India’s real estate, housing, and urban development sectors are poised for significant transformation as rapid urbanisation, infrastructure expansion, and policy reforms converge to redefine the country’s growth trajectory, according to a recent report by KPMG.
The report projects that nearly 40 per cent of India’s population will reside in urban areas by 2036, while almost half of the country’s population is expected to live in cities by 2050. Consequently, policymakers, developers, financial institutions, and urban planners must focus on building resilient and inclusive urban ecosystems that can support long-term economic growth and improved quality of life.
KPMG noted that the real estate sector now serves as more than a traditional economic indicator. Instead, the sector increasingly functions as a structural engine for economic expansion, employment generation, infrastructure development, and urban liveability. Therefore, stakeholders are placing greater emphasis on expanding affordable housing supply, particularly for Economically Weaker Sections (EWS) and Low-Income Groups (LIG), where demand continues to outpace supply.
However, several structural challenges continue to hinder affordable housing development. Rising land acquisition costs, lengthy approval timelines, fragmented regulatory processes, and limited access to finance often affect project viability and delay delivery. As a result, the report recommends a series of targeted interventions to improve project feasibility and accelerate housing supply.
The report highlights the need for higher floor area ratio (FAR) allowances for affordable housing projects, streamlined approval mechanisms through single-window clearance systems, digitised land records and mapping, and reduced development charges. Additionally, authorities must strengthen last-mile infrastructure and align master plans with evolving urban growth patterns to ensure sustainable and inclusive city development.
Alongside homeownership, rental housing is emerging as a crucial component of India’s urban development strategy. As migration to cities increases and housing preferences evolve, rental housing can play a significant role in addressing urban accommodation needs. Nevertheless, the sector remains highly fragmented and largely informal, while institutional participation and investor interest remain relatively low due to limited yield attractiveness.
To formalise the rental housing market and transform it into a structured asset class, the report recommends GST rationalisation, inclusion of rental housing under priority sector lending, conversion of vacant housing inventory into rental assets, and the promotion of co-living and specialised housing models for students, working professionals, and senior citizens. Furthermore, the adoption of Affordable Rental Housing frameworks and public asset monetisation initiatives can significantly expand rental housing supply across urban centres.
The report also underscores the importance of strengthening the regulatory ecosystem to enhance transparency, efficiency, and stakeholder confidence. In particular, it highlights the need for better alignment between the Real Estate (Regulation and Development) Act (RERA) and the Insolvency and Bankruptcy Code (IBC) to improve project outcomes and protect homebuyers.
To strengthen regulatory resilience, KPMG recommends implementing early stress detection systems, digitally integrating quarterly project progress reports, introducing project-specific insolvency resolution frameworks, and enhancing coordination between RERA authorities and insolvency professionals. These measures can help prioritise project completion, safeguard homebuyer interests, reduce project delays, and minimise systemic risks within the real estate sector.
According to the report, India’s urban transformation agenda will depend heavily on execution-focused reforms, stronger institutional capacity, and deeper collaboration between the public and private sectors. Moreover, a balanced approach that combines affordable housing expansion, rental housing ecosystem development, regulatory reforms, and infrastructure investment will define the next phase of sustainable urban development.
As India continues its urbanisation journey, the housing and real estate sectors will remain central to economic growth, investment generation, job creation, and the development of future-ready cities. Consequently, effective policy implementation and collaborative action across stakeholders will be essential to achieving the vision of inclusive, resilient, and sustainable urban growth under Viksit Bharat 2047.
