Realty sector expected to grow to USD650 bn by 2025

​Hyderabad: Real estate sector is estimated to grow to $650 billion by 2025 and surpass the $850 billion mark by 2028, said a recently released report.

According to the report titled ‘Indian real estate and construction: Consolidating for growth’ by KPMG India, the real estate sector contributed nearly seven per cent to the Indian gross domestic product (GDP) in 2017 and is expected to double its contribution by 2025. Besides, the sector is projected to grow to $650 billion by 2025 and surpass $850 billion by 2028. The report adds that the factors driving the growth are affordable housing, commercial offices, and co-working spaces.

“The real estate sector in India has now entered a revitalisation phase and teething problems posed by various regulatory reforms have started settling in,” said Neeraj Bansal, Head-KPMG (India). Citing positive investor sentiment, real estate sector witnessed $4 billion investment by institutional investors in 2018, and a five-year high of average deal size having crossed $150 million mark. The driving factors mentioned again were the current government’s renewed focus on affordable housing, the game changing regulatory reforms, and an infrastructure status to warehousing.

“Institutional financing is becoming a prominent financing medium, particularly focusing on the commercial sector which attracts over 60 per cent of investments. Average deal size in 2018 has tripled to $157 million from $47 million in 2016,” added Bansal. Further, the growth of commercial segments is supplementing the growth of the sector in whole.

Wherein entrepreneurs wanting to explore a flexible, low cost solution breaking the stereotypical leasing arrangement is boosting the co-working space and the same with warehousing owing to strong growth momentum being exhibited by e-commerce, retail, FMCG and automotive sectors. The Grade A and B warehouse stock projections in the top eight cities in India pre-GST implementation was at a CAGR (2014–16) of 15 per cent whereas has increased to an expected post-GST implementation at a CAGR (2017–21) of 21 per cent.

Adding traction to the growth of the sector other than recognising the potential of asset classes, increased interest in affordable housing, is also the innovative technology and increased participation from the private sector. Moreover, easier availability of land in the extended suburban sub-markets, along with improved infrastructure connectivity, is also helping drive the real estate sector leading it to the projected growth of $650 billion by 2025.