Investment Oasis: Understanding the Booming Indian Real Estate Landscape
The Indian chronicle of progress is at a pivotal turning point today. The country on the cusp of becoming a global superpower is already an economic behemoth, with the year 2023 culminating with its presiding as the fifth most economically powerful nation in the world. Not only that, according to S&P Global, the country is poised to possess the third-largest economy globally by 2030.
The inextricable, directly proportional relationship between the economic upswing and real estate investment propensity spells a palatable surge in demand for real estate across all segments. However, macroeconomic factors are not all that are driving the real estate investment surge. The country’s favourable demographic dividend, a progressive policy and programme framework dedicated to uplifting its infrastructure, and thriving urban expansion all culminate in driving this growth.
In a landscape piloted by projected 7-9% economic growth, it comes as no surprise that industry experts augur sustained growth for the real estate industry. Residential real estate sales are projected to grow by 10–12%, fuelled by demand for smaller, more affordable units by the expanding middle class and first-time buyers. Similarly, the sale of commercial projects is anticipated to witness an uptick, impelled by a rebound to work-from-office mode as well as surfacing into popularity in modern commercial spaces like SCO and coworking spaces.
The recently discovered appeal of Real Estate Investment Trusts (REITs) with an estimated Rs 18,000 crore under AUM has also bolstered the sector’s robust outlook. Let us study some of these factors that, combined, have spelled a positive outlook for the Indian real estate sector in 2024.
Favourable Financial Landscape
One major factor that has contributed to the optimistic stance for the real estate industry is the anticipated economic growth the country is expected to attain in the coming year. As mentioned above, the Indian economy’s dream is predicted to continue in 2024. With the country expected to emerge as the fastest-growing economy for the third time in a row,
This economic vigour is expected to boost the real estate sector, with increased income and stability bolstering predilections for investment. In addition to this, the Reserve Bank of India’s long-awaited pronouncement of easing interest rates will also fortify a desire to become homeowners by making home loans more affordable.
This, coupled with government-backed initiatives to make housing more affordable and burgeoning urbanisation, has formed the perfect nexus for increased demand for residential properties. The favourable economic climate with attractive interest rates and a liberal investment policy framework also forms the ideal junction for institutional investors.=
Flourishing Urban Milieu
The country’s young demographic dividend has also led to a national landscape that is constantly being urbanised, with numerous policies being rolled out to ameliorate the social and transit infrastructure of cities. This development not only helps in fulfilling the housing needs of a growing population but also creates an ecosystem conducive to financial investment, thereby creating an even more fertile environment for real estate investments.
NRI Driven Growth
According to recent industry analysis by a renowned real estate consultancy, NRI investment in the country has been rapidly increasing over the years. While NRIs comprised only 10% of real estate investments in India between 2019 and 2020, the figure has jumped to 15% during 2023 and is poised to amplify to 20% by 2025.
The increasing investment from NRIs is due to numerous reasons. From a propitious regulatory setup to the country’s relatively stable socio-economic terrain and a terrific economic upswing during an era of global headwinds, the contemporary period brings to foreign investors the ideal confluence of favourable factors.
The government has recently worked relentlessly to ensure a liberal investment framework for NRIs with numerous tax incentives as well as RERA, ensuring a transparent and hassle-free investment process. Reinforcing this lucrative investment climate is the depreciating value of the Indian rupee against major foreign currencies, leading to NRIs, who usually have higher disposable income, being drawn to invest in the Indian real estate landscape.
To conclude, the Indian real estate industry is poised to experience extraordinary growth in 2024 as a result of a confluence of numerous factors, such as India’s economic trajectory, the increasing inclination of NRIs to invest in their homeland, rapid urbanisation, an opportunistic investment policy framework, etc. Therefore, if you have ever considered investing in real estate, 2024 is the ideal time to finally take the plunge and yield promising results.
