The Indian real estate sector will grow over three times to reach an estimated USD 1.5 trillion by 2034, constituting 10.5% of the total economic output by then, according to a joint report by Knight Frank India and CII.

In its latest report titled ‘Indian Real Estate: A Decade from Now’, Knight Frank India, a leading real estate consultancy in the country, in association with the Confederation of Indian Industry (CII), has projected that the value of the Indian real estate sector.

In 2023, the sector’s market size was approximately USD 482 billion, contributing 7.3% to the total economic output. The residential market is expected to lead with a value of USD 906 billion, followed by the office sector contributing USD 125 billion. Land for manufacturing activities is estimated to generate a value of USD 28 billion, driven by rising demand in India, while warehousing is projected to yield revenues of USD 8.9 billion.

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According to the report, India’s economic growth in the next decade will depend heavily on several factors, including a growing young population, bolstered domestic manufacturing, infrastructure development, and urban expansion. Under favourable conditions for these drivers and assuming an annual 2% depreciation of the INR to USD exchange rate, India’s GDP could potentially reach USD 10.3 trillion by 2034.

Gulam Zia, Senior Executive Director – Research, Advisory, Infrastructure, and Valuation, Knight Frank India, said, “In the coming decade, India’s economic ascent will be marked by an unprecedented surge, with the real estate sector poised to be a cornerstone of this transformative journey. Fueled by burgeoning wealth, robust consumer spending, infrastructural advancements, entrepreneurial fervor, and strategic initiatives like ‘Make in India’, our nation stands on the brink of a profound economic evolution.”

“We anticipate the Indian real estate sector to grow to a USD 1.5 trillion powerhouse by 2034, constituting a remarkable 10.5% of the nation’s economic output. This journey about sustainable progress, anchored in resilience and adaptability, paving the way for a brighter, more prosperous tomorrow,” he added.

Residential Real Estate 2034

India’s population is expected to surge to 1.55 billion by 2034 with an estimated 42.5% of the population residing in urban centres. As per the estimates from Knight Frank Research and CII, to accommodate the burgeoning urban population, urban cities in India will require an addition of 78 mn housing units by between 2024-34.

By 2034, it is estimated that a substantial portion of the population will be in the lower-middle and upper-middle-income brackets. Consequently, generating housing demand for the affordable segment, gradually transitioning towards the mid-segment.

The proportion of High-Net-Worth Individuals (HNIs) and Ultra High Net Worth Individuals (UHNIs) households in India are expected to rise from 3% to 9% by 2034, also driving significant demand for luxury housing. This surge in demand will have the potential to generate an additional market value output of approximately US$ 906 billion over the next decade.

Commercial Real Estate 2034

In 2008, the top 8 cities in India cumulatively accounted for 278 mn sq ft office stock; which has now increased to 900+ mn sq ft. In the last few years. Tier 2 and 3 cities in India have also witnessed a rising demand and supply for office real estate in India. Factors such as business expansion, low costs, infrastructure development, rise of IT and the services industry, and the availability of talent are some of key drivers of growth in office stock in Tier 2 and 3 cities. These factors, along with increase in formal workforce in India, will further generate demand for adequate volume of office space in India.

To accommodate the promising economic activity and growth in formal employment, an estimated 2.7 billion (bn) sq ft of office space will be required by 2034, i.e. an additional requirement of 1.7 bn sq ft between in the next decade. As the sector scales up, the potential revenue generation from India’s office real estate is estimated to be US$ 125 bn in 2034.

The report expects Global Capability Centres (GCC) to potentially drive the office market in the next decade. By 2030, there will be an estimated 2,400 GCCs across India as India emerges as global technology and services hub[1]. Assuming a similar pace of growth, the number of GCCs in India may scale up to 2880 by 2034.