Indian real estate sector set for breakthrough at $10tr by 2047
- 28 Sep 2024
V Nagarajan
These long-term growth ingredients will be pivotal in the expansion of Indian real estate – from under a trillion currently, to potentially a $10 trillion market by 2047, accounting for a 14-20 per cent share in the country’s GDP, according to a report on Indian Real Estate: The Quantum Leap, by Colliers-CREDAI.
Most importantly, the quantum leap will create multiple real estate hotspots in its wake. Along the accelerated journey till 2047, various real estate segments will evolve and continue to proliferate, growing and maturing by varying degrees. Core assets such as office and residential real estate are likely to mature further and alternative assets such as data centers and senior living will embark upon strong growth trajectories.
Market consolidation, fair-pricing and institutionalisation will become more pervasive across asset classes, especially in the industrial & warehousing segment. With shifting demographic pattern in India, the median age is likely to increase from 30 years to 40 years by 2050. Further, half of the Indian population is projected to live in urban agglomerations by 2050.
With rapid urbanisation and supporting factors like infrastructure growth and employment opportunities, real estate traction is likely to expand beyond the tier I cities and create dispersed growth centers in smaller towns & cities.
Peripheral areas of established cities and tier II & III cities of the country will particularly witness accelerated real estate development across asset classes.
Shifting demographics will drive real estate activity, especially in housing and retail asset classes. With a significant portion of the Indian population likely to fall in the sweet spot of ‘First-time homebuyer’ age-bracket, healthy traction across housing categories is expected in the next few decades. Additionally, population with a significant share of older people can potentially speed up investments in the senior living market.
Infrastructure enhancement & supportive regulatory framework, imperative for fostering long-term real estate growth
Infrastructure augmentation and policy-level push have enabled the Indian real estate to sail through multiple ebbs and flows of property cycles. Throughout last few decades, key regulatory frameworks and acts such as the RERA Act, PMAY, and REIT regulations have provided a boost to investor and end-user participation. Policies and regulations for logistics and data centers have been instrumental in the accelerated growth of newer real estate frontiers.
Over the next few years, asset classes under REITs/SM REITs will expand beyond office and retail to include warehouses, hotels, and rent-yielding residential properties. In the long-term, such financing avenues will become prevalent in alternate real estate verticals such as data centers, hospitals, educational institutes, senior and student living accommodations etc.
Over the years, driven by strong domestic growth prospects, improvements in ease of doing business, and continual FDI relaxations, foreign capital inflow has grown significantly across diverse sectors. Institutional investments in the real estate sector in the last decade has crossed $60 billion, with majority being funded by foreign players.
Digitalisation & Sustainability will be the central themes in the future of real estate
Advanced technologies will also play a major role in decarbonising the real estate sector. With focus on built spaces, developers will incorporate sustainable elements at every stage of construction. Green-certifications in the office market will particularly become a hygiene-factor and green-adoption levels are likely to increase from about 60-70% to almost 100% over the next few years.
Overall, with commercial real estate in India being increasingly defined by sustainability and quality, it is anticipated that multiple opportunities for developers and investors to lead in sustainability and meet evolving occupier preferences. Looking ahead, nearly 80% of the 160 million sq ft of upcoming supply over the next three years is expected to be green certified, underscoring the shift towards more sustainable real estate development.
I sold an apartment last year to reinvest in a larger home. Now I wish to transfer the ownership to my daughter. What is the ideal mode to effect transfer? Madhu Kvipal, Sharjah.
As you have sold your old apartment and availed capital gains exemption, you cannot sell it for three years failing which you will be liable for taxation of the exempted capital gain in the year of sale. It is ideal to go through a Will and get it registered.
I have inherited a commercial property in Mumbai from my grandfather. Can I sell and repatriate the sale proceeds? Tejas Shah, Dubai.
Yes. General permission is available to NRIs/PIOs to repatriate the sale proceeds of the immovable property inherited from a person resident in India subject to certain specified conditions. The amount should not exceed $1 million, per financial year, and this is subject to submission of documentary evidence in support of acquisition and inheritance of assets. An undertaking by the remitter and a certificate by a chartered accountant in the prescribed format would be necessary.
In case of deed of settlement and the settlement taking effect on the death of the settler, the original deed of settlement and a tax clearance/NOC from the IT authority should be submitted. In the event of more than one remittance, all such instalments shall be made through the same authorised dealer.