Indian Real Estate Set for Massive Growth: Projected to Reach $10 Trillion by 2047

The Indian real estate market is on the verge of a massive transformation, as a recent report by Colliers and the Confederation of Real Estate Developers' Associations of India (Credai) reveals that the sector is expected to grow into a $10 trillion market by 2047. Over the past decade, institutional investments, predominantly from foreign sources, have poured over $60 billion into the market, signifying strong confidence in India's growth potential.

Growth Drivers and Economic Contribution

Currently, real estate contributes around 7.3% to India's gross domestic product (GDP), but this share is expected to increase significantly to anywhere between 14% and 20% by 2047. Several factors are contributing to this anticipated growth, such as India's improving ease of doing business, ongoing foreign direct investment (FDI) relaxations, and strong domestic growth prospects. According to the report, the influx of foreign capital will likely continue to grow, supported by a more welcoming regulatory environment. The enhanced transparency brought by regulations such as the Real Estate (Regulation and Development) Act (RERA) and Real Estate Investment Trusts (REITs) has played a pivotal role in fostering investor confidence and streamlining the sector’s operations.

The Rise of Alternative Funding

Another notable trend is the rise of alternative funding strategies in Indian real estate. As both foreign and domestic investors look for innovative ways to invest, options like green financing through bonds, social impact funds, and venture capital are becoming increasingly popular. These strategies not only diversify the funding landscape but also contribute to sustainability initiatives, ensuring that future developments are both energy-efficient and environmentally friendly. As Boman Irani, president of Credai National, points out, this shift towards sustainability is only going to grow stronger. “Alternative segments like senior living, co-living, and data centers will witness exponential growth in the coming years, driven by changing consumer preferences and the integration of new technologies,”he says.

Urbanization and Emerging Opportunities

By 2047, about 50% of India's population will reside in urban areas, and the median age will rise to nearly 40. With rapid urbanization, real estate development will no longer be confined to Tier 1 cities. Smaller towns and cities are poised to become growth centers, attracting investments and creating opportunities beyond traditional urban hubs. Manoj Gaur, chairman of Credai National, highlights the importance of infrastructure and employment opportunities in these smaller cities. “With infrastructure growth and urbanization accelerating, real estate traction will expand beyond Tier 1 cities, creating new growth centers in smaller towns,” he says.

Expanding Asset Classes and New Opportunities

The report also shines a light on the future of Real Estate Investment Trusts (REITs) in India. While office and retail spaces have been the primary focus so far, the asset classes under REITs are expected to diversify over the next few years, with warehouses, hotels, and rent-yielding residential properties joining the fray. In the long run, alternative real estate verticals such as data centers, hospitals, educational institutions, and senior/student living accommodations are expected to benefit from these new financing avenues. As the real estate market expands, these segments will play a crucial role in shaping the future of Indian real estate, ensuring that it meets the evolving needs of the population.

A Promising Future for Real Estate

In summary, the future of Indian real estate looks incredibly promising, with institutional investments, sustainable practices, and a shift towards smaller cities driving its transformation. With the sector set to contribute more significantly to the country’s GDP and offer a wider range of opportunities for investors, developers, and homebuyers alike, Indian real estate is poised to be a major player in the global market by 2047.