Indian Real Estate Market: Investment Analysis

The Indian real estate market is one of the most globally popular sectors. To put in simple words, it comprises of sub-sectors like housing, retail, hospitality and commercial. Most importantly, the growth of corporate offices has increased the demand for workspaces; besides urban and semi-urban accommodations. In fact, the country looks forward to more NRI investments in the Indian real estate market. This is indeed in both the short and long term. Bengaluru is definitely the first choice for NRIs to invest in real estate. Besides, there are places like Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun.

In this article, we will be making a detailed investment analysis of the Indian real estate sector.

Indian real estate market: Advantages of investing

1. Robust Demand

• To begin with, there is a massive demand for residential properties. This is because of an increase in household income and urbanisation.
• In particular, India is among the top 10 price appreciating housing markets internationally.

2. Attractive Opportunities in Indian Real Estate Market

• Indeed, growing requirements of space such as education and healthcare, e-commerce and logistics have created attractive opportunities for investors.
• In fact, the co-living market size across India’s top 30 cities is likely to grow. In particular, the expectation is to reach 13.92 billion USD. This accordingly, means more than double and that too by 2025 from the current size of 6.67 billion USD.

3. Policy Support

• The government has allowed FDI of up to 100 percent for townships and settlements development projects.
• In particular, under the Housing for All scheme, 60 million houses will be built. Most importantly, 40 million of these would be in rural areas and 20 million in urban areas, by 2022.

4. Increasing Investments

• To explain, Indian real estate attracted over 6.06 billion USD in investment in 2019
• In fact, in 2019, the Indian real estate sector attracted more than 5 billion in private equity inflow. Out of which, around 66 percent or 3.3billion USD was put in commercial real estate.

Indian real estate market: Major investments and developments

• In March 2020, the Government approved proposals from TCS and DLF to set up SEZs. This is for the IT sector in Haryana and Uttar Pradesh.
• In fact, Blackstone has already crossed the US$ 12 billion investment milestone in India.
• Puravankara Ltd which is a realty firm has planned to invest around Rs. 850 crores or 121.6 million USD. This is to develop three ultra-luxury residential projects in Bengaluru, Chennai and Mumbai. Most importantly, this is in the next four years.
• First REIT, which raised Rs 4,750 crore or 679.64 million USD, was launched in early 2019 by the global investment firm, Blackstone, and the realty firm, Embassy group.
• In January 2020, RMZ Corp entered into a tactical and equivalent partnership with Mitsui Fudosan (Asia) Pte Ltd to inflate its business.
• Undeniably, housing sales reached 2.61 lakh units in 2019 across seven major cities across India.
• In September 2018, Embassy Office Parks announced that it would rise around Rs 52 billion or 775.66 million USD through India’s first Real Estate Investment Trust (REIT) listing.

Government Initiatives

• The Union Cabinet has approved the setting up of Rs 25,000 crore or3.58 billion USD alternative investment fund (AIF). This is to recover around 1,600 delayed housing projects across major cities in India.
• In fact, Pradhan MantriAwasYojana (Urban) has sanctioned 1.12 crore houses in urban areas. Accordingly, this created 1.20 crore job opportunities.
• The Government has created an Affordable Housing Fund (AHF) in the National Housing Bank (NHB). In particular, there is an initial quantity of Rs 10,000 crore or 1.43 billion USD. This was done using priority sector lending shortfall of banks and other financial institutions for micro-financing of the HFCs.
• To put in simple words, India officially permitted 417 special economic zones (SEZs). 238 of which were already in operation on 29th February 2020. Most importantly, the majority of the SEZs are in the IT or ITeS sector.

Conclusion

Undeniably, the real estate in India is facing an economic crisis at the moment. However, the real estate market seems to be a place that is flooded with opportunities. To put in simple words, starting from the rentals to commercial spaces the demand is only increasing.

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