Regional Analysis 2019 India

India Market Review 2019

Rapid urbanisation in the country is pushing the growth of real estate. More than 70% of India’s GDP will be contributed by urban areas by 2020.

6.6%
GDP growth 2017-18
7.3%
Expected GDP growth 2018-19
70%
GDP from urban areas
600m sq.ft.
Commercial stock 2018

India’s GDP is estimated to have increased by 6.6% per cent in 2017-18, and is expected to grow by 7.3% in 2018-19. Between April to July of 2018, GDP grew by 8.2%. India has retained its position as the third-largest start-up base in the world, with over 4,750 technology start-ups, with about 1,400 new start-ups being founded in 2016, according to a report by NASSCOM. India’s labour force is expected to touch 160-170 million by 2020, based on the rate of population growth, increased labour force participation, and higher education enrolment, among other factors, according to a study by ASSOCHAM and the Thought Arbitrage Research Institute. Its foreign exchange reserves were US$400.49 billion in the week up to September 14, 2018, according to data from the RBI.

Real estate in India is expected to reach a market size of US$1 trillion by 2030 and contribute 13% of the country’s GDP by 2025, up from US$120 billion in 2017. The Retail, Hospitality and Commercial sectors are also growing significantly, providing much-needed infrastructure for India's evolving needs.

Cross-border capital inflows to India’s real estate sector have increased 600% during the 2012-17 period, to reach US$2.6 billion. 

Sectors such as IT and ITeS, retail, consulting and e-commerce have registered high demand for office space in recent times. Commercial office stock in India is expected to have reached 600 million sq.ft. by the end of 2018, while office space leasing in the top eight cities is expected to reach 100 million sq.ft. during the 2018-20 period. Grade-A office space absorption is expected to reach 700 million sq.ft. by 2022, with Delhi-NCR contributing the most to this demand.

The Securities and Exchange Board of India (SEBI) has given its approval for the Real Estate Investment Trust (REIT) platform, which will facilitate all kinds of investors in the Indian real estate market. It could create an opportunity worth Rs 1.25 trillion (US$ 19.65 billion) in the Indian market over the coming years. The emergence of nuclear family units, rapid urbanisation and rising household income are likely to remain the key drivers for growth in all spheres of real estate, including residential, commercial and retail. In particular, rapid urbanisation in the country is pushing the growth of real estate. More than 70% of India’s GDP will be contributed by urban areas by 2020.

Cross-border capital inflows to India’s real estate sector have increased 600% during the 2012-17 period, to reach US$2.6 billion. In 2017, India ranked 19th out of 73 countries in attracting cross-border capital to its property market. Private equity and venture capital investments in the sector reached US$3.37 billion between January and October 2018. Between March 2015 and 2018, the retail segment in Indian realty attracted private equity investments of around Rs 5,500 crore (US$ $853.4 million).

Contributor: Darshan Joshi

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