In India, the real estate sector is the second-highest employment generator, after the agriculture sector. It is also one of the segment that attracts much investments both locally and from abroad. Bengaluru is expected to be the most favoured property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun. The covid outbreak has reduced the office space market in prime metros. It has driven the residential real estate demand in tier 11 cities as a result of the covid lockdown and work from home mode of office.
The office market in top eight cities recorded transactions of 22.2 million square feet from July 2020 to December 2020. Information Technology (IT/ITeS) sector dominated with a 41% share in second half of 2020, followed by BSFI and Manufacturing sectors with 16% each, while Other Services and Co-working sectors recorded 17% and 10%, respectively.
In 2020, the manufacturing sector accounted for 24% of office space leasing at 5.7 million square feet. SMEs and electronic component manufacturers leased the most between Pune, Chennai and Delhi NCR, followed by auto sector leasing in Chennai, Ahmedabad and Pune.
Home sales volume across eight major cities in India jumped by two times to 61,593 units from October 2020 to December 2020, compared with 33,403 units in the previous quarter, signifying healthy recovery post the strict lockdown imposed in the second quarter due to the spread of COVID-19 in the country. The Indian Real Estate industry is in for a significant growth in the years to come as there is a current shortage of housing in urban areas of about 10 million units. An additional 25 million units of affordable housing are required by 2030 to meet the growth in the country’s urban population.Investments in the Industry
Retail real estate and warehousing segment attracted private equity (PE) investments of US$ 220 million and US$ 971 million, respectively, in 2020. Indian real estate attracted U$ 5 billion institutional investments in 2020. Investments from private equity (PE) players and VC funds reached US$ 4.06 billion in 2020. The real estate segment attracted private equity investments worth Rs. 23,946 crore (US$ 3,241 million) in the last quarter of the fiscal year.
According to the data released by Department for Promotion of Industry and Internal Trade Policy (DPIIT), construction is the third-largest sector in terms of FDI inflow. FDI in the sector stood at US$ 42.97 billion between April 2000 and September 2020.Future Forecast
Real estate sector in India is expected to reach US$ 1 trillion by 2030. By 2025, it will contribute 13% to the country’s GDP. By 2040, real estate market will grow to Rs. 65,000 crore (US$ 9.30 billion) from Rs. 12,000 crore (US$ 1.72 billion) in 2019.