India's real estate market is predicted to grow to $5.8 trillion by 2047: Factors driving this boom!

Update: 2023-10-11 09:22 GMT

New Delhi, India – According to a joint analysis by Knight Frank and the National Real Estate Development Council (Naredeco), India's real estate market is predicted to grow to $5.8 trillion by 2047, contributing 15.5% to GDP, up from 7.3% today. Read more: How will the Israeli-Hamas conflict affect the Indian economy? According to the research 'India Real Estate: Vision 2047,' the residential segment will dominate the real estate market. It is anticipated that by 2047, when India celebrates 100 years of independence, the size of the Indian economy will range between $33 and $40 trillion. According to the report, private equity investments in the Indian real estate market have steadily increased over the last two decades, with a predicted number of $5.6 billion in 2023 expected to rise to $54.3 billion by 2047, or a 9.5% annual growth rate. What are the forces leading to boom in real estate market in India?

1.Real estate as an investment opportunity

Home ownership is more appealing than ever as a long-term financial plan. In 2021, Second-home purchases also witnessed surge. People began to recognize the benefits of real estate investing and began to regard it as a secure and reliable type of investment.

This year will see a multifold increase in real estate investments, owing to the fact that the real estate market tends to be less unstable compared to other investment opportunities and provides larger returns.

2.Decline in low income households

According to Rajan Bandelkar, president of Naredeco India, real estate would drive significant growth in the Indian economy by 2047. A multifold economic boom will stimulate demand across all asset classes - residential, commercial, warehousing, industrial land expansions, and so on - and will rise at a multiplier rate to meet the economy's and consumers' growing consumption needs." According to Knight Frank India, India will require an estimated 230 million housing units over the next 25 years. Housing demand is likely to continue concentrated in inexpensive housing, but will progressively migrate to mid-tier and luxury homes. The proportion of low-income households will fall from 43% today to 9% in 2047.

3. Government assistance

The government has offered several incentives to encourage the real estate market; including tax breaks and homebuyer subsidies. This has helped to improve the environment for real estate investment.

In his Independence Day speech, Prime Minister Narendra Modi also announced that the government would come up with a scheme to grant relief on housing loans to the urban lower- and middle-class population. The new initiative will help families that live in cities but in rented houses, slums, or chawls, as well as unauthorized colonies.

4. People's growing preference for luxury lifestyle

The concept of integrated living is gradually gaining traction in the residential sector, as home purchasers prefer complexes with cutting-edge amenities such as office buildings, parks, schools, hospitals, and shopping centres with multiplexes.

Homebuyers today want to live a more peaceful, independent, and secure life. As a result, this trend has intensified. The demand for townhouse living is expanding and is expected to continue in 2023. Township living serves the social, civic, and recreational needs of all residents and is equipped with multi-layer security measures.

5. Foreign Investment

Foreign investors are increasingly choosing India as a real estate investment destination.A number of factors, including the country's strong economic development, rising disposable incomes, and a favourable investment environment, have contributed to this.

According to Niranjan Hiranandani, National Vice Chairman of NAREDCO, the domestic economic environment is favorable, with economic resilience, strengthened infrastructure growth plans, different business models, and domestic consumption power, which is what is driving the northbound growth in the Indian real estate sector. A rising GDP will spur development in commercial and industrial real estate, attracting foreign investors to Grade A assets. The emergence of new alternative asset classes will be crucial in combining investments and strengthening investor confidence.

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India's real estate market is predicted to grow to $5.8 trillion by 2047: Factors driving this boom!

1.Real estate as an investment opportunity

2.Decline in low income households

3. Government assistance

4. People's growing preference for luxury lifestyle

5. Foreign Investment

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