India's Real Estate: Poised for a Boom

India's real estate sector is on the rise, with a mix of favorable factors like low inventory, strong regulations, and a low interest rate cycle. UBS forecasts a 15% growth in pre-sales by 2029, making it a promising market with potential for developers and investors alike.

According to a UBS report, India's real estate sector is set to enter a prime growth phase, buoyed by a rare mix of favorable conditions over the next three to five years. The residential market, in particular, benefits from record-low inventory levels, robust affordability, supportive regulations, and increased developer consolidation.

Factors such as urbanization, rising incomes, and potentially lower interest rates further enhance the sector's growth prospects. With strong demand momentum and low inventory overhang, the Indian property market is at its healthiest in 15 years. The report highlights the unique combination of favorable demographics, sector consolidation, and regulatory support driving this positive outlook.

UBS projects a 15% compound annual growth rate (CAGR) in residential pre-sales between FY24 and FY29, a sharp contrast to the decline observed in the pre-COVID years. Compared to other global markets at their peaks, India stands out with its favorable demographics, low household debt, and superior affordability, suggesting a long-term advantage for its housing market.

The report draws parallels between India's current macroeconomic situation and China's early 2000s scenario, which led to a sustained property boom for China. With work-from-office trends rising and global capability centers expanding, commercial real estate is also witnessing a resurgence. Supportive regulatory changes have further bolstered the sector.

UBS anticipates a 26% topline CAGR for the commercial segment from FY24 to FY29, making it an increasingly attractive investment for developers ready to invest upfront for high-margin annuity income prospects.

(With inputs from agencies.)