Real Estate Contributes Significantly to India’s GDP Growth

India witnessed steady GDP growth in the first quarter of FY2023-24. This was the quickest growth volumes seen across four quarters. Several industry experts have opined on the contribution of real estate towards GDP growth in the country. Some experts feel that the real estate sector has a vital role to play in fostering economic growth while also shaping the trajectory of growth northwards. They feel that better sectoral growth will have a positive multiplier impact on 270 allied sectors while also generating considerable employment. The inflow of investments in the industry is boosted through superior infrastructure development, improved economic performance, tax-based incentives, and better policy-based reforms. 

Many other industry experts also opine that the steady GDP growth of 7.8% for Q1 FY2023-24 indicates powerful economic progress. They state that the real estate sector has been instrumental in driving this growth, majorly due to higher demand for both residential and commercial spaces throughout the country. The higher realty activity has not only led to more employment generation, but also boosted overall economic activity countrywide. Industry watchers have reported historical highs achieved in terms of residential property sales with a year-on-year increase of 22%. This has naturally been a major contributor towards the overall growth in real estate services. At the same time, the construction segment witnessed slower growth than expectations. However, this should go up significantly in the next few quarters, with the Government’s focus on developing infrastructure. 

Kanika Gupta Shori, the Founder and COO, Square Yards, states that there are several factors that have led to higher demand for real estate. These include higher availability of affordable housing units, better amenities and improvements in infrastructure throughout Tier-II and Tier-III cities and other positive market variables that have driven higher migration of individuals to urban zones from rural areas. This has propelled real estate demand across segments, while FDI inflows have gone up considerably with regard to investments across multiple real estate asset classes over the last few years according to her. Kanika Gupta Shori states that this clearly demonstrates higher investor confidence in the Indian real estate market. 

With the real estate industry posting solid recovery and growth figures over the last couple of years, the renewed focus on infrastructure development, Smart Cities, and higher urban migration are factors that are expected to keep the sector chugging along positively in the near future. The upcoming festive season promises to be a good one for the sector and it should keep contributing towards higher employment and economic growth in the near future.