Big money flows into Indian real estate, but affordable housing struggles: ANAROCK report

Indiarsquos real estate business is heading towards one of its biggest investment cycles yet According to ANAROCK Capital the sector could absorb nearly Rs 50 lakh crore in capital over the next 10 years as demand rises across housing offices logistics parks and data centresThe report says Indiarsquos property market is no longer struggling with lack of money Instead the bigger challenge is where this money is going with most investments flowing into premium housing and top metro cities while affordable housing continues to face a major funding crunch said CEO Shobhit AgarwalBig money chasing Indian real estateIndiarsquos real estate market is expected to become a USD 1 trillion industry by 2030 This growth is attracting banks REITs private equity funds AIFs and institutional investors in large numbersAccording to ANAROCK Capital the sectorrsquos financing landscape has changed sharply over the last decade due to reforms such as RERA GST and stricter RBI regulations making the market more transparent and investorfriendlyReal estate finance undergoing major shiftAccording to the report Indiarsquos real estate sector has moved from a fragmented and NBFCled funding model to a more regulated and transparent system Structural reforms such as RERA GST Insolvency and Bankruptcy Code IBC REIT regulations and RBI norms have improved investor confidence and capital flow into the sectorANAROCK Capital CEO said the challenge today is not the availability of capital but ensuring that funds reach affordable housing projects smaller developers and emerging TierII and TierIII citiesAffordable housing losing the funding raceWhile luxury and premium homes continue to attract strong investor interest affordable housing is being left behindThe report highlights that homes priced below Rs 40 lakh now make up only 10 per cent of new launches compared to 26 per cent in 2021 At the same time premium homes priced above Rs 15 crore account for more than half of all new launchesThere is an urban housing shortage of roughly 10 million units and at least 25 million affordable homes are needed by 2030 saidVishal Srivastava Head Corporate Finance Managing DirectorRs 55000 crore needed to revive stalled homesOne of the biggest concerns remains stalled housing projects More than 45 lakh affordable and midincome homes across 1500 projects are currently stuck and need around Rs 55000 crore in funding supportThe governmentbacked SWAMIH Fund has already helped complete nearly 58600 homes The newly announced SWAMIH Fund 20 is expected to support another one lakh homesHousing finance market growing rapidlyIndiarsquos housing finance market has already crossed Rs 38 lakh crore and is projected to double to Rs 77 lakh crore by 202930 Home loans continue to drive the sector making housing finance one of the largest business opportunities for banks and finance companiesMetro cities continue to dominate investmentsCommercial real estate funding remains heavily concentrated in Mumbai Metropolitan Region MMR NCR and Bengaluru which account for nearly 80 per cent of total lending in the sectorBanks currently dominate commercial real estate lending with a share of 56 per cent while NBFCs and Housing Finance Companies contribute around 22 per centREIT market still has huge room to growIndiarsquos REIT market has expanded rapidly with six listed REITs now having a combined market value of more than Rs 2 lakh crore However only a small portion of Indiarsquos office assets are currently listed under REITs showing massive untapped potential compared to global marketsThe next big opportunity in Indian real estate may come from sectors beyond traditional housingThe report says investors are increasingly betting on data centres warehousing logistics parks and office spaces driven by Global Capability Centres GCCs Indiarsquos data centre capacity is expected to cross 8 GW by 2030 while warehousing stock has already grown beyond 605 million square feetIndia remains attractive despite global uncertaintyDespite global tensions and market volatility Indiarsquos strong domestic demand infrastructure spending and urban growth continue to attract longterm real estate investmentThe report says developers with lower debt and stronger balance sheets are likely to benefit the most from the next growth cycle