Indian real estate to be worth $1.5 trn by 2034 as demand soars: Report

GDP could reach $10.3 trn in 10 years, creating demand for offices and housing for all economic sections

India's real estate sector will be worth $1.5 trillion by 2034 as it grows three-fold from $482 billion now as residential and commercial demand grows, said a report on Friday.

The sector’s share in the country’s economic output is likely to rise to 10.5 per cent in next 10 years from 7.3 per cent, according to the ‘India Real Estate: A Decade From Now’ report by the Confederation of Indian Industry (CII) and real estate consultancy Knight Frank. In 2015, the sector's share in economic output was $279 billion.

Residential property demand is growing in the country, alongside the need for office space and an expanding hospitality and retail industry catering to the needs of a population with improving income. "Furthermore, expanding e-commerce is catalysing the demand for warehousing and storage facilities in India providing a thrust to the industry," said the report.

India's growth in the next decade will depend on a growing young population, manufacturing, infrastructure and urban expansion. "Under favourable conditions for these drivers and assuming an annual 2 per cent depreciation of the Rs (rupee) to $ (dollar) exchange rate, India's gross domestic product could potentially reach $10.3 trillion by 2034," it said.

The residential market is expected to be worth $906 billion by 2034 and the office sector $125 billion.

The report estimated that in 10 years 42.5 per cent of Indians will be living in urban centres. To meet the requirements of this population, India would need additional 78 million housing units in the next 10 years.

A large number of the population will be in the lower middle and upper middle-income bracket that would need affordable housing as it transitions towards the mid segment.

The share of high-net-worth and ultra-high-net-worth individual households is expected to rise from 3 per cent to 9 per cent by 2034, "driving significant demand” for luxury housing.

An additional 1.7 billion sq ft of office space would be required by 2034 to accommodate economic activity and the growth of the formal economy, said the report about commercial real estate.

In office space, substantial growth would be driven by global capability centres (GCC). "By 2030, there will be an estimated 2,400 GCCs across India as [the country] emerges as a global technology and services hub. Assuming a similar pace of growth, the number of GCCs in India may scale up to 2880 by 2034," it said. India has around 1,700 GCCs now.

Private equity (PE) in real estate will substantially increase: from around $3.1 billion in 2023 to $14.9 billion by 2034. "Emerging sectors such as data centers, healthcare, hospitality, co-living, and co-working spaces present promising avenues for private equity investors, driving the growth narrative in India for the coming years," said the report.