As outlined in a report by Naredco-Knight Frank India, the real estate sector stands as a significant contributor to the revenue of Indian states and Union Territories (UTs). In the fiscal year 2023, these regions collectively amassed approximately Rs. 2 lakh crore (equivalent to US$ 24 billion) through various channels, including stamp duties. This financial inflow constitutes 5.4% of the total revenue generated by all Indian states and union territories during 2022-23. The report, titled ‘India Real Estate: Vision 2047,’ was jointly released by the realtors’ organization Naredco and property consultancy firm Knight Frank India.
According to the report’s projections, the Indian real estate market is poised for remarkable growth, with its size expected to surge over 12-fold, reaching US$ 5.8 trillion by 2047, compared to the US$ 477 billion valuation observed in the preceding year. Furthermore, the real estate sector is anticipated to significantly enhance its contribution to the country’s overall economic output, increasing from the current 7.3% to over 15% by 2047.
As India approaches its centenary of independence in 2047, the report envisions the nation’s economy to be valued between US$ 33-40 trillion. To arrive at these figures, Knight Frank assumes an average annual growth of US$ 36.4 trillion for the Indian economy by 2047.
The analysis also predicts substantial growth within specific segments of the real estate industry. Residential real estate, which stood at US$ 299 billion in the previous year, is expected to expand to a substantial US$ 3.5 trillion by 2047. Similarly, the office real estate sector is projected to escalate from US$ 40 billion to US$ 473 billion, while the warehousing industry is anticipated to grow from US$ 2.9 billion to US$ 34 billion.
The report highlights that India’s real estate market has evolved into a vital source of funding for infrastructure development in the country. Leveraging the appreciation in land and real estate values spurred by public investments and policy initiatives, financing mechanisms like value capture finance have enabled state governments and municipalities to generate additional revenue. These mechanisms include tools such as land value tax, betterment levy, development fees charges, and transfer of development rights (TDRs), which have facilitated the funding of urban infrastructure development.
