised to reach USD 5.6 bn, reflecting a YoY growth of 5.3 per cent, according to the report.
“With India’s GDP expected to reach $36.4 trillion by 2047, the private equity investments within the Indian real estate sector are projected to surge to $54.3 bn by 2047, signifying a CAGR of 9.5 per cent spanning 2023 to 2047,” the report said.
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