The real estate sector in India is one of the fastest growing sectors post liberalization, accounting for 7% of GDP currently and projected to reach 13% by 2025. It has a large market size expected to reach $1 trillion by 2030. Real estate is an important sector due to its linkages with construction and other ancillary industries, and its role in the growth of cities and economic development. The sector was impacted by COVID-19 but segments like industrial and warehousing have thrived, while others like retail and hospitality were hit. Going forward, trends like demand for affordable housing, rental housing, flexi office spaces, data centers, and warehousing/logistics are expected to shape the sector.

1. REAL ESTATE SECTOR
Trimester – III, 2023
ANURIMA MUKHERJEE BASU
IPRD COURSE

2. What is Real Estate?
◦ Real estate is defined as land, including the air above it and the ground below
it, and any buildings or structures on it
◦ It includes land, any structure on it (building and infrastructure) – immovable
property
◦ Land and benefits arising out of land and things attached (permanently
fastened) to the earth
◦ Activities in real estate sector involves the purchase, sale, and development of
land, residential and non-residential buildings.

3. Real estate sector – A snapshot
ONE OF THE FASTEST GROWING
SECTOR POST LIBERALIZATION – 7%
OF GDP , 13% BY 2025
4TH LARGEST IN FDI FLOW
POTENTIAL HIGH EMPLOYMENT IN
THIS SECTOR – ABSORBS
UNORGANIZED WORKERS
MARKET SIZE IS EXPECTED TO
REACH US $ 1 TRILLION BY 2030.

4. Real estate sector
◦ Chain of backward and forward linkages with other sectors of the economy,
especially with housing and construction sector
◦ Large number of ancillary industries are dependent on it
◦ cement, steel, brick, timber, building materials, design industry
◦ Second/third largest employment generator after agriculture – absorbs large
number of unskilled and semi-skilled workers

5. Real estate sector - importance
◦ Assumed growing importance after liberalization of the economy
◦ Linked to economic growth of cities, towns, villages and regions
◦ Developments are influenced by retail, hospitality, entertainment (hotels, resorts,
cinema theatres) industries, economic services (hospitals, schools) and
information technology (IT)-enabled services (like call centres)
◦ GoI thrust on industrial corridors and logistics to boost manufacturing – impacts on
real estate

6. Real estate as an asset class
◦ Real estate has traditionally been preferred
as an asset class
◦ Homeownership is preferred than
investment – low loan interest rates, policy
and incentives, social compulsions
◦ Uncertainty is pushing people to buy own
house (Anarock survey,
◦ Affordable properties (< Rs 45 lakh)
emerged as the most preferred in the post-
COVID survey
◦ Demand for luxury properties (>1.5 cr) has
also seen an increase

7. Important policy initiatives
◦ 100 % FDI allowed since 2005. FDI norms relaxed in 2018 to allow FDI in
automatic route for new townships, infrastructure, business centres and malls/
shopping complex.
◦ Securities and Exchange Board of India (SEBI)
developed guidelines for Real Estate Investment Trust
(REIT) in 2007, which allows all kinds of investors
to invest in the Indian real estate market.

8. Regulator for Real Estate – RERA
◦ Government of India notified the Real Estate (Regulation and Development)
Act 2016 on 26th March 2016 and come into effect from 1stMay 2017
◦ All commercial and residential real estate projects including plotted
development shall have to be registered with RERA…. Ongoing incomplete
projects to be registered
◦ Ensure timely completion of projects, safeguard interests of consumers,
facilitate RE development
◦ Each State to set up state level regulatory and appellate authority – GUJRERA
in Gujarat

9. Segments in the sector
REAL
ESTATE
SECTOR
RESIDENTIAL SPACE CONTRIBUTES~80% OF THE REAL ESTATE SECTOR
COMMERCIAL SPACE
HIGH INCIDENCE OF LEASING, FEW BIG PLAYERS ACROSS THE
COUNTRY
RETAIL SPACE
HIGH DEMAND IN BIG CITIES, FDI AND PRIVATE EQUITY
INVESTMENT Between2015 and March2018, attracted
private equity investments of around Rs 5,500 crore
HOSPITALITY SPACE HIGH DEMAND, SETBACK DUE TO PANDEMIC
SEZS
As of January 2019, India had formally approved 421 SEZs, of
which 213 were in operation.
MAJOR DEMAND IN IT/ITES SECTOR

10. Real estate growth drivers
Source: ibef.org

11. MAJOR
STAKEHOLD
ERS
Landowners
Developers
Customers
Financial
Institutions
Engineers/
Architects/
Designers
Government
suthority
Contractor/
Material
supplier
Investors
RE broker
Marketin/
Advertisem
ent agents

12. Real Estate Projects
◦ Acquiring land – agriculture to NA, open land
◦ Construction of township, housing complex, individual house
◦ Construction of industrial estates, commercial complex, malls etc
◦ Redevelopment/ reconstruction of existing projects – housing, commercial,
amenities
◦ Development of related infrastructure-park, bridges, housing,

13. Current Market Outlook

14. Effect of COVID
◦ Initial shock – all segments were hit badly
◦ But industrial and warehousing, along with alternative sectors like data centres
thrived in the COVID-19 era, while office, retail and hospitality suffered
◦ Market fundamentals continue to remain strong with investors continuously on
the hunt for income yielding assets
◦ New normal – ‘warehousing, flexi spaces, logistics hubs, changes in residential
preferences, affordable housing push, rental housing push

15. Residential segment trends

16. Office space – trends
(Leadership in Energy and Environment Design)

17. Trends in office space

18. Retail segment
• India is one of the fastest growing e-commerce market
in the world
• Rise of demand in tier II, III cities
• Change of demographics
driving retail growth
• Southern cities showed
high growth
• Demand from domestic
and international players
• Retail market growing
across India
• Shift to online shopping
but hybrid model to
continue

19. Retail sector trends
◦ Rise in warehousing and logistics demand
◦ Manufacturing, Pharma, Cold Chain industry – new demand
◦ Technology, Data Centres, IoT – new opportunities and requirement of flexible
spaces

20. Emerging trends – retail & logistics