How will REAL ESTATE industry evolve in next 5 years?

- Manju Yagnik

Vice Chairperson, Nahar Group and Sr. Vice President, NAREDCO, Maharashtra

Indian economic growth trends indicate a promising future for real estate in India. The Indian real estate sector is one of the fastest growing in the world because of the persistent need for more residential, commercial and hospitality spaces. As the world grows and changes, so do people's needs for housing, businesses and other amenities. They want the best for themselves, and they want to be able to show it through where they work, live, or simply enjoy themselves.

Through this article, I wanted to highlight some of the key pillars that would help Indian real estate evolve in the coming five years.

Automation and Artificial Intelligence

India has one of the youngest populations in the world with an average of 29-30 years. Both the Millennial and the Gen Z generations are heavily skewed towards a digital lifestyle and developers would have to adapt to this new customer segment with a heavy focus on technology. We should be able to see some major disruptions across home automation, Artificial Intelligence (AI) and IoT which could lead to a complete transformation of business models in the sector. Evolving technologies like Building Information Modeling (BIM), Prefabricated buildings, Additive manufacturing, etc. would become the norm as developers would start witnessing the changing customer trends and address them accordingly.

Fast growing economy

Since the Covid-19 pandemic, the Indian economy has seen a V-shaped recovery that has also benefited the real estate industry. The Indian economy has shown great resilience and has evolved from the pandemic related challenges enabling the government to chart out a roadmap to hit the US$ 5 trillion mark, sooner rather than later. The Indian GDP has consistently grown over the past two decades, which has also led to strong housing demand from the middle income group. Over and above that, Indians have traditionally focussed on savings as an important aspect of their financial well-being. Increase in savings resulting in investments has been an important factor of the Indian economy consistently growing at the current pace.

This rapid growth would also lead to 10-12 million jobs being created every year. The younger generation with stability in their careers and unlimited growth opportunities would seek a better quality of life, and that, in turn, would mean higher growth for the real estate sector.

India's vibrant startup ecosystem

India is considered as one of the key start-up hubs of the world with more than 50,000 start-ups being registered every year. There has been no dearth of funding from Private Equities and Venture Capitalists resulting in creation of multiple unicorns in the past five years. The start-up sector is expected to continue its growth path at a healthy rate of 15% annually as India is on course to cross the 200 unicorns mark very soon. Creation of high-value startups would entail a faster growth pace for commercial real estate in metros as well as non-metros.

Growing NRI investments

In the upcoming years, the Indian real estate market will continue to expand steadily, with NRIs playing a key role in this success story. The Government of India along with the RBI has played a crucial role to control interest rates in the past two years. Not only that, the 'Digital India' movement has ensured an increase in transparency across Indian real estate along with simplifying the investment process for NRIs. Factors like competitive interest rates, favourable currency movement, and transparent regulations will continue to play its part in enabling NRIs to invest in India.

Growth in various segments of real estate

By the year 2030, the amount of office space will reach a billion square feet, with flexible offices making about 8-10% of the overall office space. Additionally, with the growth of Direct to Consumer brands (D2C), India will continue to offer tremendous opportunities across retail and brick & mortar spaces as well. Outlook for the mid segment and affordable housing segment looks extremely encouraging. As international brands set up huge corporate campuses across cities like Pune, Bangalore and Hyderabad, there would be a strong housing demand for employees looking to stay closer to their workplace.

The real estate scenario of India is poised for a stupendous growth, and investing in real estate in Indian cities like Hyderabad, Mumbai, NCR, Chennai, Kolkata and more will bear consistent and rewarding capital appreciation. All the future economic indicators suggest a fast-paced growth for the Indian economy which would have a sizable impact on the real estate sector as well.

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