As there is a growing demand for corporate environments and office space as well as urban and semi-urban accommodation, there is a drastic change in growth and demand for real estate businesses. Real-Estate is considered to be the world’s most recognized sector. Investing in real estate would open a door of opportunities for investors. Real estate comprises four major sub-sectors: retail, hospitality, housing, and commercial.

How can Real Investment be Silver Lining? 

Among 14 major sectors, in terms of direct, Indirect, and induced effects in every sector of the economy, the construction industry ranks third. Real estate profit margin always goes up, which implies that without much risk real estate market can offer an investor a high return, and it’s a well-known fact that the real estate market is always a high-time market and has a high cap rate between five and ten can be beneficial. Regarding long-term investment and capital, real estate is counted as the profitable and safest measure to earn.

After Agriculture, the real estate sector is the second-highest emolument generator. According to the reports, by 2025, Indian real estate is expected to increase by 15-18 million per square foot for data centres. Metro cities, including Bengaluru, Ahmedabad, Pune, Chennai, Goa, Delhi, and Dehradun, are expected to witness the most favoured property investment destination for NRIs. There’s a surge in demand for residential properties due to increased urbanization and rising household income. Factors such as demographic data or population composition, Interest rate and subsidies affect the real estate market.  

Indian Real Estate Market Analysis: Growth and Review 

Growth of Real Estate Market Growth 

In 2019, the real estate market was Rs 12,000 crores (USD 1.72 billion); an estimation states that by 2040 the market would grow to Rs 65,000 crores (USD 9.30 billion). By 2030, the Indian Real estate sector is expected to reach USD 1 trillion in market size, up from USD 200 billion in 2021. Commercial real estate, retail, and hospitality are growing at a considerable speed, giving rise to infrastructure growth. By 2025, the real estate sector would contribute 13 per cent of the country’s GDP.

How can Real Estate Investment be Blank Check? 

SEZs abrupt investment in 2022

In one year, India’s real estate sector witnessed more than 1,700 acres of land deals in the top seven cities after the replacement of the existing SEZs act boosted demand for office space; henceforth, FY 2022 witnessed a booming foreign investment in the real estate sector. From 2017-21 there was USD 10.3 billion in Foreign investment in the commercial estate sector.

Through infrastructure and real estate investment trusts, Indian Firms are expected to witness a surge of Rs 3.5 trillion (USD 48 Billion) in 2022, as compared to date, raised a fund of USD 29 billion to date, as per the estimation of ICRA.

From July 2020 to December 2020, the top eight cities in the office market recorded transactions of 22.2 MSF. Whereas for the same period, new completions were registered at 17.2 MSF. In the first half of 2020, Information Technology (IT/ITeS) exhibited its domination in terms of share of sectoral occupiers with 41 per cent share, followed by BSFI and manufacturing sectors having 16 per cent of share each, meanwhile working sectors and other services recorded 17 and 10 per cent.

Real Estate Market Growth YOY of FY2022 

In 2021, around 40 million square feet were delivered in India. In the upcoming 2-3 years, India is expected to have a 40 per cent market share and deliver 46 million square feet in 2022. By 2025 the real estate demand would increase by 15-18 million.

The Gross leasing volume for the first quarter of 2022, of India’s top seven leading office markets, was 11.55 million square feet. With 59 per cent of YOY growth in the eight micro markets, a total unit of 55,907 new houses was sold in India’s third quarter of 2021. Across the top eight cities, new housing supplies stood at 65,211 in the third quarter of 2021 units, an increase of 19,865 units compared to the same period of 2020. Commercial space witnessed a record increase in investment in 2021-22; for instance, Chintel Group invested Rs 400 crores in October to build a new commercial project in Gurugram. An article in Economic Times stated that per 1,000 people, three houses are built annually. However, the required construction rate per 1,000 population is five houses. In urban areas, the current shortage of housing is 10 Million units. To meet the country’s urban growth, 25 million affordable housing units are required by 2030.

In 2020, 24 per cent of office space was accounted for by the manufacturing sector, leasing at 5.7 million square feet. Between Delhi NCR, Chennai, and Pune, the SMEs (Small and medium-sized enterprises) and electronic component manufacturers leased the most, followed by Auto Sector leasing in Ahmedabad, Pune, and Chennai. 26 per cent, 34 per cent, and 9 per cent of office space leases were accounted by E-commerce, 3PL, and retail segment, respectively. The office segment attracted 71 per cent share, followed by retail and residential and warehousing with 15 per cent and 7 per cent each, respectively, of the total PE investment in real estate in Q4FY21.

Market Size of Indian Real Estate for FY23

In the Indian, Real estate market, strong and positive momentum would prevail in the financial year 2023, as a solid structural foundation would back it, lowered home loans rate, and a gain in demand. It is expected that financial year 23 could be the fiscal year for the real estate industry for which they are looking for stated reports.

On a pan-India basis, this year, property prices in India are likely to increase by 7.5%, the fastest growing in five years. According to a Reuter poll of property analysts, next year and in 2024, average house prices would forecast to rise by 6 per cent. Reuter’s polls also predict that prices in Delhi and Mumbai, along with its surrounding National Capital Region, would probably rise between 4 per cent and 5 per cent this year and in the upcoming year. In the course of the upcoming two years, the prices of Chennai and Bengaluru are also expected to rise 5.5 – 6.5 per cent.

 According to experts in the field, factors such as an increase in housing demand and a rise in building material costs majorly cause housing prices to rise; also, for first-time buyers, high-interest rates could weigh on affordability. Earlier this year, the benchmark repo rate was increased by the Reserve Bank of India by 40 basis points to 4.40 per cent in its first rate hike. In efforts to tame High inflation, the central bank is expected to get more aggressive, and interest rates are expected to hike.