A recent report has forecasted a remarkable expansion of India’s real estate sector, projecting a valuation of approximately $5.8 trillion by the year 2047, coinciding with the nation’s centennial celebration of independence. This revelation stems from a study conducted by real estate consultancy Knight Frank India in conjunction with the National Real Estate Development Council (NAREDCO). Presently, the estimated value of the real estate sector hovers around $477 billion.
The report accentuates that the projected valuation of the real estate industry will contribute a notable 15.5% to the total economic output in 2047, signifying a substantial surge from the current 7.3%. Over the past two decades, private equity investments in the Indian real estate sector have exhibited consistent growth.
Forecasts for 2023 suggest that private equity (PE) investments in Indian real estate are set to reach $5.6 billion, demonstrating a year-on-year growth rate of 5.3%. The estimations on India’s overall economy project a range between $33 trillion to $40 trillion, whereas the current size of the Indian economy stands at approximately $3.4 trillion. With India’s Gross Domestic Product (GDP) predicted to reach $36.4 trillion by 2047, private equity investments in the Indian real estate sector are anticipated to ascend to $54.3 billion by 2047. This transition highlights a Compound Annual Growth Rate (CAGR) of 9.5% spanning from 2023 to 2047.
“Real Estate is poised to catalyze a substantial expansion of the Indian economy by 2047. The magnified economic growth will engender augmented demand across diverse asset categories such as residential, commercial, warehousing, and industrial land developments. These domains will grow exponentially to cater to the escalating requirements of the economy and the consumptive demands of individuals,” remarked Rajan Bandelkar, President of NAREDCO.
Knight Frank India has projected that there will be an estimated demand for 230 million housing units in India within the next 25 years. Evaluating the market value, the residential segment demonstrates the potential to contribute an output equivalent to $3.5 trillion by 2047. Shifting income profiles are poised to fuel housing demands across various price segments. Although housing demand will predominantly center on affordable housing in the coming years, it is anticipated to gradually pivot towards the mid and luxury segments.
“The percentage of lower-income households is poised to decrease from the current 43% to a mere 9% by 2047. Consequently, a substantial portion of the population will transition to lower-middle and upper-middle-income categories. This transformation will notably boost the demand for mid-segment housing. Moreover, the proportion of high net-worth individuals (HNIs) and ultra-high net-worth individuals (UHNIs) households is projected to escalate from the current 3% to 9% in 2047, thereby generating a significant demand for luxury housing in India,” the report elucidated.
Additionally, Knight Frank’s estimates suggest that a considerable 69% of the working population will hold formal employment roles, actively contributing to the economic expansion by 2047.
In terms of market value, the prospective office stock is positioned to generate an output potentially equivalent to $473 billion by 2047. Notably, the office stock has witnessed a substantial increase from 278 million square feet in 2008 to a cumulative 898 million square feet across the leading eight Indian cities in 2022.
“The next 25 years are poised to unveil a dramatic metamorphosis within the Indian economy and the real estate sector. Favorable demographics, enhanced business and investment sentiments, coupled with governmental impetus towards high-value output sectors such as manufacturing and infrastructure, will robustly bolster India’s economic expansion,” asserted Shishir Baijal, Chairman & Managing Director of Knight Frank.
