November 22, 2023

India’s rising stature in global real estate domain

India’s pre-eminent perch as the fifth-largest economy in the world is powered by its phenomenal economic remarkable feat growth and resilience in difficult times. While many sectors have chipped in to make this possible, the country’s ever-evolving real estate industry has taken a front-seat role in propelling this growth.

The Indian real estate market is poised to catapult its way to a heady figure upwards of Rs 65,000 crore by 2040 from its present level of around Rs. 13,000 crore, with the sector set to contribute over 13% of India’s GDP by 2025 itself. These are dizzying projections, but the realty sector is well and truly on track to achieve these milestones and further elevate India’s stature on the global stage.

Another very powerful index of India’s rising global standing comes from the global real estate transparency index according to the Global Realty Survey, in which the country has climbed 5 places to 35th from its 40th position in 2014. According to international industry watchers, India has emerged as one of the top 10 countries to register maximum progress in clarity and transparency in the real estate sector over the past few yearsr

This has surely boosted investor confidence both within the country and outside, riding on better market fundamentals, improved infrastructure, easier access to information, greater accuracy of available data, smoothness of transactions and a better regulatory and legal environment. With this enhanced transparency and greater ease of doing business, the real estate sector is set to benefit from a multiplier effect and continue to power the growth of India’s economy.

India’s rise in this global transparency index is also unparalleled by countries with similar-sized markets, for instance, the other BRICS bloc nations – China, South Africa, Brazil and Russia – all failing to make any progress on the global ranking roster. With this improved outlook, the winds are favourable for more FDI to flow into the sector to supplement the domestic gusto.

As per the global survey, the UK ranks first in transparency, followed by Australia and the US. The top 10 list is completed by France, Canada, New Zealand, the Netherlands, Germany, Sweden and Ireland. Venezuela is pinned as the least transparent market, bringing up the rear at 100th.

Improved confidence of international investors has been vindicated by FDI inflow which topped $7.5 billion, according to market estimates. The government’s liberalized policies and regulatory reforms, including the RERA Act, have contributed seriously to this extremely positive outlook. This exponential growth has lifted overall business sentiment by augmenting infrastructure, logistics and connectivity, all contributing to economic growth in the final analysis and promoting India as an attractive investment destination.

This buoyancy is reflected in ground-level figures as well. While net office space absorption during Q1 of 2023 (Jan-Mar) clocked around 8.4 million sq. ft., new launches of real estate projects in the same quarter across the seven big cities in the country accounted for a significant 42%, marking a jump of nearly 27% logged during the same period four years back.

The residential real estate market in the country saw an all-time high of home sales at nearly Rs. 3.5 lakh crore in FY23, a whopping growth of over 48% year-on-year and an almost 37% jump in the number of homes sold. In the luxury residential segment, the YoY growth was an even more striking 151% in Q1, 2023.

While the real estate sector is the second-highest employment generator in India after the farm sector, experts now predict higher investment in this domain by NRIs and HNIs. This segment of buyers has been steadily growing in numbers over the years in the luxury real estate market, riding on factors like back-to-home urge, reliable investment option, evolving demographics, availability of high-end, bespoke properties that suit their sophisticated lifestyle, supportive government policies, etc.

This positive outlook is reflected in a recent report which predicts the Indian real estate sector to swell in size to nearly $6 trillion by 2047, contributing almost 16% to the GDP share, which now hovers around 7.5%. This is a clear indicator of India’s rising stature in the global real estate market as one of the most sought-after investment destinations.

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