Indian real estate market value to reach $1 trillion by 2030

Inayat-ur-Rahman, Business Editor

The real estate sector in India is expected to reach $1 trillion in market value by 2030, up from $200 billion in 2021 and contribute 13 per cent to the country’s GDP by 2025, according to India Brand Equity Foundation (IBEF).

India’s real estate sector, the 2nd largest employer after agriculture, is set to a new level of growth due to the sound regulatory environment that has eliminated unreliable developers and brokers, a top industry official told Gulf Today.

“Strong regulations and oversight under the Real Estate (Regulation and Development) Act (RERA) has eliminated the wrong players from the real estate market that is now clean and we are seeing a strong upturn in selling activities,” Harshvardhan Tibrewala, Managing Director of Roha Realty, said in an exclusive interview.

Harshvardhan Tibrewala.

“The market is well regulated and the investors’ money is under the RERA watch in the escrow accounts. So, there is a renewed trust factor that is firmly in place. Non-Resident Indians (NRIs) can now invest in properties safely. However, they need to look at a few things – such as, location, price, quality and the developer’s credentials.”

 “Between July 2021 and September 2021, a total of 55,907 new housing units were sold in the eight micro markets in India (59% YoY growth),” IBEF said in a report. “India’s real estate sector saw over 1,700 acres of land deals in the top 7 cities in a year.

 “As per ICRA estimates, Indian firms are expected to raise up to IRs3.5 trillion (US$48 billion) through infrastructure and real estate investment trusts in 2022, as compared with raised funds worth US$29 billion to date.

 “Foreign investments in the commercial real estate sector were at $10.3 billion from 2017-21. As of February 2022, developers expect demand for office spaces in SEZs to shoot up after the replacement of the existing SEZs act.”

The series of reforms that started in 2014 led to increased capital flows over the years. Out of the total Institutional investment of US$62.8 billion from 2006 to March 2022, 58 percent was received 2015 onwards, a recent report by global real estate advisory Jones Lang LaSalle said.

“Apart from direct investments noted above, investment platforms/ joint ventures have also announced commitments of US$19 billion as of end of the January-March quarter (Q1), 2022. Though the details of these investments remain private, the rise in such platforms indicates more investments by these routes. The successful listing of three Real Estate Investment Trusts (REITs) is another leap towards maturity of the market,” JLL said in a report.

Echoing the same, Shishir Baijal, chairman and managing director, Knight Frank India, said: “Over the last 8-10 quarters, it has been firmly established that there is a strong latent demand in the residential sector, which when supported by right prices and sops, will convert to sales.

“In the last few quarters, this has given the once beleaguered sector a strong comeback. While some headwinds face the residential market with the geo-political issues, high inflation leading to increased repo rate and higher prices, demand remains strong leading to a positive outlook for the sector.”

In 2020, the manufacturing sector accounted for 24 percent of office space leasing at 5.7 million square feet. SMEs and electronic component manufacturers leased the most between Pune, Chennai and Delhi NCR, followed by auto sector leasing in Chennai, Ahmedabad and Pune, said IBEF in its report. The 3PL, e-commerce and retail segments accounted for 34 per cent, 26 per cent and 9 per cent of office space leases, respectively. Of the total PE investments in real estate in Q4 FY21, the office segment attracted 71 per cent share, followed by retail at 15 per cent and residential and warehousing with 7 percent each.

Roha Realty is the real estate arm of the Mumbai-based diversified business conglomerate Roha Group, which carries a legacy of more than five decades. The developer, whose development portfolio consists of eight delivered and nine under-development projects with total development portfolio exceeding three million square feet worth $200 million (Rs15.9 billion, at current exchange rate), has earned a name for delivering quality homes to customers.

Harshvardhan Tibrewala is in Dubai to set up his company’s first overseas office to tap the local market for the NRIs. His team is meeting the UAE-based real estate brokers for securing home buyers. He says, the developers’ credibility in ensuring timely delivery of projects and on quality will dictate the success and failure of a developer, going forward.

A mid-size real estate developer in Mumbai, India, Roha Realty has already been named as the Most Promising and Trusted Developer, Mumbai’ at the Business Titans Awards held in Dubai.