Indian Realty To Contribute 15.5% To Total Economic Output In 2047
In its latest report Knight Frank India, in association of NAREDCO has projected that India’s real estate sector is expected to expand to USD 5.8 trillion (trn) or USD 5,833 billion (bn) by 2047. This estimated real estate output value will contribute 15.5% to the total economic output in 2047 from an existing share of 7.3%. The report India Real Estate: Vision 2047 will be unveiled by Shri. M. Venkaiah Naidu, Former Vice President, Govt of India at NAREDCO’s Silver Jubilee Celebration event in Hyderabad, along with other dignitaries present at the event. By 2047, when India reaches 100 years of independence, the size of India’s economy is estimated to range between USD 33 trn to USD 40 trn. Private equity (PE) 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 bn, reflecting a YoY growth of 5.3%. With India's GDP expected to reach USD 36.4 trn by 2047, the private equity investments within the Indian real estate sector are projected to surge to USD 54.3 bn by 2047, signifying a CAGR of 9.5% spanning 2023 to 2047. Providing perspective on REITs, Knight Frank shared that the combined portfolio of Indian REITs encompasses 84.9 mn sq ft, with 75.9 mn sq ft dedicated to office assets and 9 mn sq ft to retail assets. Additionally, there is ongoing construction of approximately 21.3 mn sq ft within the REITs sector, projected to reach completion within 1-2 years. With the initial REITs setting a positive precedent, it is probable that REITs in the coming years will expand into diverse sectors such as residential and warehousing, in addition to the existing office and retail segments. Inspired by global markets, developers are likely to contemplate venturing into REITs for alternative asset classes like data centers, hospitality, healthcare, education and more, in the longer term over the next 25 years. According to Knight Frank India, in the next 25 years, cumulatively there will be an estimated 230 million units of housing requirement in India. In terms of market value, the residential market has a potential to generate an output equivalent of USD 3.5 trn in 2047. 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% currently to 9% 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 and UHNIs households in India which will likely increase from existing 3% to 9% in 2047 will generate a significant demand for luxury housing in India. As per Knight Frank estimates, 69% of the working population will be formally employed to support the economic expansion of US$ 36 trn by 2047. In terms of market value, the estimated office stock is likely to generate a potential output equivalent to USD 473 bn in 2047. The office stock has grown significantly from 278 mn sq ft in 2008 to 898 mn sq ft cumulatively across the leading eight cities in India in 2022. Spurred by the high degree of correlation between the economic growth and increase in income levels, India’s warehousing market is likely to witness a potential demand for 159 mn sq ft by the year 2047. India’s warehousing sector has a potential to generate an output equivalent to USD 34 bn in 2047.
Tags : Knight Frank India association NAREDCO India real estate sector economic output Shri. M. Venkaiah Naidu Former Vice President Govt of India Private equity investments GDP REIT