Wider context

India’s economic growth is entering an exciting phase, transitioning from taxiing to take-off. With an anticipated growth rate of 6.3% for the financial year (FY) 2024, the construction industry looks set for burgeoning development. A standout feature of this remarkable economic growth is the Indian real estate sector, projected to contribute approximately 13% of the country's GDP by 2025. This rise is fuelled by the continuing spree of urbanisation and increased smart city initiatives.

The construction industry is primed to reach a staggering $1.4 trillion by 2025, with both the private and public sectors reaping the rewards of the rolling infrastructure development, propelling India into an era of boundless opportunity.

India commits to developing reliable and resilient infrastructure in alignment with its 2030 Agenda for Sustainable Development Goals. The latest union budget stated that the capital expenditure (CapEx) has surged by 37.4%, rising from $89.6 billion to $123.1 billion, recognising the focus to extend infrastructure to tier II and tier III cities, a strategic move aimed at fostering widespread economic and human development.

India’s ambitious target to reach net zero emissions by 2070 has driven substantial investments in renewable energy, energy efficiency, and sustainable transportation. The property sector is also increasingly acting in response to carbon emissions, with HSBC reporting energy security and energy costs as the prominent factors accelerating business transitions. The national target appears achievable with hopes of the government and financial institutions incentivising the net zero transition.

The recent G20 presidency has garnered attention from across the globe, shaping India as an attractive destination for investment and business growth. The 'Start-up India' initiative has also created ripples in the entrepreneurial landscape, with a remarkable 62% increase in recognised start-ups in 2022. India's commitment to integrating manufacturing into the global supply chain has attracted foreign direct investment (FDI), signalling the confidence of international investors in the nation's manufacturing and services sectors.

In line with the G20s’s resolution to promote the adoption of digital technologies, the union government has identified 54 global technologies in its pursuit of fostering the construction technology sector. Technologies such as building information modelling (BIM), digital twins, virtual reality (VR), and augmented reality (AR) have revolutionised the project lifecycle, with their adoption accelerating in the wake of the COVID-19 pandemic. Furthermore, 3D printing and modular construction are gaining traction, courtesy of an extended Smart Cities Mission timeline from June 2023 to June 2024.

Against this backdrop, the Indian construction industry remains in a good position despite the weakening economic scenario elsewhere. Largely, input costs have decreased due to reduced global raw material prices, yet these reductions are compensated for by increasing labour costs. However, the indices reductions were recorded prior to the Israel-Hamas war. It is expected, as witnessed during the Russia-Ukraine war, commodities prices, including precious metals and crude oil, will increase, leading to elevated procurement costs for construction projects.

The Gleeds India Intelligence team conducted a comprehensive survey to inform this report. Prominent stakeholders, including architects, clients, contractors, developers and consultants from various sectors, have shared their invaluable insights, shaping our understanding of current market conditions and opportunities within India's ever-evolving construction landscape.

The graph below indicates that the survey responses have been mainly received from the commercial, residential, hospitality, retail, data centre and industrial markets, comprising nearly 90% of the survey respondents. Thus, the spread of the survey captures the industry-wide opinion.