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The Indian real estate sector is poised for remarkable growth, projected to expand to $5.8 trillion by 2047, as highlighted in a report by renowned property consultant Knight Frank. This surge in real estate output is anticipated to contribute significantly to the country's economy, increasing its share from the existing 7.3 percent to 15.5 percent of the total economic output in 2047. The report, titled 'India Real Estate: Vision 2047,' is a collaborative effort between Knight Frank India and NAREDCO.

Diverse Segments Poised for Expansion

The report details how this growth will be distributed across various segments. The residential real estate sector is expected to witness substantial expansion, with the output value projected to rise from $299 trillion in 2022 to an impressive $3.5 trillion. Similarly, the office real estate sector is set to experience remarkable growth, with projected output soaring from $0.04 trillion to $0.47 trillion. The warehousing real estate segment is also expected to follow this upward trajectory, with the output value estimated to reach 0.034 trillion.

Shifts in Housing Demand and Income Distribution

Looking at the bigger picture, the report forecasts the overall size of India's economy to range between $33 trillion to $40 trillion by 2047. As the housing market evolves over the next few years, the demand for housing is anticipated to transition from a focus on affordable housing towards the mid-segment and luxury housing categories. A significant shift is projected in the income distribution of households, with the share of lower-income households expected to decrease from 43 percent to 9 percent by 2047. This shift will lead to a rise in the lower-middle and upper-middle-income categories.

Future Housing Requirements and Market Potential

The report also underscores the extensive housing requirements India is likely to face in the coming decades. An estimated 230 million housing units will be needed in the next 25 years. The residential market's potential value is pegged at $3.5 trillion by 2047, while the office market could contribute an output equivalent to $473 billion. The growth in office stock is evident, having expanded from 278 million sq ft in 2008 to a cumulative 898 million sq ft across India's leading eight cities in 2022.

Adapting for Sustainable Growth

In order to ensure sustainable growth, the report emphasizes the necessity for India's real estate sector to adapt to evolving economic landscapes and technological advancements. The optimal utilization of available resources, especially the human capital, is highlighted as a critical factor for this adaptation. Shishir Baijal, Chairman & Managing Director of Knight Frank India, stresses the importance of embracing these transformations to foster growth.