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Speaking at Cafemutual Ideas Fest 2025, Rohit Rathi, Principal – Real Estate Business at ICICI Prudential Mutual Fund, shared his insights on the growth and future potential of India’s real estate sector.
The opportunity ahead
Rohit noted that real estate is the largest asset class in the world. However, in India, it currently contributes only about 7% to the GDP, compared to the global average of 15%, and 27% in China. Given that India is now in PPP terms the third-largest economy and remains one of the fastest-growing major economies, the scope for development in this sector is immense.
Rohit believes that Indian real estate sector is set to cross USD 1 trillion by 2030.
Currently, valued at around USD 650 billion, the Indian real estate sector has delivered an impressive CAGR of 29% over the past four years, post-COVID-19. The sector’s cyclical nature, combined with rising demand, is expected to drive strong performance in the coming years.
What fuelled real estate growth post COVID-19?
• Outperformance: Real estate has outperformed all other asset classes in the last four years.
• Higher disposable income: Rising personal incomes have led to greater investment in housing.
• Fiscal prudence: Government discipline and GST simplification have provided a growth boost.
• RERA implementation: The Real Estate Regulation and Development Act has improved transparency and accountability, transforming the sector into a more regulated and investor-friendly space.
What will drive future growth?
• Second home rule: The government’s move to allow the classification of a second house as self-occupied is expected to boost investments.
• TDS exemption: Rental income up to Rs. 6 lakh annually is now exempt from TDS, encouraging rental investments.
• Affordable housing push: The government has allocated Rs. 15,000 crore towards the affordable housing segment.
• Lower inventory: Inventory levels in the sector have fallen from 33 months to 13 months, indicating faster sales and healthier demand.
• Commercial demand: The growth of Global Capability Centers (GCCs) is driving demand for commercial real estate.
• New sub-segments: Warehousing, student housing, and co-working spaces are expected to contribute significantly to future growth.
Investment avenues in real estate
• Direct investments in listed real estate companies
• Real Estate Investment Trusts (REITs) – a more liquid, accessible way to invest
• Alternative Investment Funds (AIFs) – for high-risk, high-return opportunities in specialized areas
Watch the complete session now by clicking here.
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