As India charts its economic course in 2024, two sectors stand out as the primary engines of growth: real estate and infrastructure. The major reason for this is that the two components of a country’s growth are intricately interconnected, forming a symbiotic relationship that significantly influences urban development and economic advancement.
The demand and value of real estate, in turn, are profoundly influenced by the quality and accessibility of infrastructure. Well-developed transportation systems, such as highways, airports, and public transit, enhance the desirability of real estate, driving up property values in well-connected areas. Additionally, the availability of essential utilities and public amenities further adds to the attractiveness of real estate developments. Conversely, real estate development generates the need for expanded or improved infrastructure to support growing populations and evolving urban landscapes.
As per a recent NAREDCO report, the real estate sector is expected to grow at a compound annual growth rate (CAGR) of 18.7% between 2020 and 2030 with a projected market size of $1 trillion by 2030. Influenced by various factors like increased investments, government initiatives, and sustainability measures, real estate and infrastructure are together poised to stand out as the major contributors to the Indian economy.
Rising surge
India’s real estate sector is experiencing a resurgence, driven by various factors. The demand for residential properties has been buoyed by demographic trends, urbanisation, and government initiatives. Housing sales in 2023 were estimated to have risen by 30% to a staggering 4.74 lakh units in the primary markets of top cities like Delhi-NCR, Mumbai Metropolitan Region, Chennai, Kolkata, Bengaluru, Hyderabad, and Pune. This represents an all-time high in both volume and value in the Indian housing market. Driven by higher ticket-size sales, the overall sales value of residential properties has scaled to an impressive ₹4.5 lakh crore.
The Mumbai-Pune Expressway | Photo Credit: Getty Images/iStockphoto
With the backdrop of robust rental yields, value appreciation, luxury and mid-segment housing have led the demand in 2023, and will continue to do so in 2024. Furthermore, affordable housing has gained prominence, with developers and policymakers collaborating to meet the housing needs of the burgeoning middle-class population. The government’s focus on affordable housing projects has not only fueled construction activity but has also contributed to increased employment opportunities in the sector.
Commercial real estate is also transforming. The rise of remote work has prompted a re-evaluation of office spaces, leading to increased demand for flexible workspaces and technology-enabled solutions. This adaptability within the commercial real estate landscape showcases the sector’s resilience and its capacity to align with evolving work dynamics.
Development as catalyst
India’s infrastructure development has been a key driver of economic growth, and this trend will continue in 2024. The government’s commitment to large-scale infrastructure projects, such as the Bharatmala Project and the Sagarmala Programme, highlights its determination to enhance connectivity and logistics across the country.
Investments in renewable energy infrastructure are particularly noteworthy, aligning with India’s commitment to sustainable development. It is projected to reach 280 GW of its renewable energy capacity by 2025, presenting not only environmental benefits but also economic opportunities in the burgeoning green energy sector.
The Bandra Worli Sea Link in Mumbai. | Photo Credit: Getty Images/iStockphoto
Several projects exemplify India’s emphasis on real estate and infrastructure development. The Mumbai-Ahmedabad High-Speed Rail Corridor, commonly known as the Bullet Train project, The Mumbai Trans Harbour Link (MTHL), Mumbai Coastal Road, Aqua Line of Mumbai Metro Navi Mumbai International Airport, and Noida International Airport. All these projects signify the nation’s leap into advanced transportation infrastructure. The Smart Cities Mission, with its focus on urban development and technology integration, exemplifies India’s commitment to creating modern, efficient urban spaces.
Economic transformation
In 2024, India stands at the forefront of economic rejuvenation, with real estate and infrastructure emerging as the key growth drivers. The momentum in the real estate sector, backed by affordable housing initiatives, demand for mid-segment and premium housing, and the transformative impact of infrastructure projects, reflect a strong commitment to national development. As per research from Knight Frank India, the construction and real estate sectors together will account for one-fifth of the economy by 2030, and create 100 million job opportunities.
As India navigates the challenges and opportunities of the present economic landscape, the emphasis on these critical sectors positions the country for sustained growth, employment generation, and enhanced global competitiveness. The confluence of real estate and infrastructure development heralds a new era for Bharat, promising a brighter and more prosperous future.
The writer is Director, Ajmera Realty & Infra India Ltd.
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