The real estate sector in India is a significant contributor to the economy. As per the Tenth Five-Year Plan estimates, the housing sector contributes nearly 5 percent to the country’s GDP. Feedback estimates that the size of the real estate development industry in India is Rs. 2,75,000 crore per annum. Despite its large size, the sector offers huge potential for growth and the entry of new players.

The sector is likely to see large demand growth, driven by underlying factors such as rapid growth in disposable income, improved access to credit, and the changing demographic profile of the home buyer.

On the supply side, real estate is amongst the most fragmented and unorganized sectors of the Indian economy. The industry is characterized by dominance of local (city level) players across key urban markets, which operate on the basis of large established positions in land banks. Developer presence is typically limited to single cities—however; the country’s largest developers are beginning to venture out beyond their home turf into other cities.

The large prevailing demand-supply mismatch, combined with rapidly growing demand implies that the real estate sector in India will continue to offer interesting opportunities for developers and financial investors in future.