Real Estate Investment in India 2024: Expert Insights

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Planning to venture into the Indian real estate market? Prepare yourself for expert analysis on the thriving industry in 2024! Explore the most promising investment prospects, insider advice, and tactics to optimize your returns. Delve into this comprehensive guide filled with invaluable insights for prospective real estate investors in India.

Summary

I. Current State of the Indian Real Estate Market
II. Trends in Real Estate Investment in India
III. Government Initiatives and Policies Impacting Real Estate Investment
IV. Emerging Technologies in the Indian Real Estate Sector
V. Built To Rent: A Growing Demand in India
VI. Sustainable Development in the Indian Real Estate Market
VII. Real Estate Investment Trusts (REITs) in India

I. Current State of the Indian Real Estate Market

The Indian real estate market is in a state of continuous evolution, providing investors with a promising terrain to navigate. Let's delve into the present condition of the Indian real estate market, equipped with compelling statistics and insightful analysis.

1. Market Size and Growth:

Real Estate

 The Indian real estate sector has experienced steady growth. As per Statista, the market size of the real estate industry in India was approximately $120 billion in 2017, with projections suggesting it could reach $1 trillion by 2030. This points to substantial growth opportunities for investors in the upcoming years.

2. Residential Sector:

The residential sector remains a major segment of the Indian real estate market. Demand for affordable housing has been on the rise, driven by factors such as 
  • Urbanization
  • Population growth
  • Government initiatives like the Pradhan Mantri Awas Yojana (PMAY)
According to a report by Knight Frank, the residential market in India witnessed sales growth of 68% year-on-year in 2022.

3. Commercial Sector:

The commercial real estate market in India is doing very well, especially in big cities like 
The demand for office spaces, retail stores, and shared workspaces is increasing because of the growth of industries like IT/IT, e-commerce, and startups. JLL reports that office leasing in India reached a new high in the first half of 2021, showing that the commercial real estate market is strong.

II. Trends in Real Estate Investment in India

As we approach 2024, the realm of real estate investment in India is witnessing intriguing transformations. To stay ahead in this dynamic landscape, it is essential to comprehend the trends that will influence the market in the upcoming year.

1. Residential real estate continues to Shine:

The surge in India's middle class is driving an unprecedented demand for residential properties, propelled by urbanization trends and the migration of people to cities in search of better opportunities. Beyond the middle class, the demand is further bolstered by affordable housing schemes and improved infrastructure.

Notably, ANAROCK Research reports a remarkable achievement in the first half of 2023, with housing sales reaching a record-breaking figure of approximately 2.29 lakh units across the top 7 cities. Astonishingly, this accounts for over 63% of the total sales recorded throughout the entire year of 2022, despite the challenges posed by rising interest rates and housing prices. This unmistakable trend indicates that the demand for residential properties in India is poised for sustained growth, making it a compelling prospect for savvy investors to consider.

2. Rise of Co-living and Co-working Spaces:

Real Estate

The sharing economy is transforming the real estate landscape, presenting a lucrative opportunity for astute investors. The surge in popularity of co-living and co-working spaces among millennials and professionals is creating a dynamic market. According to Mordor Intelligence, the India Co-working Office Spaces market has already reached an impressive value of USD 1.78 billion this year, with a projected growth rate exceeding 7% in the foreseeable future.

3. Tier 2 and Tier 3 Cities on the Radar:

Recently, smaller cities have piqued the interest of investors in search of the next promising opportunity. These cities offer a unique blend of affordability and growth potential, making them an attractive option for those looking to diversify their investment portfolio. Pune, Hyderabad, and Chandigarh stand out among the cities that have witnessed significant growth in the real estate sector, driven by the emergence of new developments and infrastructure projects that have stimulated demand.

III. Government Initiatives and Policies Impacting Real Estate Investment

The Indian government plays a pivotal role in shaping the real estate landscape, and understanding the latest policies and initiatives is crucial for savvy investors.

1. Affordable Housing Initiatives:

Real Estate

The Union Budget for the fiscal year 2023–24 has allocated 79,000 crores for the Pradhan Mantri Awas Yojana (PMAY), marking a substantial boost to the government's housing program for the urban poor. This significant initiative provides a ray of hope for millions of individuals aspiring to own a home but facing financial constraints.

2. Real Estate Regulation and Development Act (RERA):

RERA has brought much-needed transparency to the sector. It mandates developers to register their projects, provide accurate project details, and adhere to timelines. This has boosted confidence among buyers and investors alike.              

3. Goods and Services Tax (GST):

The implementation of GST has revolutionized taxation, making transactions smoother than ever before. With a uniform tax structure, complexities have been eliminated, replacing multiple taxes like service tax and VAT. Plus, the GST rates for residential properties are a mere 5%, while commercial properties are taxed at 18%.

4. Foreign Direct Investment (FDI) Policy:

The real estate market in India is experiencing a significant boom, attributed to investor-friendly FDI policies and enhanced transparency in deals. According to Livemint, foreign investments constitute a remarkable 81% of total investments, and institutional investments in Q1 2023 witnessed a notable 37% year-on-year increase, reaching $1.7 billion, with the office sector leading the way.

IV. Emerging Technologies in the Indian Real Estate Sector

Real Estate

The real estate landscape in India is currently undergoing a digital revolution, driven by the integration of advanced technologies that are transforming the way investors, developers, and homebuyers engage with the market.

1. Proptech Revolution:

The proptech ecosystem in India is currently experiencing an exhilarating phase, witnessing the emergence of numerous startups with innovative solutions. Fintrackr's analysis reveals that over 29 real estate startups raised an impressive $345 million between January 2021 and March 2023, contributing to a total funding of $2.4 billion. This substantial growth is fueled by platforms that streamline property discovery, facilitate seamless digital transactions, and provide immersive virtual property tours.

2. Proprietary Data Analysis:

In the dynamic realm of real estate investment, data has emerged as the ultimate authority. Leveraging the capabilities of big data and artificial intelligence, investors now possess the ability to make well-informed decisions like never before. They can scrutinize market trends, forecast property values, and unveil hidden investment opportunities. This data-driven approach not only introduces transparency to the game but also serves to mitigate risks.

3. Augmented Reality (AR) and Virtual Reality (VR):

Augmented Reality (AR) and Virtual Reality (VR): These technologies are revolutionizing property viewing. Homebuyers can take virtual tours of properties from the comfort of their homes, saving time and reducing the need for physical site visits.

4. Blockchain in Property Transactions:

Transforming property transactions, blockchain technology is enhancing security and transparency. Smart contracts, powered by blockchain, are automating the transfer of property titles and funds, significantly reducing the time and costs associated with property transactions.

V. Built To Rent: A Growing Demand in India

In the dynamic realm of real estate investment in India for 2024, a trend gaining substantial momentum is the "Built to Rent" (BTR) sector. With the surge in urbanization and evolving lifestyles, BTR properties have become an appealing choice for both investors and tenants.

1. Expanding Urban Population:

India is witnessing a rapid urbanization wave. By 2030, it's estimated that 40% of India's population will reside in cities. This migration is driving the need for rental housing close to job hubs and city centers.

2. Millennial Preference:

Millennials, a dominant force in India's workforce, prefer flexibility and quality living over property ownership. Built to Rent properties offer fully furnished, hassle-free accommodation that aligns with their lifestyles.

3. Rental Yields:

Investors are enticed by the promising rental yields that BTR properties offer. With a consistent flow of tenants and rental income, BTR assets are becoming a valuable inclusion in investment portfolios.

4. Amenities and Community Living:

BTR properties are often equipped with modern amenities and community spaces, making them more appealing to tenants. This trend is transforming rental properties into holistic living experiences.

VI. Sustainable Development in the Indian Real Estate Market

Sustainability is no longer an option; it's a mandate in the Indian real estate market for 2024. As urbanization continues, so does the pressure to create eco-friendly and efficient structures. 
  • Green Building Certifications:  In 2021, India ranked 3rd globally for LEED-certified green buildings, emphasizing the industry's commitment to sustainability.
  • Renewable Energy Integration:  Solar panels and wind turbines are increasingly being incorporated into real estate projects, reducing energy costs and carbon footprints.
  • Water Management: Water recycling and conservation measures are being adopted to help address India's water scarcity challenges.
  • Waste Reduction: Developers are minimizing construction waste and promoting recycling to reduce environmental impact.

VII. Real Estate Investment Trusts (REITs) in India

REITs (Real Estate Investment Trusts) continue to transform the Indian real estate investment landscape in 2024. The three REITs focused on office properties are Embassy Office Parks REIT, Mindspace Business Parks REIT, and Brookfield India Real Estate Trust. Additionally, Nexus Select Trust is India's first REIT supported by retail assets.
  • Steady Growth: India's REIT market has seen a steady surge since its inception in 2019. 
  • Diversification: REITs allow investors to diversify their portfolios without the hassle of property management. They offer a mix of commercial properties, including office spaces, malls, and warehouses.
  • High Yields: REITs provide attractive yields, often surpassing traditional investment options, making them an appealing choice for income-oriented investors.
  • Transparency and Regulation: Strict SEBI regulations ensure transparency, investor protection, and efficient management of REITs.
In the dynamic landscape of real estate investment in India, the year 2024 presents a promising outlook. Ongoing innovations in proptech and a growing emphasis on sustainable development are shaping the industry. The "Built to Rent" sector is witnessing increased popularity, aligning with the changing lifestyles of urban residents. Meanwhile, Real Estate Investment Trusts (REITs) remain a robust option for investors, providing diversification and consistent growth.
 
 

 

 

Frequently Asked Questions

Ans 1. The real estate sector contributed approximately 7% in FY2019 and is expected to rise to 13% during FY2025.

Ans 2. Housing Market Forecast for 2024 and 2025 India's real estate market is expected to undertake a growth rate (CAGR) of 9.2% during the five years from 2023 to 2028. Looking ahead, the future of the real estate market in India appears promising, with continued growth and evolution.

Ans 3. In 2021, the size of the Indian property market was $200 billion. The projected growth by 2030 for the sector is $1 trillion. What is more, by 2025, the real estate sector is expected to contribute 13 percent of the country's total GDP.

Ans 4. India is enjoying a property boom – and real estate experts say they see no signs of it slowing down any time soon. “Properties are getting sold out within days and sometimes within hours of a launch,” says Anupam Rastogi, co-founder and chief business officer at Square Yards, an Indian real estate advisory firm.

Ans 5. Is buying a property a good investment in India? Compared to other business investment alternatives like shares and mutual funds, real estate investing in India has a lower volatility quotient. Since it is a physical asset, it continues to be among the safest investment options in India.

Ans 6. Bangalore. - The Silicon Valley of India: Bangalore consistently ranks high in real estate investment. ... Mumbai. - The Financial Capital: The city of dreams is a prime choice for property investment. ... Gurgaon. ... Hyderabad. ... Chennai. ... Pune. ... Kolkata. ... Ahmedabad.

Ans 7. After two years affected by COVID, Tier 2 and Tier 3 cities have arisen as fresh major real estate trends in 2022, and the real estate market has set unprecedented benchmarks which continued its growth momentum from 2021 amid the global slowdown.

Ans 8. Over the past 20 years, India's average property price has risen 6% each year, according to CRISIL. The Indian housing market has undergone significant changes over the past 20 years.

Ans 9. 10 Most Affordable Cities in India to Buy a House Kochi, Kerala. ... Ahmedabad, Gujarat. ... Indore, Madhya Pradesh. ... Chandigarh, Union Territory. ... Bhubaneswar, Odisha. ... Lucknow, Uttar Pradesh. ... Coimbatore, Tamil Nadu. ... Nashik, Maharashtra. Nashik is another city with relatively affordable housing options, and it has been growing steadily.