Real Estate in India
Real estate industry in India - growth, trends, COVID-19 impact, and forecasts (2022 - 2027)
Market Overview
India Real Estate Market is expected to register a CAGR of more than 15% during the forecast period.
The country’s real estate market is affected by COVID-19 pandemic. In addition, residential sector got worst hit, as strict lockdown measures across major cities in India impacted housing sales as home registrations were suspended, and home loans disbursement was slow. However, the sector is in recovering phase due to increase in house sales, new project launches. Also, increasing demand for new office and commercial spaces, etc.
However, real estate sector is the second largest sector in the country after agriculture sector in terms of providing employment opportunities. Moreover, the growth of real estate market in the country is supported by increasing industrial activities, rapid urbanization, and improved income levels. Further contributing the economy of the country.
Furthermore, government initiates key policies for the development of the real estate sector, such as Real Estate Regulatory Act (RERA), Benami Transactions Act, Boost to affordable housing construction, Interest subsidy to home buyers, Service tax exemption, Dividend Distribution Tax (DDT) exemption, PR for foreign investors, etc.
Scope of the report
The real estate sector includes various faces involving in property dealings, such as developing, selling, buying, leasing and management processes in industrial sector, residential sector, etc. Furthermore, India Real Estate Market report covers a complete background analysis of the industry, including current economic and market scenario, market size estimation for key segments, emerging trends in the market segments, market dynamics. Also covers the impact of COVID-19 on the market.
In the report India Real Estate Market is segmented by Property Type (Residential, Office, Retail, Hospitality, and Industrial), and by Key Cities (Bengaluru, Mumbai, Pune, Chennai, and Hyderabad). The report offers market size and forecasts for India Real Estate Market in value (USD Billion) for all above segments.
Key Market Trends
Residential Sector Witnessing Lucrative Growth
Major developers are focusing on affordable and mid-range housing units to meet the increasing demand in the country. Moreover, the growth is driven by various factors such as rapid urbanization, rise in the number of nuclear families, easy availability of home loans, etc.
In first quarter of 2021, more than 58,300 units are sold, Mumbai Metropolitan Region (MMR) and Pune are contributing more than 53% share in the sales. Whereas South cities such as Bangalore, Hyderabad, and Chennai contributed almost 27% to the sales in the residential sector, and NCR region contributed more than 15% share in the sales.
However, a greater number of new housing launches were made, which outpaced the housing sales in the country. More than 62,000 housing units were launched in 2021 compared to 41,000 housing units in 2020. Meanwhile, Hyderabad recorded robust growth in supply of new housing units, with 12,600 housing units in 2021 compared to 3,300 housing units in 2020. Also, Pune and Mumbai Metropolitan Region (MMR) saw a significant growth rate of 75% and 40% respectively.
Mumbai Metropolitan Region (MMR) plays vital role in development of residential sector in terms of supply and absorption of housing units among major cities, and this demand is driven by stamp duty cuts, discounts, and reduced home loan rates. Furthermore, sales share of the southern markets such as Bengaluru, Chennai and Hyderabad remained consistent.
Increase in Office Space Absorption
Many companies such as consultancies, BPM, IT companies, Banking, Financial and Insurance Services (BFIS), etc., are producing huge demand for office space in India real estate market due to high potential and relaxed FDI norms. in addition, Mumbai consulting firms contributed more than 36% demand for total office space leasing.
In addition, Bangalore city stands in first place in terms of highest volume of office absorption in India with more than 7.26 million square feet, followed by Hyderabad, and in New Delhi and National Capital Region (NCR) most of the demand is contributed by Grade A offices space absorption.
Furthermore, in 2021, renewal of leasing activities is rising in top six commercial real estate hubs, such as Bengaluru, Mumbai, Pune, Chennai, Gurugram and Noida. More than 7,400 leases spanning approximately 90 million square feet area were to be renewed. Furthermore, Mumbai holds highest share of more than 40% in leasing renewal activity, followed by Pune with a 17% share.
In 2020, various sectors announced for office space leasing resulting in robust growth of office space absorption. For instance, manufacturing sector accounted for 24% of office space leasing, followed by 3PL, E-commerce, retail segments.
Competitive Landscape
Real estate market in India is highly fragmented in nature with multiple players. Higher competition among the players impacting selling prices, land prices further leading to oversupply in the market. Furthermore, market is dominated by few Pan-India and branded players and multiple local players. Some of the major developers in country are Prestige Estates Projects, DLF, Prestige Group, Lodha Group, Oberio Realty, etc.