India’s real estate sector to grow multifold to about USD 6 trillion by 2047: Report
Aug 27, 2023
New Delhi [India], August 27 : India’s real estate sector is expected to expand to USD 5.8 trillion by 2047 when the country celebrates its 100th year of Independence, according to a report. The current real estate is estimated to be about USD 477 billion.
The report released by real estate consultant Knight Frank India in association with the National Real Estate Development Council (NAREDCO) stated this estimated real estate output value will contribute 15.5 per cent to the total economic output in 2047 from existing 7.3 per cent.
Private equity 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 billion, reflecting a YoY growth of 5.3 per cent.
On India’s overall economy, the size of India’s economy is estimated to range between USD 33 trillion to USD 40 trillion. As per estimates, the Indian economy is currently at USD 3.4 trillion.
With India’s GDP expected to reach USD 36.4 trillion by 2047, the private equity investments within the Indian real estate sector are projected to surge to USD 54.3 billion by 2047, signifying a Compound Annual Growth Rate of 9.5 per cent spanning 2023a
to 2047.
“Significant expansion of the Indian economy by 2047, will be powered by Real Estate. A multifold economic expansion will boost demand across all the asset classes - residential, commercial, warehousing, industrial land developments etc - will grow at a multiplier rate to accommodate the growing needs of the economy and consumption needs of the individuals,” said Rajan Bandelkar, President Naredco.
According to Knight Frank India, there will be an estimated 230 million units of housing requirement in India cumulatively in the next 25 years.
In terms of market value, the residential market has the potential to generate an output equivalent of USD 3.5 trillion in 2047, it said.
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 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 (high net-worth individuals) and UHNIs (ultra-high-net-worth individuals) 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,” it said.
Further, as per Knight Frank estimates, 69 per cent of the working population will be formally employed to support the economic expansion by 2047.
In terms of market value, the estimated office stock is likely to generate a potential output equivalent to USD 473 billion in 2047.
It said the office stock has grown significantly from 278 million sq ft in 2008 to 898 mn sq ft cumulatively across the
leading eight cities in India in 2022.
“The next 25 years are going to witness a dramatic transformation in the Indian economy and the real estate sector. Factors like demographic advantages, improving business and investment sentiments, and government policy push towards high-value output sectors such as manufacturing, infrastructure etc. will robustly support the economic expansion of India,” said Shishir Baijal, Chairman & Managing Director, Knight Frank.
