Being the fastest-growing economy, India remains at the focal point as we journey towards becoming the third largest economy in the world. The standard of living continues to improve and that is reflected in the increase in per capita income from USD ~1,500 to USD 2,400, with people getting access to basic necessities including housing, education, healthcare, food security, as well as inching towards an aspirational lifestyle.
As has been witnessed in the past, the development of real assets is fundamental to the economy. One of the biggest contributors to India’s growth story has been the development of physical assets including roads, airports, housing, office, logistics, education, healthcare, digital infrastructure, hospitality, and tourism. All these segments, together, contribute significantly to the India’s GDP.
Every trillion added to the economy multiplies employment and business opportunities. As would happen for a large economy, the transition from a developing to developed nation throws significant opportunity to build, own, and invest in real assets and look for long term value creation. The same is now being witnessed in India; if we look at housing alone, the sector annually provides an opportunity to build and sell close to 500,000 homes, an excellent prospect for stakeholders to invest, develop and own assets and be a part of the structural up cycle.
The similar story is with Office and Industrial Real Estate, where current availability of asset stock and pipeline may not be able to meet the growth in demand. If we look at the Railways, laying more than 5,000 km annually is equivalent to adding more than the entire railway network Switzerland. The economic multiplier effect of Infrastructure and Real Assets could be anywhere between 2.5 to 4 times. With railways development, demand for Steel, Cement, and Power goes up. And with the railway stations developing, the Real Estate and Consumer Businesses get a boost.
The under penetration exists across asset classes including office, logistics, digital infrastructure, retail, hospitality, education, and healthcare, among others. Hence, opportunities for developers to build quality assets are immense, and this space has also witnessed the entry of large global developers.
Annually, foreign investment in India is in the range USD 5 to 6 billion in real estate, which is still at a nascent stage given the soaring demand. Hence, domestic capital is bridging the gap for demand of capital. Management of global capital also requires good quality fund managers, and hence, this era is likely to see emergence of newer fund management houses.
With the high growth and thriving ecosystem of start-up India and Atmanirbhar Bharat, the new age professionals are looking to create with newer ideas. The next 10 years are to disrupt, develop and diversify businesses across markets.
Technology and artificial, generative intelligence are already disrupting the markets. Development in real estate will be seen across infrastructure and development assets, while newer ideas will diversify business risks. This is a unique opportunity across emerging markets for global capital providers to allocate capital to India. This is a time where there is political stability and will most likely remain that way for the foreseeable future.
The Economy continues to grow at a faster pace, with control on inflation and fiscal prudence; financial stability is at its best. The regulatory framework and business friendly reforms like GST, REITs, INVits, SEZ denotification, digitisation of payment structure, rationalisation of taxation structure, etc. have helped shape and shield the entire business and investor ecosystem.
Managing Director
Capital Markets & Investment Services
Colliers India
While we continue to export services, technology, electronics and core manufacturing sectors are likely to see exponential growth. The geopolitical situation is favouring India, especially its manufacturing sector; several big announcements have been made indicating large deals that will provide a boost to the sector.
The opportunities for capital allocators to diversify and increase exposure in the Indian market by investing and owing assets for long-term sustainable returns are huge, allowing them to participate in the ongoing growth story.
