POISED TO EXCEL

Indian real estate industry has witnessed growth leaps bounds, staying well on the path to become $1-trillion market 2030. Construction Times explores the market trends and outlook and how the real estate market is contributing to the Mission 2025 of Indian construction industry.

The Indian real estate sector has seen a strong overall performance in the last couple of years with projects taking off well in across the segments of real estate market. The recent spurt in land deals by various developers shows a possible upsurge in the real estate market in 2025. Residential, commercial, retail, industrial and logistics & warehousing are driving prime land deals in key locations across India. The overall real estate market trend is pushing the growth of Indian construction industry.

Construction market and real estate boost

India's construction industry has witnessed remarkable growth over the years, driven by factors such as rapid urbanization, economic development, and government infrastructure initiatives. According to Santhosh Kumar, Vice Chairman, ANAROCK Group, the sector is a significant driver of economic growth, contributing 9% to the GDP. “The Indian construction sector is poised to expand significantly, reaching a value of $1.4 trillion by 2025. This vast industry encompasses over 250 sub-sectors with linkages across sectors. It is also a major magnet for foreign investment, attracting $33.91 billion in inflows between April 2000 and March 2024,” he adds.

The industry has become the third largest sector for FDI inflows with cumulative investments in excess of USD 50 billion, according to Sriram Natarajan, Executive Director, Project Development, Cushman & Wakefield. The construction industry in India is poised to grow at a CAGR of around 6.87% through 2030.

Real estate has been a key contributor to the growth of Indian construction industry. It has emerged as the second largest employment generator after agriculture and is contributing close to 8% to India’s GDP currently, with projections to reach 15% by 2025. According to Natarajan, over the last 10 years, it has significantly boosted other sub-sectors like commercial, retail, hospitality, healthcare and education. 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.

Real estate and construction industries complement each other as both these are intrinsically connected with one another. According to Anupam Verma, CEO, Rustomjee Urbania, Rustomjee Group, while the construction sector lays the groundwork for the real estate sector, the latter acts like a catalyst driving demand for construction activities. “This collaborative partnership has a massive impact on the economy as both industries also have an influence over other sister industries like manufacturing, logistics amongst others.”

Highlighting the new push in real estate market contributing to the overall construction market in India, Amrita Gupta, Director, Manglam Group and Founder President, CREDAI Rajasthan Women's Wing adds, “The rising demand for commercial spaces, residential housing, and hospitality projects has made real estate a key contributor to this growth. The push for sustainable construction, green buildings, and technological advancements in the sector further strengthen its potential.”

Demand drivers

India's real estate market is poised for significant growth in the coming years, driven by several key factors. According to Sathosh Kumar, these factors vary from urbanization and economic growth to infrastructure development, rising disposable income of people, and favourable government policies. The country's rapid urbanization, coupled with robust economic growth, is fuelling demand for housing and commercial spaces. Government initiatives to improve infrastructure, such as transportation and connectivity, are creating new opportunities for real estate development. As incomes increase, more people are able to afford their own homes or invest in real estate. Government policies like affordable housing schemes and tax incentives are stimulating demand and encouraging investment in the real estate sector.

“These factors present a wealth of opportunities for builders and developers to capitalize on the growing market. By understanding market trends, adapting to changing consumer preferences, and leveraging technological advancements, builders and developers can position themselves for long-term success in India's real estate sector,” highlights Santhosh Kumar.

Natarajan also reflects the same, “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.”

Amrita Gupta highlights the importance of real estate market development for the growth of construction industry. She adds, “Government initiatives like 'Housing for All' and urban infrastructure investments have boosted real estate development across Tier 1 and Tier 2 cities. Real estate's contribution to employment generation and GDP growth underscores its importance in shaping India's construction landscape. In contrast, sustainable urban planning and green construction practices have become critical for long-term growth.”

Bhavesh Shah, Joint Managing Director, Today Global Developers, says, “India's projected rise as the third-largest construction market globally by 2025, valued at USD 1.4 trillion, highlights the critical role of the real estate sector in driving this growth. Today Global's varied portfolio in Navi Mumbai offers luxury living and strategic growth plans to support this goal. Our mission for 2025 is clear: to keep our customers happy by delivering world-class projects that exceed their expectations, ensuring innovation, quality, and customer satisfaction are at the heart of everything we do.”

Lookin g ahead

Indian construction industry has a huge opportunity for the coming years as the country still has a long way to go in infrastructure development. This will reflect in the real estate development as well. According to Santhosh Kumar, the country's vast population, coupled with rapid urbanization and infrastructure development initiatives, have created a massive demand for construction industry.

According to Natarajan, 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 West and South Zones are leading in terms of construction value and area, driven by mega-projects in cities like Mumbai and Bengaluru and that sets the path for other regions of India to push forth to service the demand gap,” he adds.

India's real estate market is expected to remain robust in 2025, according to Santhosh Kumar. “Factors such as continued urbanization, infrastructure development, and favourable government policies will drive real estate demand. However, challenges like rising interest rates and global economic uncertainties may impact the market to some extent,” he concludes on a positive note with a rider of caution.