India’s infrastructure and real estate sectors will attract investments worth Rs 15 lakh crore by 2026: report

PTI

Updated June 18, 2024, 17:28 CEST

Investments in the energy sector will focus on adding more green energy to the country’s energy mix, road investments will focus on creating denser networks, and real estate investments will focus on residential and commercial projects, he said.

Crisil Ratings Projects Rs 15 Lakh Crore Investment in Indian Infrastructure and Real Estate by 2026 (Image Source: iStockphoto)

The infrastructure and real estate sectors are likely to gain an amount of Rs 15 lakh crore investments until March 2026, a national rating agency he said on Tuesday.

The investments will generate 50 GW renewable energy capacity and 25,000 km of roads in infrastructure and real estate, the rating agency said.

“Investment in India’s key infrastructure sectors – renewable energy and roads – and real estate is expected to grow by 38 per cent in FY2025 and FY26 compared to the previous two fiscals and reach Rs 15 lakh crore,” Crisil Ratings said in a research note. .

Investments in the energy sector will focus on adding more green energy to the country’s energy mix, road investments will focus on creating denser networks, and real estate investments will focus on residential and commercial projects, he added.

“Demand fundamentals in these three sectors remain strong and regular policy interventions are increasing investor interest,” said Chief Ratings Officer Krishnan Sitaraman.

The government’s renewable energy targets have led to more project auctions and created a solid base for players, he said, pointing out that in FY24, auctions covered 35 GW and the pipeline currently has a capacity of 75 GW.

On roads, the agency expects to build 12,500 km of roads per year over the next two fiscal years due to the need to improve physical connectivity for wider economic development.

In the real estate industry, commercial office space net leasing will drive demand growth of 8-10 per cent this fiscal year and next, the agency said, attributing it to global capability centers eyeing India’s large talent pool and competitive rents, as well as demand from sectors national.

Residential demand growth will remain at 8-12 per cent this fiscal and next, supported by favorable affordability and premiumisation. It said the policy would play a key role in infrastructure and real estate development, listing sectoral priorities.

In renewables, higher import tariffs have helped the country’s module production ecosystem, he said, and the addition of production-linked incentive schemes for batteries and solar cells sets a path for more sustainable growth.

For the road sector, private sector confidence has been improved through the Hybrid Annuity Model (HAM) and improved concession contracts, with a more equitable sharing of risk between developers and concessionaires, the agency said.

The agency said that legal regulations in the real estate sector and recent changes to the Act on Special Economic Zones (SEZ) helped. “A total of Rs 2 lakh crore of equity capital has been deployed in these sectors in the last two fiscal years due to strong investor participation,” said Manish Gupta, deputy director, ratings.