Indian Real Estate Sector to Witness Unprecedented Growth with Rs 3 Trillion Capital Commitment
The Indian real estate sector is poised for a massive growth spree with an estimated capital commitment of Rs 3 trillion over the next two years. Developers are betting big on the boom in residential property and sustained leasing activity in commercial p
Real EstateReal Estate NewsIndustryIndustry NewsFinancial ExpressReal Estate NewsJun 28, 2024
The sector has witnessed a surge in land acquisitions, with over 1,185 acres of land picked up last year alone. Additionally, 410 million sq ft of residential properties were launched, with project launches tipped to jump by 25% this year. The construction expenditure is expected to be as high as Rs 75,000 crore, according to Sangram Baviskar, Founding Member and MD-Real Estate at TruBoard Partners.
The sales figures have also been impressive, with home sales hitting a decadal high in Q1FY24, with nearly 130,000 units sold across the top seven cities. Although sales have tapered off in Q2, they are expected to grow 8-10% in 2024. Office absorption is also on an uptrend, with the six months to June recording 29.4 million sq ft, a 19% jump over the first half of FY23.
Developers are launching new projects to cater to the growing demand. Brigade Enterprises, for instance, is expected to buy land worth Rs 1,200 crore annually and spend some Rs 6,250 crore on constructing residential property. Prestige Estate Projects has said it will sell Rs 5,000 crore worth of shares to institutional investors. The company plans to incur a capex of Rs 3,000-4,000 crore across segments this year.
The improved cash flow visibility and better corporate governance under RERA have given financial institutions confidence in developers. Money is being mopped up via IPOs, QIPs, and rights issues. Hotels too are adding capacity, with Indian Hotels Company (IHCL) recently announcing a five-year capital deployment plan of Rs 3,500 crore.
The Real Estate sector is poised for unprecedented growth, with the estimated capital commitment of Rs 3 trillion over the next two years. This growth is driven by the boom in residential property and sustained leasing activity in commercial property. With developers launching new projects and financial institutions showing confidence in the sector, the future looks bright for the Indian Real Estate sector.
Crisil Ratings is a leading credit rating agency in India. Anarock Property Consultants is a real estate consultancy firm. TruBoard Partners is a real estate advisory firm. Brigade Enterprises is a leading real estate developer in India. Prestige Estate Projects is a real estate developer in India. IHCL is a leading hospitality company in India.
Frequently Asked Questions
What is the estimated capital commitment in the Indian Real Estate sector over the next two years?
Rs 3 trillion
What has driven the growth in the Real Estate sector?
Boom in residential property and sustained leasing activity in commercial property
How many acres of land were picked up last year alone?
1,185 acres
What is the expected construction expenditure over the next two years?
Rs 75,000 crore
Which hospitality company has announced a five-year capital deployment plan of Rs 3,500 crore?
Indian Hotels Company (IHCL)
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