The valuation and consulting firm RBSA Advisors expects India’s real estate sector to grow at a CAGR of 15% from USD 60 bn in 2010 to USD 1,000 bn by 2030 and expected to contribute 13% of the country’s GDP by 2025.
It stated that the Indian real estate market is showing strong signs of rebound as the economy continues to recover post the COVID-19 pandemic. Indian real estate residential segment (averaging roughly 3-5% of GDP) contributes to 80% of the Real Estate Market. The report said that in H1 of 2021, the impact on residential market traction has been seen more as a speed-bump rather than a major obstruction.
After a prolonged period of falling and then stabilizing, residential prices are likely to start rising again. 5% capital value growth for the residential property segment is expected in the country in 2022. As things are getting back to normal, residential sales volumes have shown a strong growth of 67% YoY to 99,416 units and the unsold inventory level dipped slightly, by 1% YoY since the H1 2020, to 441,742 units in H1 2021.
The Government's focus on affordable housing is expected to further provide an impetus to this segment. The organised retail real estate sector is expected to increase by 28% to 82 million sq. ft. by 2023. India registered investments worth USD 2.4 billion into real estate assets, a growth of 52 % YoY in the first half of 2021.
The momentum kept going as the Union Budget 2022 announced an outlay of Rs 20,000 crore for Gati Shakti in infrastructure projects. Rs 48,000 crore for Pradhan Mantri Awas Yojana (PMAY) for urban and rural homes in FY23. It is expected that the real estate market will recover from the shock across the forecast period as it is a 'black swan' event (COVID ‘19) and not related to ongoing or fundamental weaknesses in the market or the global economy.
41 investors have made 157 investments totalling to USD 5,281 million since 2021. Amongst the ten transactions in last year were SWAMIH Fund, Motilal Oswal, HDFC Venture, Altico Capital, ASK Group, Piramal Enterprises, KKR, Piramal Fund, Xander Finance and BlackSoil Realty.
In October 2021, SWAMIH has given final approval to 95 projects sanctioning more than Rs 9,500 crore which will complete over 57,700 homes. The latest fund offering by Motilal Oswal Real Estate has a target to raise Rs 1,250 crore. HDFC property fund is one of the largest private equity real estate funds in India, having an aggregate capital commitment of Rs 7,200 crore across four funds.
The International Monetary Fund (IMF) predicts that the global real GDP growth will be 3.6% from 2021 to 2023. Recovering commodity prices, after a significant decline in the historic period is further expected to aid the real estate market growth. Developed economies are also expected to register stable growth during the forecast period. Additionally, emerging markets are expected to continue to grow slightly faster than the developed markets in the forecast period.
RBSA Advisors Managing Director & CEO Rajeev R. Shah said, “As we slowly but surely get back to normal and not the new normal, the Indian Real Estate sector also shows strong signs of a rebound. While 2021 recorded an annual Private Equity transaction of USD 3.6 billion (announced value) in this space in India, the coming years show a lot of promise with the investment activity being up 72% compared to the previous year. The bill boards are back and as banks induce people with very attractive financing terms, we expect the Real Estate sector to do very well in the near future".
