Going by most conservative estimates, India is set to grow 7.3 per cent in FY24, which is significantly higher than projections made by the likes of IMF. Importantly, India is scripting this growth while facing global headwinds and disruptions such as climate change, hostile geopolitics and conflicts. Also, the government is looking at doubling GDP over the next seven years.

Strategic infrastructure development is likely to play a critical role in India becoming a $7 trillion economy by 2030. This is because over the last decade, India has moved from a siloed approach to infrastructure development to devising nation-building strategies that promote connected infrastructure, where physical, digital and connectivity infrastructure are integrated to help other businesses in the economy.

The entire value chain of sectors like manufacturing depend on connected infrastructure and availability of skilled human resources near the employment centres. Consequently, rapid development and better connectivity are being increasingly witnessed in tier-2 and 3 cities and even in rural areas. Newer residential and retail real estate projects are emerging in these areas. As for the metros and tier-1 cities like Gurugram, which are employment hubs, the real estate sector is booming, offering high quality living spaces for the people.

Major transformation

Further, the infrastructural landscape surrounding key cities is undergoing profound transformation, facilitated by initiatives such as the Bharatmala expansive highway network, the Delhi Mumbai Industrial Corridor and Sohna expressway. These developments enhance connectivity and foster a conducive environment for urban expansion and economic growth. Supported by agencies like NHAI and State governments, the construction of key arteries like Northern Peripheral Road, Southern Peripheral Road, and Sohna-Alwar Road have revolutionised accessibility, making areas like Sohna and Gurgaon ripe for real estate development.

Such developments are occurring across the nation, with two-pronged objectives. First, making tier-2 cities as well as far-off places more accessible and connected to urban centres and, second, decongesting metros and tier-1 cities by promoting development and increasing employment at the local levels. The effective functioning of regulatory bodies and the coordinating efforts of all stakeholders are propelling a surge in property values and infrastructural advancements, presenting lucrative investment opportunities in areas around Delhi-Gurgaon, Bangaluru, Mumbai, Pune, and so on.

Riding the wave of progressive infrastructural development, the real estate sector is set to play a greater role in the country’s growth story. At $477 billion currently, the sector contributes to around 7.3 per cent of GDP. Over 250 ancillary industries are associated with the sector, accounting for 18 per cent of total employment in the country, which is next only to agriculture.

Some of the positive trends that are driving growth in the property market include increasing foreign direct investment in the sector, growing popularity of commercial real estate as a choice of investment, strengthening of the REIT ecosystem, and a boom in mid-segment and luxury real estate.

More growth drivers

These apart, there are several other growth drivers, which include: a large young and employable population, a growing middle class, and increasing digitalisation of the real estate sector, which is enhancing trust and transparency in the sector. The burgeoning middle class is driving the sales of the upper mid-segment and luxury housing segments (₹1 crore and above). Across the top-8 cities, luxury housing sales have grown from 16 per cent of total sales in 2018 to 27 per cent in 2022.

Per industry reports, in FY23 the Indian residential property market witnessed an unprecedented surge, with home sales touching ₹3.47-lakh crore ($42 billion), registering a 48 per cent y-o-y growth. These trends indicate that the real estate sector is poised to accelerate rapidly and could contribute 15 per cent to GDP by 2030, crossing the $1 trillion mark in the process.

Continued thrust on developing connected infrastructure, reduction in tax, increment in home loan rebates for the salaried class and giving industry status to the real estate sector are a few of the low-hanging measures which can further accelerate the sector’s growth. Also, measures to contain the price rise of construction materials would be an important incentive not only for the real estate sector but also for the entire infrastructure industry.

The real estate sector also needs to come together building stronger collaboration for pushing digitalisation for greater transparency, investing in R&D and innovation for more cost-effective building solutions as well as adopting eco-conscious development practices to drive sustainability.

These measures would help the sector contribute more to infrastructure development and eventually realise the $7 trillion economy goal by 2030.

The writer is Chairman, ASSOCHAM – National Council on Real Estate, Housing and Urban Development