Teji Mandi Explains: Consolidation, urbanisation keeps structural story intact for real estate sector

07:49 PM Jul 22, 2021 | Teji Mandi

All the government reforms, as well as unforeseen events, have changed the face of the real estate industry over the last five years.

Key Trends Over the Past Decade


Increasing capital intensity, subdued prices, and the changing profile of homebuyers have driven out weak players. Leaving the market consolidating in favour of the big players. The situation has further worsened for smaller developers. As a result, an increased number of new projects are being launched by branded developers.


Preference for Branded Developers

The buyers are also looking towards making risk-free investments. The tendency to invest in under-construction projects at lower prices is being replaced by the preference for ready-to-move-in projects. Homebuyers are willingly paying premium prices for such properties as it reduces risk.

It has automatically shifted the market in favour of organised players as they have better liquidity on their side to complete the projects. This trend of financially strong and organised players gaining market share is expected to continue in the coming years.

Growing Urbanisation

India’s large population base of ~1.37 bn provides a huge domestic demand base. With the growing industrialisation and more international exposure, a large number of MNCs are setting up their operations in India. With that, India’s urbanisation rate is also increasing at a fast pace.

Going ahead, eight cities in India are projected to have a population base of over 1 crore by 2035. It will also increase the nuclearisation of families with a large population migrating to urban centres in search of work.

With faster urbanisation and the growing nuclearisation of families, more housing units are being constructed.

Supportive Demographic Dividend

As per the census report of 2011, India had approximately 61% of its population in the age group of 15 to 59 years. It is expected to reach approximately 65% by 2036.

India has one of the largest populations in the younger age groups in the world as compared to developed economies. It will create one of the largest workforces, for both, residential as well as other real estate asset classes.

Growth in Income Level

According to the World Economic Forum, approximately 14 crore households are expected to be added to the upper mid-income and lower mid-income brackets by 2030. Households belonging to these two income brackets are expected to drive housing demand in the mid-end category in tier 1 and 2 cities.

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