Indian realty market to touch $1 trillion by 2030: Survey

Mumbai: Indian real estate market is expected to touch USD 1 trillion by 2030, becoming the third largest globally, a recent survey said.

According to the survey conducted by KPMG in association withe Naredco and APREA revealed that the sector is estimated to grow to USD 650 billion by 2025 and surpass USD 850 billion by 2028 to touch USD 1 trillion by 2030.

The report released Thursday here noted that India has consistently improved its ranking in global real estate since 2014, which has instilled confidence in investors.

Speaking about the findings of the report, Neeraj Bansal partner and head ASEAN corridor of KPMG in India said this growth is driven by emerging asset classes such as affordable housing and co-working spaces.

"As by-products of this growth, the average yearly contribution of 67 percent to Indian gross domestic product is anticipated to almost double by 2025 while generating employment opportunities for over 66 million people in parallel," he added.

According to the report the private equity investments in Indian real estate improved 15 percent year-on-year in January-March 2018 reaching USD 3 billion and is estimated to grow to USD 100 billion by 2026 with tier 1 and 2 cities benefiting the most in future.

"Indian realty sector has been struggling with unsold inventory, reducing buyers' confidence, delays in projects, and negative cash flows for quite some time. However, a number of growth promoting regulatory developments and initiatives announced over the last two years, are paving the way for strong sector growth in the future," the report said.

The report further noted that USD 4 billion has been invested by institutional investors in 2018 so far with the average deal size crossing USD 150 million mark, the highest in the last five years.

In 2018, the report said, the average deal size tripled to USD 157 million compared to USD 47 million in 2016.

Of the total investments that have come in 2018, nearly 44 percent are from foreign investors primarily from the US, Canada and Singapore. Also, over 90 percent of the foreign investment have preferred commercial projects across Mumbai, Pune, Bengaluru and Hyderabad.

According to the study, the average deal size of foreign investors is USD 149 million compared with domestic's USD 87 million. These domestic investors have equally preferred commercial (USD 959 million) and residential (USD 870 million) projects.

"Overall, Mumbai has been the preferred destination attracting 53 percent (USD 2 billion) of total investments. Most of these investments have come from foreign investors Hyderabad (USD 793 million) and Bengaluru (USD 694 million) are preferred destinations of domestic investors," it said.

The report further noted that there is underutilisation of over Rs 20 billion worth of real estate investment trust (REIT) office stocks offering a potential rental yield of up to 7.5 percent.