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India's real estate market will be worth $1.5 trillion by 2034, up threefold from $482 billion now as residential and commercial demand rises.
According to the 'India Real Estate: A Decade From Now' research by the Confederation of Indian Industry (CII) and real estate consultant Knight Frank, the sector's contribution of the country's economic output is expected to climb from 7.3% to 10.5% over the next ten years. The sector's portion of the economy's output in 2015 was $279 billion.
The demand for residential real estate is rising nationwide, along with the requirement for office space and the growth of the hotel and retail sectors to meet the demands of an increasingly affluent populace.
"Furthermore, expanding e-commerce is catalysing the demand for warehousing and storage facilities in India providing a thrust to the industry," said the report. India's growth in the next decade will depend on a growing young population, manufacturing, infrastructure and urban expansion. "Under favourable conditions for these drivers and assuming an annual 2% depreciation of the ₹ (rupee) to $ (dollar) exchange rate, India's gross domestic product could potentially reach $10.3 trillion by 2034," it said.
The residential market is expected to be worth $906 billion by 2034 and the office sector $125 billion. The report estimated that in 10 years 42.5% of Indians will be living in urban centres. To meet the requirements of this population, India would need additional 78 million housing units in the next 10 years.
A large number of the population will be in the lower middle and upper middle-income bracket that would need affordable housing as it transitions towards the mid segment. The share of high-net-worth and ultra-high-net-worth individual households is expected to rise from 3% - 9% by 2034, "driving significant demand” for luxury housing.
An additional 1.7 billion sq ft of office space would be required by 2034 to accommodate economic activity and the growth of the formal economy, said the report about commercial real estate. In office space, substantial growth would be driven by global capability centres (GCC). "By 2030, there will be an estimated 2,400 GCCs across India as [the country] emerges as a global technology and services hub. Assuming a similar pace of growth, the number of GCCs in India may scale up to 2880 by 2034," it said. India has around 1,700 GCCs now.
Private equity (PE) in real estate will substantially increase: from around $3.1 billion in 2023 to $14.9 billion by 2034. "Emerging sectors such as data centers, healthcare, hospitality, co-living, and co-working spaces present promising avenues for private equity investors, driving the growth narrative in India for the coming years," said the report.
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