Renewable Energy, Roads, and Real Estate Set to Attract Rs 17.5 Trillion in Investments
MUMBAI: The renewable energy, roads, and real estate sectors are witnessing a surge in investor interest, projected to see a 15% annual increase in investment inflows, reaching Rs 17.5 trillion over the next two fiscal years.
Renewable EnergyRoadsReal EstateInvestmentsCrisil RatingsReal Estate MumbaiJun 09, 2025
In fact, these sectors are seeing varied trends. The renewable energy sector is witnessing accelerated adoption of storage-linked capacities, while the roads sector is focusing on monetisation. On the other hand, the real estate sector is experiencing premiumisation in residential properties and an influx of global capability centres in commercial real estate, driving a realignment of offerings by developers, according to a report by Crisil Ratings.
Krishan Sitaraman, the chief ratings officer at Crisil Ratings, stated, “What remains constant across these three sectors is the strong investment growth. Over this fiscal and the next, investments may rise 15% annually, reaching Rs 17.5 trillion compared to the Rs 13.3 trillion in the preceding two fiscals.”
In the renewable energy space, addressing the intermittency of power supply is a critical issue. There is a transition towards hybrid or storage-backed capacities, which facilitates the scheduling of power round-the-clock with greater confidence. Of the 75 gigawatts (gw) capacity to be added in this and the next fiscal, hybrids will account for 37% from 14% during the past two fiscals.
In the roads sector, which has a significant multiplier effect on the economy, a pick-up in project awarding will be crucial to revitalise sectoral growth. For the National Highways Authority of India (NHAI) to reach its previous highs of 6,000 km/year of awards and execution, a substantial rise in private capital through the acceleration of asset monetisation will be essential. We expect the share of monetisation in NHAI’s sources of funds to grow to 18% in this fiscal and the next from 14% in the preceding two fiscals. The NHAI has a monetisable asset base of Rs 3.5-4 trillion.
In the real estate segment, the residential market is seeing demand normalise after a rapid recovery following the pandemic. Revenue growth for developers is expected to remain steady at 10-12% this fiscal and the next. With volume growth slated to rationalise, realisations will be supported by continuing demand for premium projects.
Commercial real estate, too, will see steady net leasing growth of 7-9% this fiscal and the next. As the country continues to remain a cost-efficient market for global capability centres (GCCs) and the domestic sectors grow at a steady pace, annual net leasing demand is poised to cross 50 million square feet by fiscal 2027.
However, with growth also comes challenges. In the renewable energy sector, the timely availability of evacuation is critical. A significant ramp-up in transmission capacity is underway, with a total capital expenditure of Rs 1 trillion in this fiscal and the next, which is double that of the preceding two fiscals.
In the roads sector, monetisation has been a mixed bag in the past, with 35% of the total toll-operate-transfer bundles floated not being awarded. Possible delays in monetisation due to approvals or mismatches in valuations can lead to a slowdown in sectoral growth.
In residential real estate, new launches outpacing demand can ratchet up inventory levels. Inventory is expected to inch up to 2.9-3.1 years this fiscal after achieving a low of 2.7 years in fiscal 2024. This may increase the debt of some developers.
Frequently Asked Questions
What is the projected investment growth in the renewable energy, roads, and real estate sectors?
The sectors are projected to see a 15% annual increase in investment inflows, reaching Rs 17.5 trillion over the next two fiscal years.
What is the trend in the renewable energy sector?
There is a transition towards hybrid or storage-backed capacities to address the intermittency of power supply.
How important is project awarding in the roads sector?
A pick-up in project awarding is crucial to revitalise sectoral growth, and a substantial rise in private capital through asset monetisation will be essential.
What is the expected growth in the residential real estate market?
Revenue growth for developers is expected to remain steady at 10-12% this fiscal and the next, supported by demand for premium projects.
What are the challenges in the renewable energy sector?
The timely availability of evacuation is critical, and a significant ramp-up in transmission capacity is underway.
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