Mr Shashank Vashishtha, Executive Director, Exp Realty India
The real estate landscape in India is on an extraordinary trajectory as the country steers toward its 100th year of independence in 2047. This sector has evolved significantly over the last three decades, mirroring the remarkable growth of India’s economy, which has transitioned from a fledgling market to the world’s fifth-largest economic powerhouse. Such unprecedented progress has been fueled by visionary policy reforms and substantial expansions in manufacturing and services.
Among the prime beneficiaries of this economic leap forward stands the real estate sector, wielding a vast network intertwined with nearly 250 ancillary industries. It stands as a pivotal generator of employment, ranking second only to agriculture, employing a substantial 18% of the nation’s workforce. At present, this sector contributes a notable 7.3% to India’s economic output, boasting an estimated market size of USD 477 billion. However, projections paint a staggering picture of growth, envisioning an astronomical expansion to USD 5.8 trillion by 2047, constituting a monumental 15.5% of the total economic output.
Numerous driving forces propel this meteoric rise. Urbanization, fueled by demographic advantages and rising disposable incomes, propels the demand for residential properties. This surge goes beyond housing, encompassing the growing need for contemporary office spaces, hospitality and retail real estate, all to meet the escalating consumption patterns of the populace. The flourishing e-commerce sector fuels demand for warehousing and storage facilities, while the uptick in telecommunication services necessitates the development of expansive data centers. Concurrently, government policies concentrating on affordable housing, smart city projects, and incentivizing housing loans create a fertile landscape for investment in the real estate sector.
The far-reaching impact of real estate is profound. A mere 1% growth in real estate development triggers an impressive 8% surge in steel and cement production, highlighting its extensive influence. Furthermore, this sector stands as a crucial revenue stream for state governments, contributing an estimated INR 2 trillion from stamp duties, registration fees, and land revenue in FY 2022-23. Leveraging tools like land value tax, betterment levy, and development charges, state governments and municipalities channel increased property values into funding critical infrastructure projects.
The Maharashtra government’s introduction of the metro cess in 2019 serves as a stellar example of innovative revenue generation. Levying an additional 1% tax on property transactions in four key cities, it has surpassed expectations, generating over INR 1,800 crore, exceeding the annual revenue target of INR 700-800 crore. This initiative underscores the potential of innovative financing models in propelling infrastructure development.
As we gaze into the future, India’s real estate sector emerges as a cornerstone of the nation’s progress. With a projected population of 1.7 billion by 2047, with over half residing in urban centers, the demand for housing will be unprecedented. Urban cities will require a staggering 230 million housing units to accommodate this burgeoning populace, necessitating a shift towards integrated townships, mixed-use developments, and self-sustaining mini-townships.
India’s real estate sector is poised to be a linchpin in the nation’s journey towards a thriving, prosperous future. With prudent policies, innovative financing models, and a proactive approach to urban development, India is on the cusp of unlocking the full potential of its real estate sector, shaping a future where housing embodies not just a necessity but a testament to India’s enduring growth story. As 2047 approaches, the horizon gleams with opportunities, and the real estate sector strides ahead, leading the way.