Real Estate Boom Ahead? Tycoon Niranjan Hiranandani's Big Bullish Take For 2025 | EXCLUSIVE

Budget 2025 Expectations: Real estate in India is set for a 15% compounded annual growth over the next five years, according to Niranjan Hiranandani, Founder & MD, Hiranandani Group. In an exclusive interaction with Republic Business, the real estate tycoon highlighted that the sector, currently contributing 7% to the $3 trillion GDP, is poised to play an even bigger role as the economy heads toward a $5 trillion mark with a 15-16% contribution. This trend is also supported by NITI Aayog’s projections.

Edited excerpts
 

Republic: What is your overall view on the current state of the real estate market? Where does it stand?

Hiranandani:  Well, the current state of the real estate market is fantastic because we have seen in 2024 a growth of almost 15% growth in the overall real estate market. And so there is a positive strength.

Tier 1, Tier 2 peripheral areas of cities. All these have had a compounded annual growth. So there's a positive story over there. The commercial has also grown almost 8 to 10%, which is pretty good.

Looking at the fact that the size of the market was good, it has further grown into that. Of course, the city focuses are still some of the prominent ones, which are like Mumbai, Bangalore, ncr, Pune and the others which are taking place. So, the overall positive growth of the real estate market has one hiccup.

The one hiccup is the affordable housing segment, which the government will have to address in the budget and otherwise.

Republic: if we compare globally in terms of growth and development with regions like the US or China? How far are we?

Hiranandani: So, if you look at China, for instance, there's been negative growth, and it will continue to be negative because they have amounts of surplus unsold stocks in millions.

There's a long way to go if the Chinese market is concerned. The real estate market in America is okay it is growing.  The commercial market has had a setback and there is a post-Covid. We have seen work from home has really increased, and so we see a setback in the commercial market in the US, I would say India is the fastest growing nation in the world both in terms of overall GDP and also in terms of real estate.

Republic: What are your projections for the growth of the property market in the next 5 years and 10 years?

Hiranandani: Real estate will grow 15% in the next five years, compounded annual growth. Today, at $3 trillion, we are 7% of the GDP in terms of real estate.

When we reach $5 trillion, we will be between 15 and 16%. So not only will we grow, but we will grow much faster. And overall, housing and real estate is going to see growth which is unprecedented in the next couple of years. And this is confirmed by Niti Ayog.

Republic: What are the hottest hubs of real estate in 2025? Are there any particular areas or regions you are more bullish on?

Hiranandani: I think most of the metros are still very bullish. The Mumbai metropolitan region is extremely bullish. Especially because of the infrastructure of the metro. We are adding 300km of metro. We are adding a coastal road. We have just completed the Atal Bridge 22 kilometers. The new airport at Navi Mumbai will become operational by April 2025. So, all this put together, you're going to see huge growth in these peripheral areas like Navi Mumbai, Panvel.

Similarly, you're going to see better areas of Delhi, Bangalore and others also grow at a pace which is unprecedented. So I think that the growth in the peripheral areas is going to be much stronger than what you have seen earlier.

Republic: As the Union Budget is also knocking on the door. What are your top three expectations this time from the Finance Minister?

Hiranandani: The first and main thing is, of course, the focus on affordable housing. I think she needs to do something.  Also, the figure of 45 lakhs of affordable housing cap is just not enough. They need to make it to 1 crore at least. Second, something needs to be done in terms of interest. The interest of RBI is not directly under her control, but she's working on it through the PMAY scheme. But she needs to do something in order to reduce interest rates on home loans. The interest deduction on home loans is still stuck at Rs 2 lakh for the last 12 years and needs to go up at least to Rs 5 lakh.

Last year’s changes to capital gains tax aimed to align it with stock market rules. However, individual income tax rates, which can go as high as 37%, need urgent revision. High tax rates discourage compliance and drive cash hoarding, as seen in the rise of cash circulation from Rs 16 lakh crore during demonetisation to Rs 30 lakh crore today. Restructuring these rates is crucial to reduce cash dependency and encouraging formal economic activity.

Republic: So last year's promise of building 2 crore, 3 crore houses under PMAY is massive. Do you think it will be more streamlined in the Budget 2025?

Hiranandani: Affordable housing faces challenges like acquiring land and approvals, as these are state matters. However, the financial structure for implementation is sound, honest, and transparent, making delivery straightforward. The success of the earlier PMAY scheme supports this.

In urban areas, progress should be smooth, but a significant surprise could be the elimination of slums in Mumbai. Both the state and central governments are focused on slum redevelopment, inspired by Dharavi's model. Within five to seven years, we could see all the slums in Mumbai redeveloped, transforming it into a beautiful city.

Republic: With the government's push on smart cities, how do you think Budget 2025 can accelerate the development in these areas?

Hiranandani: India’s federal system comprises the central government, state governments, and local corporations. The key to success lies in fostering seamless collaboration amongst them. With proper execution, remarkable achievements are possible.

For instance, projects like the Atal Bridge (22 km, Rs 22,000 crores) were completed in just five years, an incredible feat. Similarly, despite political and logistical challenges, Mumbai’s metro is progressing rapidly, with 300 km set to be completed in the next two years.

These developments highlight India’s transformation, positioning it as a global success story. The future looks promising, and India is at the centre of the world’s attention.

Republic: What is the Hiranandani story? So how did you make it in real estate?

Hiranandani: My journey spans 45 years, starting small as a first-generation real estate developer. I initially ventured into textiles and real estate but faced failures in both before fully committing to real estate, where success followed. I took bold leaps, including pioneering townships, prioritising unmatched quality, and embracing sustainability 35 years ago.

Today, we operate Mumbai’s largest sewage recycling plant, processing 4 million liters daily across two projects. These efforts earned trust and loyalty, with our core values being quality and sustainability.

Republic: What about the key challenges that you faced in the initial phase of your journey, and what were the turning points and the key decisions that you're very proud of?

Hiranandani: Even today, the ease of doing business remains a challenge despite government efforts. Surprisingly, even I face delays with approvals, showing how systemic the issue is. Change is needed across the board to truly improve the ease of doing business. There are positive surprises though. For instance, in Uttar Pradesh, my son set up the Data Centre in Greater Noida, and the process was remarkably smooth. Similarly, our work in GIFT City saw fast approvals. The competitive spirit amongst states in India’s federal structure is driving improvements, but progress varies.

Ultimately, efficiency depends on local politicians and bureaucrats. Some are disappointingly slow, while others impress with their speed and support. Perhaps we should rate politicians and bureaucrats, just as developers are rated these days.

Republic: What would you like to advise to a young entrepreneur who wants to start and make really big in real estate in 2025?

Hiranandani: Young people go for it. The real estate sector offers immense opportunities, especially as India grows. Unlike earlier times when banks avoided private developers, today, funding is accessible through IPOs, REITs, InvITs, FDI, and stock market listings. With strategic planning and a strong team, the possibilities are vast.

While challenges remain, competition is driving improvements in quality and delivery. Big industrial players like Tata Housing and Godrej are also entering the space, transforming the industry. These changes, unimaginable in the past, make real estate an exciting prospect for young entrepreneurs.