India’s real estate sector likely to expand to $5.8 trillion by 2047: Report

New Delhi: India’s real estate sector is expected to expand to $5.8 trillion by 2047, contributing 15.5% to the GDP from an existing share of 7.3% a joint report by Knight Frank and National Real Estate Development Council (Naredeco) said.

The report ‘India Real Estate: Vision 2047’ stated that the residential segment will have an overwhelming share in the real estate sector. “By 2047, when India reaches 100 years of independence, the size of India’s economy is estimated to range between $33-40 trillion,” it said.

The report noted that private equity investments in the Indian real estate sector have consistently grown over the past two decades and from a projected figure of $5.6 billion in 2023, it is expected to reach $54.3 billion by 2047, an annual growth of 9.5%.

Rajan Bandelkar, president, Naredeco India said, "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,"

According to Knight Frank India, in the next 25 years, there will be an estimated 230 million units of housing requirement in India. The demand for housing is expected to remain concentrated in affordable housing, will gradually shift towards mid segment and luxury housing. The share of lower income households will reduce from existing 43% currently to 9% in 2047.

Niranjan Hiranandani, National Vice Chairman of NAREDCO, opined that, “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”.

According to the report, REITs in the coming years will also expand into diverse sectors such as residential and warehousing, in addition to the office and retail segments. Builders are also likely to contemplate venturing into REITs for alternative asset classes like data centers, hospitality, healthcare and education.

REITs encompass 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 mnsq ft within the REITs sector, projected to reach completion within 1-2 years.

As per Knight Frank estimates, 69 per cent of the working population will be formally employed to support the economic expansion of USD 36 trillion by 2047. In terms of market value, the estimated office stock is likely to generate a potential output equivalent to USD 473 billion in 2047.

The office stock has grown significantly from 278 million sq ft in 2008 to 898 million sq ft cumulatively across the leading eight cities in India in 2022, it added.