By the year 2030, in India 2 out of 5 people will be living in a city, according to the World Economic Forum, with the estimate of 1.5 billion people – that’s 600 million people living in urban centres. India will have six more megacities, with population over 10 million. By 2030, India will have 5,000 small urban towns and 50,000 developed rural towns, along with a young (40 and below) population of 77% and a median age of 31. By 2030, India will take over China as the nation with the highest population. I open with these facts to show the major demand that Indian real estate will be undergoing in the coming years.
Increasing incomes, urbanization and economic growth are the driving forces for the steadily growing demand of residential and commercial real estate in India. Due to its greater growth potential than other investments like bank deposits, gold and so on, real estate is a highly preferred asset class. Commercial real estate is on the rise with large number of constructions of shopping malls, office complexes, industrial parks and more. Sectors such as hospitality are increasingly growing at a fast pace in India, creating opportunities for investors.
The Government of India’s affordable housing scheme, Pradhan Mantri Awas Yojana is driving residential development. The Government has also facilitated the growth of the real estate sector by introducing massive changes in the taxation and regulatory aspects of real estate. Along with that, the Real Estate Regulatory Authority (RERA) Act 2016 is ensuring transparency in the real estate sector. As a result of increasing transparency and guaranteed returns, private investments in the sector have surged. RERA has also ensured that credible developers alone will be able to survive in this industry.
Some conclusions about the future of real estate can be drawn out, based on the current scenario and possible future economic and political changes. India is rapidly growing as an economy which will lead to a heavy inflow of foreign investments, be it in the retail sector, FMGC, gourmet or luxury brands. When a certain sector is directly related to infrastructure and real estate, the rise and fall there will affect the overall structure of Indian realty. Therefore, we can expect a steady growth rate in the coming years in India and it will differ from city to city based on various factors mentioned.
Rural real estate will undergo the most drastic change, with the penetration of finance and internet services. More money will be going through banking channels. This will give access to credit required for real estate to flourish.
There is always a tremendous demand for real estate in India. This sector aims to reach a figure of $180 billion by the year 2020. (Zricks.com) The most livening fact is that both residential and commercial real estate have gained importance and both will witness a flourishing future. According to the IBEF website, real estate sector in India is expected to contribute 13 per cent of the country’s GDP by 2025 and reach US$ 1 trillion by the year 2030.
In the short term, the slowdown may continue but the true value of the sector is yet to be realized.