What is the future of the Indian real estate market?
22 June 2023
The Indian real estate market has long been recognized as a lucrative investment medium with great growth potential and attractive returns. India is undergoing rapid urbanisation and economic development, and the future of the Indian real estate market is bright. The market was valued at approximately $120 billion in 2020, making it one of the largest sectors of the Indian economy. Moreover, the real estate and construction sector contributed around 7% to India's GDP in the same year. These numbers highlight the immense opportunities and potential for real estate investment in India, making it an attractive market for investors. In this blog, we will examine the factors shaping the future of the Indian property market, the opportunities it presents for property investment, and the emergence of innovative concepts such as fractional ownership.
Sources: https://www.ibef.org/industry/real-estate-india.aspx
Growth Drivers: Factors shaping the future
Several factors contribute to the positive outlook for the future of the Indian real estate market:
Urbanisation and Demographic Changes: India is currently undergoing a major wave of urbanisation with a growing middle class and urban population. By 2030, India's urban areas are expected to house 600 million people, which will increase demand for residential and commercial space.
Government Initiatives: The Indian government has introduced various reforms and initiatives to revitalise the real estate sector. Founded in 2015, Pradhan Mantri Awas Yojana (PMAY) aims to provide affordable housing for all by 2022. As of March 2023, over 1.26 million homes are sanctioned under his PMAY.
Source: https://pmaymis.gov.in/
Foreign Direct Investment (FDI): The Indian real estate market has been attracting substantial foreign investment. Liberalised FDI policies, relaxed regulations, and increased ease of doing business have made India an attractive destination for global investors, further fueling the growth of the real estate market.
Technology and Digitisation: Technological advances and the adoption of PropTech solutions are transforming the Indian real estate sector. India's online property market is expected to reach US$1.6 billion by 2040 due to increased use of property portals, virtual property tours and digital property management solutions.
Real Estate Investment in India: Opportunities and potential
The future of the Indian real estate market presents numerous investment opportunities for both domestic and international investors:
- Residential Real Estate: The demand for affordable and mid-segment housing is expected to rise in the coming years. The affordable housing segment has witnessed significant growth, with a 27% increase in new launches in the first half of 2021 compared to the same period in 2020.
- Commercial Real Estate: With the growth of the Indian economy, there is an increasing demand for office spaces, retail outlets, and commercial complexes. Cities like Bangalore, Mumbai, and Delhi are witnessing a surge in commercial real estate development, offering attractive investment prospects.
- Industrial and Warehousing: The rapid growth of e-commerce and the government's focus on manufacturing under the "Make in India" initiative are driving the demand for industrial and warehousing spaces. The warehousing sector is projected to attract investments worth $10 billion over the next four to five years.
- Fractional Ownership: Fractional ownership is gaining popularity in the Indian real estate market. The real estate market for fractional ownership in India is expected to grow 16% in coming years, providing investors with the opportunity to own a fraction of high-value properties and diversify their real estate portfolios.
Source: https://timesofindia.indiatimes.com/blogs/voices/fractional-ownership-gaining-popularity-in-india/
The Role of Fractional Ownership: Democratising real estate investment in India
Fractional ownership is growing in popularity in the Indian real estate market as it has the potential to democratise investment opportunities. This innovative concept will enable individual investors to invest in prime real estate, commercial space and quality residential projects that were previously unattainable. Fractional ownership platforms such as Aurum PropTech allow investors to own a portion of a property and benefit from rental income and potential capital appreciation. It has several benefits, including reduced investment risk, increased liquidity, professional property management, and hassle-free ownership. This provides diversification opportunities and allows investors to build their real estate portfolios with less investment.
The future of the Indian real estate market is bright and determined by factors such as urbanisation, government initiatives, foreign investment and technological advances. While the residential, commercial and industrial sectors offer attractive investment opportunities, concepts such as fractional ownership are changing the way individuals invest in real estate. As the market continues to evolve and adopt innovative solutions, investors can capitalise on the growth potential of the Indian real estate sector and take advantage of lucrative opportunities while diversifying their investment portfolios.