Indian real estate market makes a strong case for more investment

Indian real estate market

The world economy has had a shaky start to the new decade. India, on the other hand, appears to be in a better position due to its post-pandemic smart recovery.
India is now firmly on track to have the fastest-growing economy for the next five years thanks to key policy initiatives that have a persistent focus on developing the country into a manufacturing and innovation hub. India’s economy, which is currently the fifth-largest in the world, is expected to overtake China by 2029 to take third place. India is poised to emerge and flourish on the world stage.

The thriving services industry in India will contribute significantly to the country’s expanding economy. Due of the cheap talent prices, low real estate costs, and good IT connectivity, the multi-year trend of outsourcing IT services will have a cascading effect on office space demand.

The demand for offices in India’s resilient office markets has reached three-year highs. India’s retail and warehousing sectors are on the mend thanks to the country’s robust consumer base, and its residential markets have reached levels that are quite similar to those of 2010. There is a significant policy push in favour of boosting its manufacturing capacities and this sector’s GDP share.
Indian FDI as a percentage of total FDI has increased as a result of shifting geopolitical dynamics worldwide. In FY 2021–22, India experienced an equity inflow of up to USD 58.8 billion, with the construction sector receiving the third-highest FDI.

On JLL’s Global Real Estate Transparency Index 2022, India is also ranked among the top ten nations with the most improvement. It is currently on the verge of being classified as “Transparent,” which will entice additional international investment flows. In contrast to the global decrease, institutional real estate investment in India increased by 19% year over year.
Investments will expand by 19% in 2022: A vote of confidence

Transaction volumes for 2022 were closed at USD 5.2 billion as India became known as a generally secure investment location. Investments followed the office and residential sectors’ strong operating growth, while warehousing and data centres continued to experience development.

Growth-promoting factors for the economy and the housing market include:

Capital spending increased to 3.3% of the GDP as infrastructure development continued to receive attention. Reduced total logistics costs will encourage multi-modal transportation as a result of improved seamless connection via roads, rail, ports, and airports.

ii) Adding value through utilising a skill pool

India is home to the most young people in the world and has some of the most engineering graduates. The need for many sectors is anticipated to be driven by the fast expanding skill in emerging technologies like AI/ML, data engineering, etc.

iii) Building a global manufacturing powerhouse from the ground up

For industries wishing to set up alternative production sites to reduce geopolitical concerns, financial incentives have been provided. India is most likely to become the world’s factory.

iv) Being the hub of international technology and R&D

More than 1,800 GCCs are already operating in India, taking up more than 200 million square feet of area. Given its longstanding and well-established reputation as an outsourcing/offshoring hub, it has emerged as the centre of worldwide R&D and innovation.

v) The contribution of Indian real estate to increased responsibility and sustainability

Within the next ten years, the percentage of commercial Grade A stock in India’s top seven cities with green certifications is expected to surpass 50%.

India presents a strong case to foreign investors thanks to its stable economic and policy climate, strong “animal spirits” in the real estate cycle, opportunities arising from the sizeable consumer base of the nation, and demographic dividend. And this is only the start.

Radha Dhir, CEO & Country Head, India, JLL, wrote the article.

Disclaimer: ET Edge produced this content.