In their latest report on Skilled Employment in Construction Sector in India, property consultants Knight Frank and The Royal Institution of Chartered Surveyors (RICS) a global professional body state that the real estate output is likely to touch $1 trillion by 2030. The construction sector is likely to create 100 million jobs by the end of the decade and the share of skilled workforce to rise from 9.7% in 2023 to 10.5% by 2030.
the last few decades, the Indian economy has grown manifold bracing multiple global crises such as the dot com crash in 2000, the GFC crisis in 2008, the latest being the COVID-19 pandemic through 2020 and 2021. Currently, even as economies globally face growth downturns due to inflationary pressures and interest rate actions of the central banks, India’s economic growth trajectory has remained resilient. In terms of GDP at market prices, the current size of India’s economy is estimated to be at USD 3.4 trn and is positioned as the fifth largest economy globally.
The rapid growth in India’s economy is driven by increasing income levels which provides impetus to domestic demand and improving business conditions which has gained appeal from the domestic as well as foreign investors.
The pace of economic growth has further widened the scope of expansion of the construction sector in India which includes real estate as well as infrastructure development to accommodate the growing needs of the economy. By 2030, India’s economy is estimated to be at USD 7 trn, propelling a high degree of growth in the construction sector.
In the last ten years, the output from India’s construction sector – inclusive of both infrastructure and real estate development and services – has grown at a CAGR of 11%. The construction sector, along with the output generated from real estate services and ownership of dwellings, contributes 18% to the economy’s total output.
Additionally, this sector is the second largest employment generator with multiple linkages to the economy. In terms of productivity, the elasticity of employment to output of the construction sector is 1.124 .
The output generated from India’s real estate sector is estimated to grow to USD 1 trn by 2030 from the existing USD 650 bn. The growth push to the real estate sector is mostly emerging from the residential demand, in addition to commercial, retail, hospitality, and warehousing developments, to cater to demand arising from the growing population.
Between 2012-2022, 2.8 mn residential units have been launched across the top 8 cities5 in India, translating into 3.1 bn sq ft of residential real estate development6 . Additionally, there is a stock of 880 mn sq ft of Grade A office development and 106 mn sq ft of retail real estate inclusive of shopping malls and high streets across the top 8 cities in India. Business sentiments and conducive policy measures undertaken by the policy makers in the last few years have boosted the investment sentiments of both domestic as well as international investors towards the construction sector in India. Between FY 2012-22, India’s construction sector has attracted a cumulative FDI inflow of USD 35 bn.
Sustainable infrastructure development improves competitiveness across all sectors of the economy such as agriculture, mining and manufacturing, generating a significant number of jobs, which in turn propels domestic consumption and economic growth.
Recognizing the need to improve infrastructure such as roads, railways, ports, telecommunications and energy infrastructure, the central government has increased its budgetary allocation as well as undertaken initiatives to encourage private investments in infrastructure development.
The Government of India’s capital outlay towards infrastructure has increased from 1.7% of GDP in FY 2012-13 to 2.5% estimated for FY 2023-24. Additionally, the central government’s policy initiatives such as National Infrastructure Pipeline (NIP) announced in 2020 envisages USD 1.4 trn investment between FY 2020-25; Bharatmala announced in 2022 aims at better planning and execution of infrastructure development in the country.
