India’s urban population to be 40% of India’s total population by 2030, driving long-term real estate growth

Admitting to a short-term pull back; IndiaMLS encourages real estate investors to look long-term in the urban markets.

Context: IndiaMLS is a highly specialized Multiple Listing Service (MLS) product, designed for professional REALTORS in India. Its CEO and Founder Jay Patel was invited to speak at the ‘International REALTORS Conference (IRC) hosted by the Chamber of Real Estate and Builders’ Associations, Inc’ (CREBA), in Philippines in June 2015. The conference was designed to help real estate professionals and businessmen unleash the opportunities and take advantage of modern online media in facilitating property transactions across borders.

The Indian economy experienced robust growth in the past decade and is expected to be one of the fastest growing economies in the coming years. While this has largely propelled real estate forward; the market is experiencing a short-term pull back within the urban real estate industry.

Jay Patel, Founder and CEO of IndiaMLS said that, “ Rental yields are as low as 2-3%, compared to the government 10 year bond which is yielding almost 8%. Thus, if there isn’t enough capital appreciation, real estate may not look as attractive in the short term.”

Speaking at the global conference in the Philippines, Jay added that for the short-term, a combination of too much growth, too fast, is resulting in excess supply and softening prices, but the long-term view of real estate in India is quite different.

“India’s urban population as a percentage of total population was around 32 percent in 2014 and is expected to rise to 40 percent by 2030. Stronger wages and better standard of living is expected to result in an increase in urban population in the country to above 600 million by 2031 from 406 million in 2014. Thus, we remain bullish on the long-term prospects for the Indian real estate market, ” added Jay.

Admittedly, there are other attractive places to invest today relative to real estate, such as the Indian stock market which had been relatively stagnant during the past few years, but represents good investment opportunities today. However, Government initiatives such as various urban development policies and programs (e.g., JNNURM) are expected to contribute to enhanced urbanization benefiting the real estate industry in the coming years.