The Indian real estate sector received institutional investments, largely from foreign players, of over $60 billion in the last decade, according to a report by Colliers and the Confederation of Real Estate Developers' Associations of India (Credai).
The sector is projected to be a $10 trillion market by 2047, while its share in India’s gross domestic product (GDP) is estimated to increase to 14–20 per cent during this period. Currently, the sector’s share in GDP stands at around 7.3 per cent, the report said.
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The foreign capital flow is set to enhance over the years due to strong domestic growth prospects, improvements in ease of doing business, and continual FDI relaxations.
The report also projected the enhanced adoption of alternative funding strategies in Indian real estate on the back of an increase in foreign capital and an equally strong contribution from domestic investors.
“Green financing in the form of bonds and credit issuances and relatively new financing avenues such as social impact, distressed, special situations, and venture capital funds will become more prevalent in the next few years,” the report stated.
“Alternative segments like senior living, co-living, and data centres will also witness exponential growth, driven by evolving consumer preferences and technological integration, with a focus on sustainability and energy efficiency becoming a standard across developments,” said Boman Irani, president, Credai National.
The report stated that the median age of the country was likely to increase from about 30 years to nearly 40 by 2050. About 50 per cent of India’s population will reside in urban centres by 2047.
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“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 centres in smaller towns and cities,” said Manoj Gaur, chairman, Credai National.
The report also noted that the initiatives like real estate regulatory authority (Rera) and real estate investment trusts (Reits) regulations have enhanced transparency, improved investor confidence, and streamlined operations across the sector.
Asset classes under Reits/small, medium Reits to expand beyond office and retail are predicted to include warehouses, hotels, and rent-yielding residential properties over the next few years.
“In the long-term, such financing avenues will become prevalent in alternative real estate verticals such as data centres, hospitals, educational institutes, senior and student living accommodations,” it added.