Introduction

Real estate sector is one of the most globally recognized sectors. It comprises of four
sub sectors - housing, retail, hospitality, and commercial. The growth of this sector is
well complemented by the growth in the corporate environment and the demand for
office space as well as urban and semi-urban accommodations. The construction
industry ranks third among the 14 major sectors in terms of direct, indirect and induced
effects in all sectors of the economy.
It is also expected that this sector will incur more non-resident Indian (NRI) investment,
both in the short term and the long term. Bengaluru is expected to be the most favoured
property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa,
Delhi and Dehradun.
Market Size
By 2040, real estate market will grow to Rs 65,000 crore (US$ 9.30 billion) from Rs
12,000 crore (US$ 1.72 billion) in 2019. Real estate sector in India is expected to reach
a market size of US$ 1 trillion by 2030 from US$ 120 billion in 2017 and contribute 13%
to the country’s GDP by 2025. Retail, hospitality, and commercial real estate are also
growing significantly, providing the much-needed infrastructure for India's growing
needs. Indian real estate increased by 19.5% CAGR from 2017 to 2028.
Office space has been driven mostly by growth in ITeS/IT, BFSI, consulting and
manufacturing sectors. During 2019, the office leasing space reached 60.6 msf across
eight major cities, registering a growth of 27% y-o-y. In 2019, office sector demand with
commercial leasing activity reached 69.4 msf. Co-working space across top seven cities
increased to reach 12 sq ft by end of 2019.
Warehousing space is expected to reach 247 msf in 2020 and see investment worth Rs
50,000 crore (US$ 7.76 billion) during 2018–20. Grade-A office space absorption is
expected to cross 700 msf by 2022, with Delhi-NCR contributing the most to this
demand.
Housing sales reached 2.61 lakh units in 2019 across seven major cities.
Investments/Developments
Indian real estate sector has witnessed high growth in the recent times with rise in
demand for office as well as residential spaces. Real estate attracted around Rs 43,780
crore (US$ 6.26 billion) in investment in 2019. The retail segment attracted PE (Private
Equity) investment of around US$ 1 billion in 2019. Institutional investment in the sector
stood at US$ 712 million during the quarter ended March 2020. Real estate attracted
around US$ 14 billion from foreign PE between 2015 and Q32019.
Exports from SEZs reached Rs 7.96 lakh crore (US$ 113.0 billion) in FY20 and grew
~13.6% from Rs 7.1 lakh crore (US$ 100.3 billion) in FY19.
According to the data released by Department for Promotion of Industry and Internal
Trade Policy (DPIIT), construction is the fourth largest sector in terms of FDI inflow. FDI
in the sector (includes construction development and construction activities) stood at
US$ 42.50 billion from April 2000 to March 2020.
Some of the major investments and developments in this sector are as follows:
 According to the property consultant, Anarock, India is likely to have 100 new malls by 2022. Of this number,
69 malls in will be built in the top seven metropolis and the remaining 31 malls will be in Tier 2 & 3 cities.   
 In March 2020, the Government approved proposals from TCS and DLF to set up SEZs for IT sector in
Haryana and Uttar Pradesh.
  Blackstone crossed US$ 12 billion investment milestone in India.
 Puravankara Ltd, a realty firm, plans to invest around Rs 850 crore (US$ 121.6 million) over the next four
years to develop three ultra-luxury residential projects in Bengaluru, Chennai and Mumbai.
 First REIT, which raised Rs 4,750 crore (US$ 679.64 million), was launched in the early 2019 by global
investment firm Blackstone and realty firm Embassy group.
 In January 2020, RMZ Corp entered into a strategic and equal partnership with Mitsui Fudosan (Asia) Pte
Ltd to expand its business footprint.
 Housing sales reached 2.61 lakh units in 2019 across seven major cities.
 In September 2018, Embassy Office Parks announced that it would raise around Rs 52 billion (US$ 775.66
million) through India’s first Real Estate Investment Trust (REIT) listing.
Government Initiatives
Government of India along with the governments of respective States has taken several
initiatives to encourage development in the sector. The Smart City Project, with a plan
to build 100 smart cities, is a prime opportunity for real estate companies. Below are
some of the other major Government initiatives:
 In order to revive around 1,600 stalled housing projects across top cities in the country, the Union Cabinet
has approved the setting up of Rs 25,000 crore (US$ 3.58 billion) alternative investment fund (AIF).
 Under Pradhan Mantri Awas Yojana (Urban) (PMAY (U)), 1.12 crore houses have been sanctioned in urban
areas, creating 1.20 crore jobs.
 Government has created an Affordable Housing Fund (AHF) in the National Housing Bank (NHB) with an
initial corpus of Rs 10,000 crore (US$ 1.43 billion) using priority sector lending short fall of banks/financial
institutions for micro financing of the HFCs.
 On July 31, 2020, India formally approved 423 SEZs, of which 248 were already in operation. Most special
economic zones (SEZs) are in the IT/ BPM sector.
Road Ahead
The Securities and Exchange Board of India (SEBI) has given its approval for the Real
Estate Investment Trust (REIT) platform, which will allow all kind of investors to invest in
the Indian real estate market. It would create an opportunity worth Rs 1.25 trillion (US$
19.65 billion) in the Indian market in the coming years. Responding to an increasingly
well-informed consumer base and bearing in mind the aspect of globalisation, Indian
real estate developers have shifted gears and accepted fresh challenges. The most
marked change has been the shift from family owned businesses to that of
professionally managed ones. Real estate developers, in meeting the growing need for
managing multiple projects across cities, are also investing in centralised processes to
source material and organise manpower and hiring qualified professionals in areas like
project management, architecture and engineering.
The growing flow of FDI in Indian real estate is encouraging increased transparency.
Developers, in order to attract funding, have revamped their accounting and
management systems to meet due diligence standards.
References: Media Reports, Press releases, Knight Frank India, VCCEdge, JLL
Research, CREDAI-JL, Union Budget 2019–20