India has been one of the fastest growing economies in the world over the last few years. India’s gross domestic product (“GDP”) grew by 8.3% in 2016, 7.0% in 2017, 6.1% in 2018 and 4.2% in 2019. The International Monetary Fund (“IMF”) estimated a dip of 10.3% in the real GDP growth rate of India in 2020. With continuous quarter-on-quarter growth and COVID-19 related vaccination roll out in place, the Indian economy is projected to show a sharp rise in the real GDP growth in 2021 at 8.8%, as per the IMF.
India Turns Urban
Rapid urbanization in India is expected to drive the demand for residential, offices and other real estate asset classes in the medium to long term. The percentage of urban population and age distribution profile are key demand drivers for real estate in a country. India with its increasing urban population is a relatively younger nation as compared to developed economies of the world and is likely to retain its position in the future as well. India, with one of the largest workforces, is expected to be a huge market for both, residential as well as other real estate asset classes.
India is one of the fastest growing economies of the world and is expected to rank as the 4th largest economy by 2026. The country is attracting many global majors for strategic investments owing to the presence of vast range of industries, supportive government policies and promising digital transformation. Riding on this wave, Real Estate sector in India is also seeing increased investment by individuals and corporates both in residential and commercial. A conducive ecosystem at home such as low interest rates, rapid urbanization and increased demand on home loans make it a golden opportunity for an NRI to invest now.
Key real estate sector enablers :
- Real estate is said to contribute to 13% of India’s GDP by 2025 and pegged at $1 trillion dollars by 2030
- People living in Urban areas to increase from 462 mn. in 2018 to 600mn in 2030
- An estimated 5mn homes need to be constructed every year to match demand
- Calendar year 2019 recorded the highest transaction of 5.63 mn square metres (i.e. 60.6 mn. sqft.)
- Commencement of REIT facilitates superior asset quality with higher returns
- Implementation of RERA is making Indian real estate more transparent
- Home loans are available at perhaps the lowest interest rate in decades, giving you significant leverage.
- The Indian real estate industry has witnessed a growing interest of foreign developers from Dubai, Japan and Australia – an indication of global confidence in the industry, making it one of the best investment options for you.
- The recently introduced Real Estate Investment Trust is trading at a 35% premium to the issue price and is estimated that INR 25 billion worth of REIT issues are to hit the market in the next 3 years.
- The government is providing answers for a post-Covid world by quantitative easing and financial reforms to kick-start the economy.
- Stable prices means home affordability has improved across all segments.
- The importance of having your own home has become even more apparent during this pandemic. And with the prices remaining by and large stable over the past 4 years, the demand for residences has a lot of room for growth.
- Thanks to a robust demand, a wider range of opportunities, government policies and an increase in investments, this is perhaps the best time to invest in the Indian real estate sector.
- Implementation of the Real Estate Regulatory Authority ensures convenience and transparency, making the entire process easier for the homebuyer.
- Real estate has always been a long term and stable investment, but more so now due to the largely stable prices, low inflation and interest rates.