India’s real estate sector expected to expand to USD 5.8 trillion by 2047 : Knight Frank report

Hyderabad, Aug 26 (FN Bureau) India’s Real Estate Sector is expected to expand to USD 5.8 trillion or USD 5,833 billion by 2047, according to a latest report “ India Real Estate: Vision 2047 “, released by Knight Frank India, a leading real estate consultancy in the country, in association of NAREDCO here on Saturday. This estimated real estate output value would contribute 15.5 per cent to the total economic output in 2047 from an existing share of 7.3 percent, the report projected. The report was unveiled by former Vice President M. Venkaiah Naidu at NAREDCO’s Silver Jubilee Celebration held here. By 2047, when India reaches 100 years of independence, the size of India’s economy is estimated to range between USD 33 trn to USD 40 trn, the report revealed.

Private equity (PE) investments in the Indian real estate sector have consistently grown over the past two decades. Projections for 2023 indicated that PE investments in Indian real estate are poised to reach USD 5.6 bn, reflecting a YoY growth of 5.3 per cent. With India’s GDP expected to reach USD 36.4 trn by 2047, the PE investments within the Indian real estate sector are projected to surge to USD 54.3 bn by 2047, signifying a CAGR of 9.5% spanning 2023 to 2047. Providing perspective on REITs, Knight Frank shared that the combined portfolio of Indian REITs encompasses 84.9 mn sq ft, with 75.9 mn sq ft dedicated to office assets and 9 mn sq ft to retail assets.

Additionally, there is ongoing construction of approximately 21.3 mn sq ft within the REITs sector, projected to reach completion within 1-2 years. Commenting on the occasion, Rajan Bandelkar, President NAREDCO India said, “Vision 2047, not just for NAREDCO but for Indian Real Estate, is about the roadmap of India’s economic growth, and the role of real estate as one of the leading engines of that growth story.” “Significant expansion of the Indian economy by 2047, will be powered by Real Estate. A multifold economic expansion will boost demand across all the asset classes – residential, commercial, warehousing, industrial land developments etc – will grow at a multiplier rate to accommodate the growing needs of the economy and consumption needs of the individuals,” he added. NAREDO National Vice-Chairman Niranjan Hiranandani opined that “PMO’s ambitious project Housing for All will propel the sustainable demand for residential housing across the spectrum. A strong foundation for the upward cyclical growth of the real estate sector is being laid by the Government of India and the regulatory authorities. The northbound growth in the Indian Real Estate sector is driven by the favourable domestic economic environment with economic resilience, bolstered infrastructure growth plans, alternative investment models, and domestic consumption power”.

Growing GDP will stimulate commercial and industrial real estate growth, attracting global investors towards Grade A assets. Emerging alternative asset classes will also play a critical role in pooling investments and boosting investors’ confidence, he added. As per Knight Frank estimates, 69% of the working population will be formally employed to support the economic expansion of US$ 36 trn by 2047. In terms of market value, the estimated office stock is likely to generate a potential output equivalent to USD 473 bn in 2047. The office stock has grown significantly from 278 mn sq ft in 2008 to 898 mn sq ft cumulatively across the leading eight cities in India in 2022, the report stated. Knight Frank India Chairman and Managing Director Shishir Baijal, said, “The next 25 years are going to witness a dramatic transformation in the Indian economy and the real estate sector. In the imminent future, India’s economy is expected to grow at a rapid pace, and the structural shift in the economy will be led by a major push to the growth of all sectors including real estate. For sustainable growth, it is imperative that India’s real estate sector adapts to transformations in the economy and changing technologies, making optimum use of the growing resources, especially the human capital.”