States and Union Territories (UTs) in India amassed a significant sum of Rs 2 lakh crore in the fiscal year 2022-23 from the real estate sector, as revealed by a report from Naredco-Knight Frank India. This substantial revenue collection stems from various sources within the real estate sector, including stamp duties.
According to the report, this revenue accounts for 5.4 percent of the total income accrued by all Indian states and UTs throughout the fiscal year 2022-23.
The report highlighted the pivotal role played by the real estate sector in bolstering the revenue streams of state governments. In the aforementioned fiscal year, an estimated Rs 2 trillion was garnered by all states and UTs across India through stamp duties, registration fees, and land revenue.
The collaborative effort between the National Real Estate Development Council (Naredco) and property consultancy firm Knight Frank India produced the comprehensive report titled ‘India Real Estate: Vision 2047.’
The report’s projections indicate a remarkable growth trajectory for the Indian real estate sector, foreseeing its size expanding over twelve-fold to USD 5.8 trillion by the year 2047, up from USD 477 billion in the previous year. This burgeoning sector is expected to contribute more than 15 percent to India’s total economic output by 2047, a substantial increase from its existing 7.3 percent share.
Furthermore, the report envisions India’s economy reaching a substantial USD 33-40 trillion by the time the country commemorates its centenary of independence in 2047. For analytical purposes, Knight Frank has employed an estimated mean growth figure of USD 36.4 trillion for India’s economy by that year.
In specific sectors, the report predicts the residential real estate market to expand to USD 3.5 trillion (USD 3,500 billion) by 2047, a significant rise from its value of USD 299 billion in the previous year. Likewise, the office real estate market is anticipated to grow to USD 473 billion from a meager USD 40 billion, while the warehousing market is projected to reach USD 34 billion, up from USD 2.9 billion.
Additionally, the report acknowledged that apart from bolstering state revenues, the real estate sector has also evolved into a vital instrument for financing infrastructure development across the country. Mechanisms like value capture financing have empowered state governments and municipalities to raise financial resources by tapping into the augmented value of real estate properties and land stemming from government investments and policy initiatives.
The report elaborated that value capture financing tools, including land value tax, betterment levy, development charges, transfer of development rights (TDRs), and more, have facilitated the generation of supplementary revenues. These funds have subsequently been allocated for funding the development of city infrastructure.