India Real Estate Latest Trends | Overview | Growth | Investments

April 1, 2024
India’s Economic Ascendancy to Emerge as an Investment Haven

Did you know that at the time of independence, India had a GDP of a meagre Rs 2.7 lakh crore? In less than a century, the country has emerged as the world’s fastest-growing economy for two consecutive years in a row. As of 2023, the country’s GDP was a whopping $3.75 trillion, with the International Monetary Fund designating it as the ‘bright star’ in a struggling global economy.

In the 77 years since independence, the country has become a land of opportunities due to its robust infrastructural development, urbanisation, and strong economic climate. This, in addition to the country’s unique investment incentives such as tax incentives, competitive labour costs, and burgeoning economic influence, has led to the country becoming an investment haven.

Foreign Direct Investment (FDI) Trends

Indeed, the World Investment Report 2023 reports that the country’s FDI inflows have increased by 20 times from the year 2000 to 2024. The report also stated that in FY 2021, the country received the third-highest foreign investment globally. According to industry experts, the trend of the country emerging as an investment powerhouse is forecasted to continue in the upcoming years.

Growth Projections and Investment Landscape

The IMF’s projected GDP growth rate of 5.7% in FY24 for the country makes it one of the most sought-after investment destinations in the Asia-Pacific (APAC) region. Owing to the liberal investment ecosystem, the country offers investors an opportunity to benefit from higher yields, relatively feasible prices, and valuations. Between the years 2019 and 2023, foreign investment made up 77% of total investment in the country. Additionally, the year 2023 witnessed a dramatic 20% YoY increase in foreign investment at $3.6 billion.

Diversification and Alternative Assets

Apart from the traditional investment assets, reports suggest that investments have bolstered alternative asset classes, with avenues such as industrial, residential, and co-working spaces likely to witness renewed interest in the upcoming years. However, as reports suggest, office assets continue to lead investment in the country, with the average annual inflow surging to $2 billion in 2023.

Foreign Investor Dominance and Sustainability Trends

Another report suggests that in the same year, 90% of investment in the office sector originated from foreign bodies. Additionally, there has been a noticeable inclination towards investing in spaces that are aligned with the global Environmental, Social, and Governance standards. This is particularly true for office spaces, as more and more organisations feel the brunt of increasing public scrutiny and pressure regarding their sustainability initiatives.

Regional Dynamics and APAC Investment Surge

As has been the trend for the past couple of decades, the USA and Canada maintained their top position as the leading investors. However, countries from the APAC region such as Singapore, Hong Kong, South Korea, and Japan are also showing an increasing interest in the country’s booming real estate market. This is evident in the increase of investment inflow from APAC countries by 57% YoY in 2023 to $1.8 billion, out of which 70% were office spaces. Further, investment inflow from APAC countries has almost doubled from 2019 to 2023, showcasing the significant uptick of confidence in the Indian real estate sector.

Final Thoughts

The Indian saga of economic transformation and success is indeed one for the annals of history. From a country bogged by years of foreign rule to one of the world’s most powerful economies, the story is indeed inspirational. The country is in the midst of becoming the third-most powerful economy by 2030, making investing here more lucrative than ever before.

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