The past few years have been the worst for India’s real estate market, constrained by the implementation of RERA, GST and demonetization ebcause the sector was largely under the influence of corrupt politicians, bureaucrats and tax evading business houses.
Household income has increased at ~10% CAGR over the past three years, while residential real estate prices have increased by less than 1%, thus signifying improving affordability. However, investor interest has reduced due to declining capital appreciation, which remains a challenge.
FDI has almost doubled over the past five years, with inflows increasing primarily towards commercial projects. Interest by foreign players like Blackstone, Canadian Pension Fund has increased considerably in the past five years or so.
India’s office space has more than doubled in the past decade to 550 mn sq ft. This is still far less than the developed markets, thus signifying considerable future potential. There is increased interest from foreign players to rent office spaces in India, with US having the highest proportion at 44% of total office space acquired in India. Within this, 39% is occupied by IT/ITeS sector, 12% by manufacturing, 13% by BFSI and 10% comprising shared working spaces.
India’s warehousing absorption has tripled over the past three years to ~32 mn sq. ft. in FY2018 from ~10 mn sq. ft. in FY2015 with the quantum of Grade A projects almost quadrupled. Also, vacancy levels have dropped below 10%, thus signifying an improving market scenario.
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