If projects in the pipeline were any indication of a sector’s growth, this industry has some some impressive numbers that companies out to tap global markets ought to take note:
India’s infrastructure, in terms of projects planned, till 2030 include:
$98 billion on 432 projects for Roads
$90 billion on more than 400 projects in Railways
$10 billion on 70 projects on Airports
$ 8 billion on some 75 projects on Ports.
And this without including the construction and real estate activity in key areas like Social Infrastructure, Logistics and Warehousing, Renewable Energy and many more. According to Rajnish Kumar, the Managing Director of National Banking Group of India’s largest bank State Bank of India, “Private Equity (PE) investments from foreign funds in Indian realty sector rose by 33 per cent to Rs 14,974 crore [$ 2.2 billion] during last year. However there is a huge deficit and if we are to house all citizens by 2022 then it requires an investment of US $ 2 trillion for construction of 9 crore [ 90 million] housing units; the present shortage plus additional demand of housing by 2022”.
A recent background paper on the subject, prepared by KPMG and the National Real Estate Development Council [NAREDCO], estimates the number of housing units to be 110 million units. It also pegs India to grow to being the 3rd largest global market in the real estate and construction sector. A key fuel for this growth is the increasing urbanization of India- a projected growth of over 40% in the urban population- from 420 million in 2015 to 580 million in 2030. That’s nearly 12 million people adding to the urban population every year for the next 15 years. Imagine this- building the infrastructure to accommodate the movement of and housing a population that equals half of the US population or five times that of Canada! In just the next 15 years.
Which are the companies that are ready to tap into such an opportunity?
How about our very own Brookfield Asset Management, Canada’s premier name in commercial real estate? Indeed. Canada-based Brookfield Asset Management Inc. has signed up to acquire office and retail assets of Hiranandani Developers at a valuation of close to $1 billion—one of the largest commercial real estate deals in recent years. A deal reported just earlier this month. That gives Brookfield ownership of 5 million square feet of office and retail assets at Hiranandani Business Park and Hiranandani Gardens in Mumbai. A clear sign that Brookfield is bullish on India.
Whether you are in roads, ports, airports or housing or commercial real estate or in any intermediary product or service relating to this industry, India ought to be in your plans.
Interested in knowing more about the news stories linked to this post: Economic Times: India’s Real Estate Sector can be the 3rd largest globally and LiveMint: Brookfield set to buy Hiranandani’s Assets for $1 billion