NEW DELHI (Reuters) – If India needed any further proof that it was in the midst of a massive housing boom, it got this week’s gross domestic product (GDP) data, raising expectations that the industry will continue to drive the economy for years to come. .
Data released Thursday showed the construction sector grew 13.3% in the July-September period from a year earlier, up from 7.9% in the previous quarter, its best performance in five quarters.
This helped India expand at a rate of 7.6%, which exceeded expectations, making it one of the fastest growing major economies in the world. In contrast, Western economies have been pressured by rising interest rates and energy prices, while China has faltered due to a debt crisis in its real estate sector.
The long-awaited boom — which has created millions of jobs — comes after about six years of debt and pandemic-induced contraction before the construction sector began to improve last year and hit its stride this year. This was driven by the rising incomes of many Indians, a severe housing shortage in major cities, and strong population growth.
The world’s most populous country suffered a shortage of urban housing of about 19 million units last year, and this number is expected to double by 2030, according to government estimates.
“Strong growth in the construction sector has contributed significantly to economic growth – and is likely to play the same role in the next two quarters,” said Sunil Sinha, an economist at India Ratings and Research, an arm of Fitch Ratings.
Construction companies appear optimistic in the long term, with many saying the boom could last for two to three years, and others are more optimistic.
“The housing market can continue to perform well for another three to four years,” said Sanjeev Jain, managing director of Parsvanath Developers, a leading real estate firm, noting that India is in the early stages of the housing growth cycle.
Home sales in India’s seven largest cities, including Mumbai, New Delhi and Bangalore, rose 36% in the July-September quarter from a year earlier to more than 112,000 units, despite a price increase of 8% to 18%, according to the sector. Real estate. Anarock Consulting.
Data from the consulting firm showed that there was also a 24% increase in new residential projects launched.
“Home sales are driven by first-time buyers, and nearly 80% of the homes have been purchased by end-users,” said Prashant Thakur, head of research at Anarock, adding that there is also strong demand from existing homeowners to relocate. To more spacious apartments.
In Mumbai, for example, demand has been strong despite an increase in interest rates of about 2 percentage points, according to Jayesh Rathod, director of Mumbai-based real estate consultancy Guardian.
He said his company has sold more than 5,500 apartments in Mumbai and its outskirts in Thane so far this year, a jump of more than 50% compared to the same period last year.
The main demand was to increase the salaries of workers in major cities. Average rises in sectors such as e-commerce, healthcare, retail and logistics remained above 10% for the second year in a row, according to EY estimates.
House prices in India are expected to rise faster than consumer price inflation next year, according to a Reuters poll, with real estate analysts saying growth will be driven by higher income earners buying newly built luxury housing in cities.
Housing demand has also risen significantly in small towns in the southern states of Tamil Nadu, Karnataka and Prime Minister Narendra Modi’s home state of Gujarat, according to construction companies, which say demand is driven by rising incomes and the migration of workers from rural areas. Regions.
The government is also trying to boost the availability of affordable housing by offering subsidies, which encourages construction in smaller towns and cities in India.
Shares of real estate companies rose naturally.
The Nifty Realty Index (.NIFTYREAL) is up about 67% year-to-date compared to a 12% gain for the blue-chip Nifty 50 index.
Notable gainers include Prestige Estates Projects (PREG.NS), which jumped about 120%, DLF (DLF.NS), which rose 67%, and Godrej Properties (GODR.NS), which rose 52%.
($1 = 83.3143 Indian Rupees)
(Additional reporting by Manoj Kumar, Additional reporting by Nigam Prosti – Preparing by Mohammed for the Arabic Bulletin) Editing by Ira Duggal and Edwina Gibbs
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