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Indian cities set for fastest growth in Asia

India’s booming economy is only going to continue. A recent report from Oxford Economics, ranking Asia’s 30 largest cities, has found that Indian cities will see the fastest economic growth across the region over the next five years, with Delhi expected to lead the way.

It’s not just cities performing well – the Indian economy as a whole is the fourth fastest growing economy in the world, with a 7.2% growth rate for 2017 predicted by the World Bank. Linked to this is the country’s accelerating population. Urban areas are expanding at an unprecedented rate: the country now has at least 50 cities with over a million inhabitants, providing a larger labour force and huge demand for housing and infrastructure.

Half of the Indian population are now middle class and by 2022, the country could take over the U.S. to become the second largest middle-class market in the world, according to the Brookings Institution. This increase in consumer class is driving the need for residential property, office space, schools, hospitals, and retail spaces.

India’s UHNWIs boost building 

India’s booming ultra-rich are also set to spur on construction. The number of ultra-high net worth individuals (those with net worth of over $30 million) in India has risen 290% over the past decade and is set to double over the next. Knight Frank’s Wealth Report 2017 reported that the amount of UHNWIs added annually in India will increase from 500 to 1,000 each year over the next ten years. 

Samantak Das, chief economist and national director-research, Knight Frank India, said, “In terms of real estate sector investment, the wealthy Indians have expressed their top priority in the office segment. 40% of wealthy Indians are likely to invest in residential property in India.”

Government investment

The Indian government has invested heavily in infrastructure, industrial parks, and residential buildings as part of the 12th Five Year Plan from 2012-2017. It has also launched flagship programmes such as the Jawaharlal Nehru National Urban Renewal Mission, and the National Rural Health Mission.

In the coming years, the building industry will also benefit from investments under numerous government programmes such as the 100 Smart Cities Mission, Housing for All 2022, the Atal Mission for Urban Rejuvenation and Transformation, the National Skill Development Mission, Make in India, and Power for All. To take just one of these schemes – the 100 Smart Cities Mission – the government plans to invest $7.2 billion USD to update and renew urban infrastructure in 100 cities in India.

Green building to soar

The country is also embracing green building, driven by strong demand from consumers. Its registered green building footprint is second only to the USA, but in 2016 it still only covered 5% of stock. This is expected to rise 20% from 2016-2018, according to the Dodge Data & Analytics World Green Building Trends report. New high-rise residential, mixed-use, and commercial developments are expected to be the main sectors for green building growth in India. Read our free Green Building in India Guide for more detailed information on the sector.

With a rising economy, population, and demand for housing and infrastructure, India’s already thriving construction market is set to expand. It currently accounts for 8% of total GDP and has an 8.1% growth rate. By 2030, it is expected to become the world’s third largest construction industry, behind only the U.S. and China.

As growth continues, the building materials market in India becomes ever more lucrative. The country is in need of new building materials, shorter construction times, and better-quality buildings. The country’s varied climate requires quality, robust materials and cement, ceramics, roofing materials, interior fittings, windows, and other construction materials are all in high demand. Increasingly Indian buyers are shifting their focus away from price point and towards high quality products and materials, particularly as the luxury segment grows.


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