RBETA 2024 set to celebrate India’s tech-enabled real estate expansion

Real estate market overview: The real estate sector in India is expected to reach $1 trillion in market size by 2030, up from $ 200 billion in 2021 and contribute 13 per cent to the country’s GDP by 2025, according to the India Brand Equity Foundation. Retail, hospitality, and commercial real estate segments are also growing, providing the much-needed infrastructure for India's growing needs.

If the real estate sector continues to follow the estimated growth trajectory, it is expected to expand to $ 5.8 trillion by 2047, contributing 15.5 per cent to the GDP from an existing share of 7.3 per cent.

To commemorate the exceptional growth, innovation, and technological advancements in India's real estate sector, Republic Business is proud to announce the inaugural edition of the Republic Business Emerging Tech Awards 2024 (RBETA 2024) dedicated to the real estate industry.

RBETA 2024 will highlight the major strides made by the real estate sector in harnessing technology to change traditional practices. By embracing innovative solutions, the sector aims to improve efficiency, transparency, and accessibility across all facets of the real estate ecosystem.

Tech-enabled growth 

A recent survey conducted by KPMG India reveals that 90 per cent of real estate developers in India are embracing technology to improve their operational efficiency. This adoption includes innovative interventions like ConTech and PropTech, which integrate finance process automation with cutting-edge technologies such as AI, IoT, and analytics, all integrated with Big Data. This concerted effort is set to yield immediate impacts on businesses.

In response to the pressing challenge of constructing environmentally sustainable structures, developers are increasingly turning to modern technologies to mitigate their carbon footprint. According to the Indian Green Building Council (IGBC), the green building market in India is projected to surge to $50 billion by 2025.

Smart building technologies, characterised by advanced sensors, automation systems, and seamless connectivity, are gaining popularity for their ability to improve the efficiency, safety, and overall functionality of both commercial and residential buildings. These technologies aim to make buildings more responsive to occupant needs while simultaneously reducing energy consumption and operational costs.

Global investment in India

In 2023, private equity investments in India's real estate sector reached $4.2 billion. From April 2000 to September 2023, foreign direct investment (FDI) in the sector, including construction development and related activities, amounted to $58.5 billion. The second quarter of 2023 saw robust private equity investments of $1.92 billion in the Indian real estate sector. 

According to estimates by ICRA, Indian firms were projected to raise over $ 48 billion through infrastructure and real estate investment trusts in 2022, compared to the $29 billion already secured. 

The Foreign institutional inflows into India's real estate sector also experienced a three-fold increase, totalling $26.6 billion during 2017-2022.

In July 2021, the Securities and Exchange Board of India (SEBI) reduced the minimum application value for Real Estate Investment Trusts (REITs) from Rs. 50,000 ($685.28) to Rs. 10,000-15,000 ($137.06 - $205.59), to enhance accessibility for small and retail investors. 

Notably, private market investor Blackstone, a major player in the Indian real estate sector with investments worth $50 billion, is planning to inject another $22 billion by 2030, according to the India Brand Equity Foundation.

Favourable Government policies 

The Government of India, in collaboration with state governments, has implemented multiple initiatives to speed up the growth in the real estate sector. The Smart City Project, under which the government is developing 100 smart cities, presents major opportunities for real estate companies. Here are some key governmental efforts:

• In the Union Budget 2023-24, the Finance Ministry has set aside $9.64 billion for the PM Awas Yojana, a 66 per cent increase from the previous year's allocation.
• In October 2021, the Reserve Bank of India (RBI) maintained the benchmark interest rate at 4 per cent, providing a boost to the real estate sector. The continuation of low home loan interest rates was expected to stimulate housing demand, potentially increasing sales by 35-40 per cent during the festive season of 2021.
• The Union Budget 2021-22 extended tax deductions of up to Rs. 1.5 lakh ($2069.89) on interest on housing loans and granted a tax holiday for affordable housing projects until the conclusion of the fiscal year 2021-22.
• The Atmanirbhar Bharat 3.0 package, unveiled by Finance Minister Nirmala Sitharaman in November 2020, included income tax relief measures for real estate developers and homebuyers. The measures applied to primary purchases/sales of residential units valued up to Rs 2 crore ($271,450.60) from November 12, 2020, to June 30, 2021.

Strong multi-dimensional demand 

In the latter half of 2020, the office market across the top eight cities recorded transactions totalling 22.2 million square feet (msf), while new completions stood at 17.2 msf during the same period. 

The Information Technology (IT/ITeS) sector led the sectoral occupiers with a commanding 41 per cent share, trailed by the Banking, Financial Services, and Insurance (BSFI) sector, and the manufacturing sector, each comprising 16 per cent. Other Services and co-working sectors accounted for 17 per cent and 10 per cent, respectively.

In 2020, the manufacturing sector secured 24 per cent of office space leases, amounting to 5.7 million square feet. 

Luxury home sales in India also surged by an impressive 130 per cent in the first half of 2023 compared to the corresponding period of the previous year.

According to Mordor Intelligence, the India Luxury Residential Real Estate Market size is estimated at $38.02 billion in 2024 and is expected to reach $101.92 billion by 2029, growing at a CAGR of 21.81 per cent during the forecast period (2024-2029).

(Data Sources: Knight Frank India, VCEdge, JLL Research, CREDAI-JL)