Anticipated in a report, India's real estate sphere is set to burgeon to $5.8 trillion by 2047, aligning with the nation's 100th Independence Day. Presently, the real estate market is assessed at approximately $477 billion.
The collaborative report by real estate advisor Knight Frank India and the National Real Estate Development Council (NAREDCO) highlights that the projected value of the real estate sector will play a significant role. It is anticipated that this estimated value will elevate its contribution to the overall economic output to 15.5% by 2047, up from the current 7.3%. Over the last two decades, investments from private equity in the Indian real estate domain have demonstrated consistent growth.
Forecasts for 2023 indicate that private equity (PE) investments in the Indian real estate sector are on track to hit $5.6 billion, reflecting a year-on-year growth of 5.3%. In the broader context of India's economy, its size is estimated to fall within the range of $33 trillion to $40 trillion. The present valuation of the Indian economy stands at approximately $3.4 trillion. With a projected GDP of $36.4 trillion by 2047, PE investments in the Indian real estate arena are anticipated to surge to $54.3 billion by the same year. This represents a Compound Annual Growth Rate (CAGR) of 9.5% spanning from 2023 to 2047.
The substantial growth of the Indian economy by 2047 will find its driving force in the real estate sector. This extensive economic expansion will generate heightened demand across various asset categories, encompassing residential, commercial, warehousing, and industrial land developments. These sectors are expected to experience exponential growth to cater to the expanding requirements of the economy and the consumption demands of individuals," stated Rajan Bandelkar, President of NAREDCO.
Knight Frank India's projections indicate a cumulative housing requirement of approximately 230 million units in India over the next 25 years. In a market value context, the residential sector holds the capability to generate an output worth around $3.5 trillion by 2047. This forecast suggests that with evolving income demographics, the need for housing will surface across all price categories. Although the near-term focus will predominantly be on affordable housing, there will be a gradual transition towards the mid-segment and luxury housing segments in the coming years.
The current proportion of lower-income households, currently at 43%, is projected to decrease to 9% by 2047. Consequently, a considerable portion of the population will transition into the lower-middle and upper-middle-income brackets. This shift will precipitate a notable demand for mid-segment housing. Furthermore, the anticipated rise of high net-worth individuals (HNIs) and ultra-high-net-worth individuals (UHNIs) households in India, expected to climb from 3% to 9% by 2047, will generate substantial demand for luxury housing within the country," the report stated.
Moreover, according to Knight Frank's calculations, a substantial 69% of the workforce will hold formal employment roles, contributing to the envisaged economic growth by 2047.
Regarding market valuation, the anticipated office inventory has the potential to yield an estimated output of approximately $473 billion in 2047. The report indicated that office space availability has experienced a substantial expansion, surging from 278 million square feet in 2008 to a cumulative 898 million square feet across India's prominent eight cities in 2022.
The forthcoming quarter-century is poised to observe a remarkable metamorphosis in both the Indian economy and the real estate industry. Elements such as demographic strengths, escalating positive sentiments in business and investments, and governmental impetus toward high-value sectors like manufacturing and infrastructure, are set to provide robust backing to India's economic expansion," affirmed Shishir Baijal, Chairman & Managing Director of Knight Frank.
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