In India, the construction sector comes in second place after the agricultural sector, which contributes 11% of the country's GDP. Significantly boosting India's economy and generating employment. The construction industry depends on around 250 ancillary economic sectors, including cement, steel, brick, timber, and building supplies. In the construction industry, a unit increase in spending has the potential to multiply income up to five times.
The development of the real estate includes residential, commercial, and civil construction company, infrastructure, which encompasses the construction of roads, railways, and power plants, and industrial uplift, which includes the construction of oil and gas refineries, pipelines, textile factories, and other facilities are the major segments of the construction builders industry growth.
In order to increase the growth of industry traditional financing techniques have undergone a significant transformation to make way for structured finance, private equity, and initial public offerings. As a result, it is projected that the private sector's share in overall infrastructure investment will rise to 50%. The public sector will bear the remaining burden.
According to Global Data’s “Construction In India” report, it gives detailed market analysis, information, and insights into the Indian construction services industry, including:
● The Indian construction industry’s growth
● Critical insight into the impact of industry trends and issues
● Analysis of the mega-project pipeline
The report’s key highlights are -
1. Global Data expects the residential or building construction company to retain its leading position and account for 30.1% of the industry’s total value in 2023. Market expansion over the forecast period is expected to be supported by public and private sector investments in the construction of new residential buildings.
2. In the infrastructure construction market under the Pradhan Mantri Gram Sadak Yojana (PMGSY), the government aims to build roads in the rural and backward areas of the country as a part of the PPP model.
3. Global Data expects the energy and utilities construction market to record a forecast-period CAGR of 10.83% in nominal terms, with a focus to increase the share of renewable energy in terms of total energy consumption and encouraging investment in renewable energy infrastructure.
4. Growth in the institutional construction market will be supported by public and private sector investment in education and healthcare.
5. The total construction project in India – as tracked by Global Data, including all mega projects with a value above US$25 million – stands at INR82.5 trillion (US$1.2 trillion).
The main factors boosting the need for residential buildings include the demand-supply gap for housing, favorable demographics, rising levels of affordability, and the availability of financing options. There would be a scarcity of 26.53 million homes, according to projections of the housing deficit, which presents a significant investment opportunity. Additionally, it is expected that demand for office space would continue as India becomes a more popular outsourcing location. Also, it is expected that the trend in organised retail would lead to a great demand for real estate construction.
Even while long-term variables are probably in the developers' favour, the immediate future appears bright again. The improvement in sales and cost-effectiveness is putting a spotlight on real estate industry leaders' profitability. Access to affordable housing is expected to pressurise margins.
India is on the move towards a phase of sustained growth in the infrastructure build-up. The construction industry regained growth movement in 2018 as well as 2019, with output hovering around 8% which was at 1.9% in 2017. The industry is expected to continue to expand over the period (2022-2023), driven by the government’s efforts and large spending on housing, road, ports, water supply, and airport development. The government had increased its expenditure towards infrastructure development by 20% to INR 6.0 trillion (US$89.2 billion) in FY 2018-2019 with continued investment in transport infrastructure, energy, and residential projects under flagship programs such as Bharatmala scheme, Housing for All 2022, the UDAN (Ude Desh ka Aam Nagrik) scheme and the Ayushman Bharat program. Population growth and urbanisation will also drive the need for better infrastructure facilities and road infrastructure developments in the country.