New Delhi: The realty sector can more than double its contribution to GDP to 13 percent by 2025 on rising housing demand, if the government removes bottlenecks in infrastructure, lowers borrowing cost and makes process of approvals shorter, global property consultant CBRE said.
The share of the real estate sector in GDP is likely to be 6.3 percent in 2013, CBRE said in a report titled 'Assessing the Economic Impact of India's Real Estate Sector'.
The size of country's gross domestic product (GDP) was USD 1.8 trillion in 2012-13 fiscal.
The report projected that the realty sector will generate employment for 17.2 million people and supply 8.2 million sq ft by 2025, more than double the figures for the current year.
"India’s real estate sector is poised for significant growth in the coming decade as it benefits from significant opportunities such as increasing urbanisation, demand for new housing and the expanding urban fabric of tier II and tier III cities in the country," CBRE said in the report.
That sector, however, faces numerous challenges like high borrowing costs, slow and uneven infrastructure development and lengthy approval processes, the report said.
"Once these bottlenecks are addressed, we can expect the economic contribution of the sector to increase considerably, with its share of the GDP to more than double from 6.3 percent in 2013 to almost 13 percent by 2025," it added.
Commenting on the report, CBRE South Asia Chairman and MD Anshuman Magazine said the sector has the potential for significant growth provided country's economic growth does not stagnate and these bottlenecks are removed.
The real estate and construction sector would continue to remain one of the largest employers in the economy, CBRE said, adding the annual employment opportunities generated in the sector are expected to increase from 7.6 million in 2013 to almost 17.2 million in 2025.
The annual real estate supply in India is expected to increase from about 3.6 billion sq ft in 2013 to about 8.2 billion sq ft in 2025. Majority of this space is expected to be concentrated in the residential sector.
Urbanisation in India has been increasing at an unprecedented rate, with almost 71 million people being added to the urban population from 2001 to 2011. At this rate, close to 534 million people will live in Indian cities by 2026. This offers tremendous opportunities for real estate development.