India’s real estate likely to be $1 trillion market by 2030, supported by luxury housing

New Delhi: India's real estate sector is expected to recover to 5.5 per cent in FY27 supported by strong demand of luxury housing. The sector may grow to a $1 trillion market by 2030 as it requires nearly Rs 50,000 billion of capital over the upcoming decade, a report from Brickwork Ratings (BWR) forecasted.

The report further suggests that despite slightly slower revenue growth this year, the credit outlook for the real estate sector remains stable.

Revenue growth which was at 15.8 per cent in FY25, slowed down by -0.2 percent in FY26.

Even though a 31 percent YoY increase in residential sales across leading cities and 10 percent-12 percent hike in luxury housing price continues to support Indian real estate, certain factors may negatively affect the growth. Price volatility across residential and commercial properties, rising construction costs and a strategic shift towards mid-income housing are weighing on near-term revenue growth.

Improvement in operating margins are expected to be supported by inventory clearance and a greater contribution from higher-margin premium residential projects, data centres and warehousing spaces. From 30.1 per cent in FY25, the improvement is predicted to stand at 32 per cent in FY26 befpre stabilizing at 33.3 per cent in FY27.

Financial resilience remains supported by low gearing among top-tier developers, who increasingly rely on joint development agreements rather than heavy debt.

Strong pre-sales collections, private equity funding and REIT listings are also helping developers manage liquidity and leverage.

Interest coverage is expected to remain steady at 2.8-fold in FY26, while the debt service coverage ratio is projected at 1.1-fold, providing financial headroom despite higher construction borrowing and mezzanine funding requirements.

The firm flagged unsold inventory as a concern, with Mumbai and Pune carrying housing stock equivalent to over 30 months of sales, potentially delaying new project launches and pressuring cash flows.

Refinancing requirements also remain vulnerable to movements in interest rates.

Residential development is expected to command the larger share of the real estate sector’s capital requirement, given its weight in overall sector activity, while commercial real estate continues to draw a disproportionate share of near-term institutional capital.

(With inputs from IANS)