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Size of urban sector to double in next 25 years, says housing ministry official

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The 16th edition of the FICCI Real Estate Summit.

The size of the urban sector will double in the next 25 years, said Kuldip Narayan, Joint Secretary (HFA), Union Ministry of Housing and Urban Affairs, at the 16th FICCI Real Estate Summit held on March 21.

“With increasing urbanisation from 12 to 30 percent, the next 20 years could see more development than in the last 50 years,” he said.

The demand for Grade A premium office assets is also likely to increase to 1.2 billion sq. ft. by 2030 in India, said Raj Menda, Joint Chairman, FICCI Real Estate Committee and Corporate Chairman, RMZ Corp.

Narayan said the requirements for facilities, residential spaces, commercial spaces, and urban infrastructure would double, adding, “we have a lot of catching up to do in infrastructure”.

He also alluded to changes in construction technologies, highlighting the government’s “consistent stand on reducing carbon emissions and improving energy efficiency” and encouraging the industry to “adopt better and resource-efficient construction technology”.

“We need to explore and adopt resource technologies that increase energy efficiency,” he said.

On the Credit Linked Subsidy Scheme (CLSS), Narayan said it gained popularity so much so that out of a total portfolio of about 30 lakh crore, almost five lakh crore is funded or some subsidies given in some part under CLSS.

“When we compare it to all interests subvention schemes earlier to CLSS, the number of beneficiaries works out to be almost 2000 times,” he said, adding, “almost 55,000 crore interest subsidy was given to loan accounts that we have just finished.”

Raj Menda, Joint Chairman, FICCI Real Estate Committee and Corporate Chairman, RMZ Corp, said, “After consecutive years of slowdown in the sector, last year witnessed unprecedented growth by reaching a new historical height in the commercial office segment”.

He added that “the extraordinary demand of flex space from medium and large enterprises further propelled the sector growth”.

Menda underlined that 2023 would see more significant developer activity to improve building efficiency, design adequacy and sustainability criteria. “The demand for Grade A premium office assets is likely to increase to 1.2 billion sq. ft. by 2030 in India,” he added.

The real estate sector is primed to continue being an increasingly desirable investment opportunity for various reasons, including the government’s strong focus and heaving investment into improving infrastructure, he said.

“Four or five Cs had defined the macro approach in real estate. These are COVID, Conflict, China, Construction Cost, and Crisis in Financial Markets,” said Vipul Roongta, Co-Chairman, FICCI Real Estate Committee and Managing Director and CEO, HDFC Capital Advisors.

He said the housing demand is mainly centred around affordable and mid-income in the country.

He said, “99 percent of the housing demand is centred around affordable housing, where people are making money, inventory is getting sold, and enough intervention is happening on the supply side”.

“There is a relationship between housing and physical infrastructure such as roads that affect the cost and demand for housing,” he said.

In his welcome address, Arun Chawla, Director General, FICCI, said, “With an increase in urbanisation and household incomes, the demand for residential real estate has witnessed a surge. As a result, India is now among the top 10 price-appreciating housing markets internationally. This year, when India celebrates the Amrit Kaal, this will surely be recognised as a major hallmark in the country’s list of achievements”.

During the event, two knowledge reports were released. The first, FICCI-Vestian Knowledge Report on Warehousing & Logistics Sector in India: A Brief Analysis, assesses various warehousing market trends and key policies that are helping to define the industry and the developments anticipated in the forthcoming period.

The second report, FICCI-Colliers Knowledge Report on Emerging Trends and Opportunities in Office Sector – 2023, looks at how offices have changed over the last five years and the key factors that are likely to influence the office sector, at a time when the definition of “office” has taken a new meaning since the pandemic.

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