The Indian real estate industry has been one of the biggest wealth creators in the past few decades and is the second-highest employment generator in the country after agriculture. The sector is deeply interlinked to as many as 220 allied sectors.

According to statistics available publicly, the Real Estate Industry in India Market size is estimated at USD 0.33 trillion (Rs 27.43 lakh crore) in 2024, and is expected to reach USD 1.04 trillion (Rs 86.45 lakh crore) by 2029, growing at a CAGR of 25.60% during the forecast period (2024-2029).

Over the course of 2023, the Indian real estate market broke past milestones and made significant strides. This growth could be attributed to policy reforms, a buoyant consumer sentiment, increasing disposable incomes, and a growing demand for larger homes.

The nation's increasing urban population is predicted to fuel an exponential growth in demand for residential and commercial real estate. It is anticipated that the positive home-buying sentiment witnessed in the year 2023 would continue to play out even in the year 2024.

The demand for real estate is expected to remain strong, driven primarily by the rising rates of urbanisation that are currently being witnessed in the country. All this would spill over to property prices, which could witness a substantial upsurge though at different rates in different cities and areas.

Budget 2024 Wishlist:

The most primary ask of the real estate sector from the upcoming budget is raising the Income Tax Act Section’s home loan interest rate rebate from Rs 2 lakh to at least Rs 5 lakh.

In line with the government’s push on 'Housing for All', the sector expects the government to revise the definition of affordable housing, both in terms of value and size.

These two adjustments could particularly benefit budget homes, which reportedly faced a 20 per cent decline in sales in 2023 due to the pandemic.

Another expectation that the sector has from the government is raising the domestic supply of land. There are certain land parcels that are owned by the Indian railways, port trusts, departments of heavy industries, etc. Release of these land parcels by the corresponding government agencies at reasonable rates could prove as a significant fillip to the affordable housing segment.

Industry status for the housing sector and single-window clearance for housing projects are standard asks and remain in place this year, as well.

Further, the commercial realty segment, encompassing office and retail space, plays a crucial role in the sector’s growth. Policy interventions aimed at streamline approvals and permitting processes, reducing delays in project execution, could further fuel the momentum observed in the retail leasing sector, which reportedly surged by 65 percent in January-June 2023 according to CBRE South Asia.

Stocks to Watch:

Affordable Housing Financiers, Cement companies and select Construction companies.

Outlook:

Domestic real estate market is likely to witness some consolidation in near term after prices rose in major key markets in 2023. With the domestic interest rates holding near multi year highs and economic momentum holding on, the broad outlook appears to be supportive for the sector. However, for housing demand in tier two cities, the overall prospects look supportive given the sustained thrust on infrastructure development and connectivity. Any supportive announcements in the coming Union Budget will likely help consolidate the near term sentiments and offer a further boost for the sector in long term.