India's current path towards becoming the third-largest construction market globally is well founded.
Sriram Natarajan
Executive Director, Project Development, Cushman & Wakefield
How do you assess India’s construction industry growth over the years?
India’s construction industry in the last decade, has demonstrated significant growth mainly due to rapid urbanization, economic expansion, growing PE investments in virtually all industry sectors and substantial government investments in infrastructure. It’s evolved, from being primarily a residential and commercial construction to large-scale infra projects and sustainable development.
What is the role of real estate sector and urbanisation in the growth of Indian construction industry?
The real estate sector is one of the key contributors to India's GDP and is the second largest employment generator after agriculture. It is contributing close to 8% to India’s GDP currently, with projections to reach 15% by 2025. Over the last 10 years, it has significantly boosted other sub-sectors like commercial, retail, hospitality, healthcare and education. Overall, the industry is poised to be a $1 trillion market.
Rapid urbanization is also driving growth with integrated developments, expanding Tier II cities, and the urban sprawl creating a massive need for public infrastructure, commercial offices, retail/mixed-use development, e-commerce and manufacturing spaces.
What are the major demand drivers of real estate market for the coming years? How do you look at the new opportunities for builders and developers?
Rapid urbanization and the growing migration of people to urban centres are one of the most significant drivers of real estate demand in India and it has given a major push to the housing sector. By 2050, India’s urban population is expected to reach 600 million, significantly increasing the demand for residential and commercial real estate. India’s steady economic growth has led to an increase in disposable incomes, particularly among the middle class, contributing to significant increase in investments in residential and commercial assets and indirectly boosting opportunities in industrial & warehousing, social & public utility infrastructure like school/colleges, hospitals, hotels, entertainment & mixed-use developments.
Builders and developers should focus on new geographies that are in Tier II cities as their opportunity areas. They should also explore integrated developments like residential mixed with education and light manufacturing, or large healthcare development like Medi cities and public infrastructure.
The use of Proptech, Virtual Realty, AI and similar digital platforms have further created opportunities to enhance the efficiency of the real estate sector.
What is your vision on India as the third-largest construction market globally?
India's current path towards becoming the third-largest construction market globally is well founded and is supported by robust urbanization, favourable government policies, economic growth, and technological innovation.
The YOY increase in the FDIs in the construction industry and the country's ability to attract further domestic and foreign investments makes India a major player in the global construction industry and can shape the future global trends. For this vision to be fully realized, the challenges such as regulatory complexities, land acquisition issues, and the need for skilled labour needs to be addressed.
