Real estate sector to touch $1 trillion by 2030, contribute 13% to GDP by 2025: Report

The Indian real estate sector could be in for some good days and is expected to grow at a rapid pace due to increasing income, urbanization, and economic growth. Modi government’s recent decision to cut GST rate on under construction and affordable houses is further expected to boost the otherwise struggling sector. According to a recent report presented by Colliers Research, the real estate sector in India is expected to reach USD 1 trillion by 2030 from USD 120 billion in 2017. The report said that real estate sector would also contribute 13 per cent of the country’s GDP by 2025.

It said that even as the residential market took a hit in the last few years, 2019 could be positive and the recent announcements would see investors and developers moving towards affordable housing, student housing, and co-living. The report revealed that 40 per cent of the new launches in 2018 were under the affordable segment.

Cities such as Bengaluru, Chennai, Hyderabad, Kolkata and NCR witnessed maximum launches in the affordable segment that is below Rs 5 million. Mumbai on the other hand witnessed more launches in the mid segment housing, in the range of Rs 5-10 million.

Sanjay Chatrath, Executive Director (North), Colliers International India said that high networth individuals have limited their investments in residential properties and are actively eyeing the commercial or retail spaces for better returns.

“The average disposable income per annum for middle-income group has grown around 9% across 7 major cities in India over the period of 2014-2018. However, the average growth in residential property prices was less than 2% during the same period. This depicts the increasing affordability of residential spaces for the middle-income group of metro cities. The HNIs have limited their investments in the residential sector owing to lower returns. Instead, they have been actively investing in commercial/retail spaces, that gives them a higher yield of 7%-8%”, he said.

Commercial real estate is expected to dominate over the next three years as well. Even warehousing has seen around $2 billion investment in India in the last two years and is likely to continue the positive run. 

The report predicted a CAGR of 10.5% till 2020 for Indian logistics industry. It said that the sector is likely to touch $215 billion in 2020 from $160 billion in 2018. The demand is likely to increase as people occupiers move out of their smaller warehouses and consolidate their activities in larger facilities.