Indian real estate to surge to $1.5 trillion by 2034: CII-Knight Frank report

The Confederation of Indian Industry (CII) and Knight Frank India report, forecasts India's real estate sector, to reach a value of USD 1.5 trillion by 2034.

The report titled 'Indian Real Estate: A Decade from Now' says the growth trajectory is anticipated to bolster India's economic output, with the real estate sector poised to contribute 10.5 per cent to the nation's GDP over next ten years.

Against the backdrop of India's growing urban population, which is projected to reach 1.55 billion by 2034, the demand for housing is expected to skyrocket to reach an estimated value of USD 906 billion by 2034.

Urban centres across the country will require 78 million new homes between 2024 and 2034.

Notably, this surge in demand is anticipated to span across various income brackets, from affordable housing to luxury segments, catering to the diverse needs of India's evolving demographic landscape.

Neel Raheja, Chairman of CII's National Committee on Real Estate and Housing, expressed unwavering optimism about the sector's prospects.

He emphasized that the real estate market stands poised to offer a plethora of opportunities for investors, propelling India's economy towards a trajectory of unprecedented growth.

Raheja says, "Ahead to 2034, the prospects for India's real estate sector appear highly reassuring, driven by a confluence of factors such as shifting demographics, rapid technological advancements, and supportive policy measures. This confluence is expected to catalyse significant investments in the sector, buoyed by strategic foresight and innovative approaches. Going forward, the real estate market is poised to offer a myriad of opportunities for investors across its asset classes."

He said, "In the next decade, with a significant growth in the size of the economy, the real estate industry is poised for enormous opportunities in terms of shifts in consumption patterns as well as in revenue expansion. I look forward to this report defining the real estate growth story, in turn reflecting upon its role as a leading engine that will take the Indian economy to its path of success."

The commercial real estate sector is also poised for an exponential ascent, with projections indicating a requirement of 2.7 billion square feet of office space by 2034.

The report underscores the pivotal role of Tier 2 and 3 cities in driving this growth, propelled by factors such as business expansion, infrastructure development, and the rise of IT and services industries.

Global Capability Centres (GCCs) is expected to be a key driver, with an estimated 2,880 GCCs anticipated to be operational in India by 2034.

Gulam Zia, Senior Executive Director - Research, Advisory, Infrastructure, and Valuation, Knight Frank India, said "In the coming decade, India's economic ascent will be marked by an unprecedented surge, with the real estate sector poised to be a cornerstone of this transformative journey. Fueled by burgeoning wealth, robust consumer spending, infrastructural advancements, entrepreneurial fervor, and strategic initiatives like 'Make in India', our nation stands on the brink of a profound economic evolution."

Zia added, "We anticipate the Indian real estate sector to grow to a USD 1.5 trillion powerhouse by 2034, constituting a remarkable 10.5 per cent of the nation's economic output. This journey about sustainable progress, anchored in resilience and adaptability, paving the way for a brighter, more prosperous tomorrow."

In addition, the warehousing and manufacturing sectors are slated to witness substantial expansion, buoyed by India's robust economic growth trajectory.

With projections indicating a potential demand for 111 million square feet of warehousing space by 2034 and a surge in manufacturing activities, these segments are poised to emerge as significant contributors to the country's GDP.

The report also sheds light on the retail sector, forecasting a substantial increase in organized retail consumption by 2034.

As India's economy surges to USD 10.3 trillion by 2034, the share of retail consumption is estimated to comprise 21 per cent of total private consumption, providing a substantial boost to the retail real estate market.

Private equity investments in the real estate sector are expected to soar, driven by India's burgeoning reputation as an investment destination.

The report projects private equity investments to reach USD 14.9 billion by 2034, representing a compounded annual Growth Rate (CAGR) of 17 per cent between 2023 and 2034.

In light of these projections, the report outlines key recommendations to capitalize on the sector's growth potential.

These include harnessing India's skilled workforce, addressing the urban housing deficit through holistic policy approaches, embracing technological advancements, and focusing on to expanding sustainable and green buildings.