Complete Statistics of The Residential Real Estate Industry

Kishan Thakkar K

Introduction

Real estate is one the most growing & profitable fields in India. It is expected that the market size of the real estate sector will be 1 trillion dollars by 2030. It will be contributing 13% to the country’s GDP by 2025. The major reason includes the increase in nuclear families, rapid urbanization, etc.

There are 14 major sectors that directly or indirectly affect the in all sectors of the economy, the construction sector ranks third among those sectors. Real estate is the second-highest employment generator, the first being the agriculture sector. Bangalore is the most favoured investment destination for the NRIs (Non-resident Indians), it is also predicted that the NRI investment will increase more, both in the short term and the long term.

Market size

The real estate market has a market size of Rs. 12000 crores in 2019, it will grow to 65000 crores by 2040. It will contribute 13% to the country’s GDP by 2025. The four sub-sectors of the real estate market, Housing, Retail, Hospitality, And Commercial, are also growing significantly.

As per ICRA (Investment Information and Credit Rating Agency), Indian firms are expected to raise >Rs. 3.5 trillion (US$ 48billion) through real estate investment. Rs. 2.1 trillion (US$ 29 billion) worth of funds were raised to date.

Housing Market

86,139 housing units were launched across the top eight Indian cities in the second half of the year 2020 (July 2020 to December 2020). Home sales from October 2020 to December 2020 in eight major cities of India were doubled to 61,593 units, compared to 33,403 units in the previous quarter. This signifies the healthy recovery from the strict lockdown imposed in the second half of 2020 during the spread of COVID-19 in India.

According to the Economic Times Housing Finance Summit, the required construction rate is five houses per 1000 population per year, whereas about 3 houses are built per 1000 population per year. The housing shortage of urban areas is estimated to be around 10 million units. By the end of 2030, an additional 25 million affordable units are required to meet the growth in the country’s urban population.

Investment/Development

The Indian real estate sector has witnessed high growth in recent times with the rise of both residential and office spaces. Some of the major investments in this sector are as follows:

  • Housing sales increased by 29% in the fourth quarter of 2021 in the top seven cities of India. Delhi-NCR, Mumbai, Bangalore, and Pune together account for 83% of sales in the fourth quarter of 2021.
  • As per Anarock, housing sales in the top seven cities of India have increased by 29% and new launches by 51% in the fourth quarter of 2021 over the fourth quarter of 2020.
  • The low mortgage rates and incentives rendered by developers are some of the key reasons for increasing demand for residential real estate. Residential sales in this quarter across the top seven cities of India recovered to >90% volumes recorded in 2020.
  • There is an increase in residential demand in Tier-2 and Tier-3 cities, which has been limited to the top 8 cities of India. The demand for an affordable house with a ticket size below 40-50 lakh was increased in Tier-2 and Tier-3 cities. The key reason is the adoption of working remotely due to imposed lockdown due to COVID-19.
  • The real estate arm for housing HDFC (Housing Development Finance Corporation) has partnered with Cerberus (Cerberus Capital Management) intending to create high-yield opportunities in the residential real estate industry. They are aiming to purchase inventory and provide last mile funding for under-construction residential real estate properties along with related opportunities. The Economic Times, quoting sources, said that the size of the platform is $1 billion. (Source: vccircle.com)
  • Godrej Properties will launch 12 housing projects in Q4 of 2021.
  • In October 2020, Australia’s REA Group Ltd. announced its agreement to acquire a controlling interest in Elara Technologies Pvt. Ltd, the owner of Housing.com, PropTiger.com, and Makaan.com. (Source: ibef.org)

Government Initiatives

  • The Smart City Project is one of prime opportunities for real estate developers.
  • The tax relief measures were included for real estate developers and homebuyers for purchase/sale of residential units (of value up to 2 crores) from November 12, 2020, to June 30, 2021, in Aatmanirbhar Bharat 3.0 package announced by the Finance minister.
  • Ministry of Housing & Urban Affairs has initiated Affordable Rental Housing Complexes (ARHCs), a sub-scheme under Pradhan Mantri AWAS Yojana- Urban (PMAY-U).
  • The unit cabinet clears the Rs. 25000 crores alternative investment fund (AIF) to revive stalled housing projects across top cities of India.

Conclusion

The SEBI (Securities and Exchange Boards of India) has approved the REIT (Real Estate Investment Trust), which will create an opportunity worth Rs. 1.25 trillion (Rs. 125000 Crores) in the Indian market. 

It is expected that the residential real estate industry will grow in upcoming times, with the Indian government aiming for 20 million affordable housing in urban areas of Indian cities, under the ambitious Pradhan Mantri Awas Yojana (PMAY) scheme of the Union Ministry of Housing and Urban Affairs.

Click to access the Real Estate Industry Archived Report.


References: Media Reports, Press releases, Knight Frank India, VCCEdge, JLL Research, CREDAI-JL, Union Budget 2021-22

Note: Conversion rate used in October 2021, Rs. 1 = US$ 0.013

Disclaimer: This information has been collected through secondary research and RoodLand India is not responsible for any legal obligation regarding the same.

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