Indian Real Estate Forecast for Next 5 Years: A Closer Look

An assessment of real estate growth in India in last 10 years shows that the market has witnessed robust growth, and real estate forecasting expects its trends to continue in the coming five years.

This growth is said to be driven by factors such as favourable government policies and projects, a surge in urbanisation, rising disposable incomes, and increasing demand for housing and infrastructure.

The rising demand for residential projects from the middle class and the younger demographic has prompted developers and builders to undertake projects that customise potential homebuyers’ preferences.

Real estate growth is marked by lower property rates and affordable housing options in Tier 2 and 3 cities. In comparison, Tier 1 cities are witnessing an increasing demand for high-end and luxury properties.

In the commercial real estate sector, the proliferation of businesses and multinational corporations has resulted in an upward surge in the demand for office spaces nationwide. This Indian real estate boom has significantly contributed to the nation’s GDP and increased employment rates across several industries.

Despite the promising growth, the Indian real estate sector continues to grapple with challenges such as land acquisition issues, regulatory complexities, and periodic financial crises. For accountability, measures like the Real Estate Regulation Act (RERA) have been instituted to improve the real estate market in India.

The current Indian real estate industry is estimated to have a market size of $0.33 trillion. By 2029, it is expected to reach $1.04 trillion, demonstrating a growing CAGR of 25.60% during the forecast period (2024-2029).

The report India Real Estate: Vision 2047 (by Naredco and Knight Frank India) upholds a very attractive forecast for it in the next five years.

Studies predict that the Indian property market will grow significantly, hitting $5.8 trillion by 2047. This growth will contribute a staggering 15.5% to the total economic output—a significant increase from the current 7.3%.

Rajan Bandelkar, President of NAREDCO India, says that the Indian financial scene will undergo a tremendous economic overhaul in the upcoming decades.

This growth will be reflected in the country’s GDP. Shishir Baijal, the Chief Managing Director at Knight Frank India, has also emphasised that this growth in the next 5 years can push private equity and real estate investment in India to reach as high as $54.3 billion. Such growth figures point to a CAGR of 9.5% between 2023 and 2028.

The report further claims that the Indian real estate sector will have growth projections of nearly $1 trillion by 2030—a market size significantly larger than the US$200 billion one in 2021. This growth in the real estate market in India is expected to push up India’s GDP by 13% on or before 2025.

Our real estate forecast for the next five years in India includes cautionary predictions and indicates the challenges ahead. For instance, the Economic Times Housing Finance Summit claims there is a current housing crisis, revealing that only three houses are built per 1,000 people annually.

This is falling short of the required construction rate of five houses per 1,000 population. This shortage is especially dire in urban areas, where the housing territories are estimated at around 10 million units.

To address this deficit, an additional 25 million units of affordable housing projects are deemed necessary by 2030 to accommodate the anticipated growth in the country’s urban population.

India’s real estate market is entering a new era in 2024. The next 5 years’ forecast will be a mix of opportunities and challenges, but the future looks bright. This was demonstrated by the remarkable increase in sales of luxury homes in 2023, which indicates that the sector’s future growth remains unchanged.

With this boost, overall sales in prime locations rose to 2.6 lakh units, and they are expected to go even higher by 3 lakh units by 2024. In addition, there is hope for the commercial real estate sector, notably office spaces.

The recovery of the residential real estate market in 2023 is expected to play a significant role in the real estate market in India’s growth in the next 5 years. Projected new property launches register a 15-25% growth and a crucial sales improvement of 10-15% for 2024.

This reflects an upward trend within the industry, where both residential and commercial buildings are being built to accommodate the demands of the growing favourable demographics. Union Budget-supported infrastructure schemes such as Housing for All and Smart Cities Mission help in this regard.

The implementation of the Real Estate Regulatory Authority (RERA) is set to further enhance the industry’s accessibility, transparency, and responsibility. This approach will attract both domestic and foreign investors for a sound real estate future in India.

Technological advancements (think virtual reality experiences and online real estate platforms) are expected to simplify property transactions.

The adoption of PropTech, AI-driven analytics, and blockchain for secure transactions can efficiently drive trust and secure promising opportunities for the sector. Despite challenges (including financial limitations and project delays), the real estate market remains buoyant. 

India’s burgeoning economy is promising and profitable for the real estate sector, but certain cities stand out for lucrative returns on investment. In such cases, financial stability, growth projections, price appreciation, and ongoing infrastructure development play an important role.

Investing in real estate requires thorough research and careful consideration to ensure profitability and mitigate risks. Understanding market trends and ensuring legal compliance is also crucial for informed economic decision-making and avoiding future property disputes.

Key factors in deciding investment for the real estate future in India include location (with proximity to essential services like schools, markets, and hospitals) and infrastructure development (such as road projects and metro connectivity). This not only boosts property value but also makes for comfortable living.

Other important considerations are the developer’s reputation, certain economic indicators (like favourable interest rates and inflation trends), and integrating modern technologies in properties.

In recent years, several reputable developers like AsmitA India Realty have integrated smart home technology into their affordable but premium projects to enhance the investment’s value, utility, and appeal.

In a nutshell, the real estate forecast next 5 years in India looks promising. However, the real estate future in India is going to see a sea-change in trends for the next 5 years, driven by an expected rise in luxury housing sales and a revived commercial market.

Government initiatives such as the Union Budget projects, Housing for All, and regulatory reforms like RERA are crucial to enhancing transparency and inspiring investors’ trust.

The foremost objective of leaders in the industry should be a strong management system that ensures well-built products and trust from buyers. It still has its downsides, like high land costs or infrastructural problems, but its resilience and innovative abilities show that it is headed for better days.

For sustainable development, continuous government support is needed to ensure that the real estate sector remains a committed and important driver of India’s economy.