Date Submitted: 06 Aug 2018
For centuries, going back to the days of Roman Emperor, India was the largest & richest economy in the world. In 1700 years India contributed ~25% of the global GDP, higher than the US accounts for world today. But in the course of 200 odd years of colonial empire / British exploitation reduced India to one of the poorest nation in the world by 1947, making India poster child in poverty, illiteracy & disease. Today as we speak, India is the 3rd largest economy in the world (in PPP terms). Since 1991 India managed CAGR 8.4% second only to China.
What makes India such a vibrant economy – Indian demography.
Indian population is at ~1.3bn. growing at 1.3% YOY. It is estimated to be 1.7bn later in this century. Life expectancy is 69years (27years when British left us), literacy rate today is at 79% (17% when British left). GDP at nominal price is US $2.25tn growing this year @6.7% (In PPP terms US $7.5tn+, larger than Japan).
Gross Debt to GDP 69% compare to China 260%, Foreign exchange reserve US $405bn (as on July’18). India Gross Savings Rate @ 31%. Therefore, available investment resource is clear. It is estimated India will be US $10tn (nominal) economy by early 2030. Few interesting statistics, A billion mobile phones in India vs 350mn in the US. Same capacity of steel of US, 2.5 times of cement capacity of US.
By 2020, Average age of the population
1 Japan - 48
2 Western Europe - 45
3 China - 37
4 India - 29
5 US - 40
The productive age 15yrs – 60yrs constitutes of 2/3rd of the Indian population by 2025. A study finds the Indian middle class population ~300mn is growing significantly and pushing consumption patterns up, and it is estimated the size of middle class population will reach 600mn by 2030 (twice the size of US population). We have 10mn people migrating every yr. from urban to cities.
Indian Real estate market size estimated to be US $126bn and it is predicted to grow 7 times of current size in future. Real estate staring massive young population and economic development. Real estate sector is the second largest employer in the country. The housing sector contributes 5% to 6% to the Indian GDP and expected to almost double to more than 11% by 2025. Demand for Housing, Retail, Hospitality, Commercial (office) is growing. Entrepreneurship - India has made the world’s second largest start-up ecosystem second to US.
India is the 4th largest FDI attracter in the world. The latest union budget allocates INR 60bn towards infrastructure development, which intern opens for other developments. Massive opportunities for Indian & foreign real estate players. Govt. ambitious target by 2022 housing for all requires construction of 20mn+ homes for economically weaker section, and this cannot be done by government alone, need private participation too.
RERA a transparency non-negotiable act will protect the interest of customers. Bureaucracy is coming down (comparatively), single window clearance mechanism to speed up the process to ensure the project is off the ground ASAP.
For Tier 1 cities in India (population >10mn), Global real estate transparency index moved up to 35 among 190 odd countries. Reforms such as GST, RERA, Benami act, clearly the regulatory changes enabling upward.
1. Demand for residentials will continue to grow, India accounts for 65% productive age
2. One survey found, out of 11,000 developers in India only 250 have complete depth & expertise. There are enough opportunities for overseas players
3. Besides Tier 1 cities, there are 65 Tier 2 cities in India (with >1.5mn population) attracting investments. 100 smart cities + rapid urbanisation will certainly open massive opportunities in Office, Retail, Industrial, Manufacturing, Hospitality, Tourism, Medical Tourism and many
4. Reforms are sustainable (though there are short term crisis) and enables growt