India's real estate market has reached its pinnacle. With 7% of the country's GDP, it has traditionally been one of the most developing industries and one of the major contributors to employment. Furthermore, by 2025, it is projected that its contribution would have increased to a staggering 13%. Strong investor confidence in the Indian real estate market has come from the following causes, according to investment patterns over the previous three months:
1) Direct ownership and investment in Indian real estate
The government of India's decision to liberalise FDI regulations in the construction sector is probably the most significant economic policy move it has made. In Q2 2021, real estate investment reached $1.35 billion, a nine-fold increase. Despite the second wave of the coronavirus epidemic that hit India in April this year, $2.7 billion in investments were made in the first six months of 2021, 53% of total investments in 2020.
2) Real estate investment trusts (REITs) or equity investments in publicly traded firms
In a fast-growing country like India, where cities are rapidly developing, real estate and infrastructure have become critical development elements. By 2025, the real estate sector is expected to be worth $650 billion, accounting for 13% of India's GDP, and by 2040, it is expected to be worth $9.3 billion, up from $1.72 billion in 2019. Looking at these figures, it's clear that the realty and infrastructure industry is booming.
Currently, there are around 11 REITs and InvITs operating in India, with 10 of them having AAA security. The successful launch of India's third REIT, Brookfield REIT (issue size of about $512 million), kicked off 2021. Despite the epidemic, real estate net absorption remained high, showing that REITs are becoming a popular investment destination. This will only contribute to the real estate sector's dynamism, as well as the public's trust in REITs in the United States and throughout the world. As a result, India's REIT sector is slated to begin a new development phase in 2021, with more REITs expected to be listed.
3) As a result of massive inflows into the property technology (prop-tech) sector
Technology has infiltrated virtually every industry, and real estate is no different. On the one hand, the real estate business has been fast to spot possibilities in technology adoption, while the government has been busy launching numerous measures to encourage industry participants to do the same. Among the government's flagship programmes are "Digital India”, "Global Housing Technology Challenge”, "IndiaChain," and others, all of which are aimed at making technology more accessible and comprehensive. In the aftermath of the coronavirus epidemic, as more and more home buyers in India plan and execute their property purchases using virtual platforms, the real estate sector has integrated technology in a way that has made it more robust, invincible, and given it a new and lively vitality.
In India, the PropTech business garnered about $551 million in 2020, exceeding the total of $549 million in 2019. Global investors are optimistic about the Indian real estate industry's long-term prospects, particularly the industry's digitalization, which is now a certain conclusion in the wake of the epidemic.
Source: Construction Week Online