The BSE Realty Index has recently crossed the 4,000 level to a record 11-year high, while it is still lower than its peak of 13,647 in Jan 2008. The unregulated real estate sector was under pressure back then and the index started to fall because of the Global Financial Crisis (GFC). It affected the Indian economy significantly. However, at present, the BSE Realty Index is 3X of its inception.
Drivers behind the growth
Since 2009, the Indian economy, in line with the global economy started to recover and gained from 1,347 in March 2009 to 3,813 in October 2010. The growth of the BSE Realty Index since 2016 was quite sustainable. In the last few years, reforms like DeMo, RERA, GST, and IBC were the drivers behind the stable growth.
Anuj Puri, Chairman, ANAROCK Research said, "The market consolidation that started post the reforms has induced more transparency and accountability among real estate players. The entry of the large Indian corporate houses such as Tata, Godrej, L&T, Raymond, Kirloskar, and several others into the realty sector has been instrumental in raising the confidence of the buyers and institutional investors."
Anuj Puri, later added, "The rising per capita income to US$ 1,901, recording a growth of 18% in the past 5 years, has also enabled the rise in demand for real estate. Over US$ 26 billion of FDI in the construction development between April 2000 and June 2021, massive infrastructure spending of US$ 1.35 trillion, and a buzzing IPO market that had raised over Rs. 42,000 crores in the past 3 years have been strong enablers of growth. These will continue to bolster the robustness of the markets in the future. Large and listed real estate players have significantly increased their market share. Their share of sales increased from 17% in FY17 to 31% as of Q1 FY22. Amidst high liquidity and low-interest rates, large developers were able to refinance existing loans and the listed realty companies have shed 37% of debt in 18 months and improved their balance sheets."
Commercial real estate in the post-pandemic time has emerged again. ANAROCK Research mentions, "This is evident from the rising quantum of leases post the pandemic - in H1 2021, net absorption has been on the rise, increasing by 14% over the same period in the previous year."