India Construction Market - Growth, Trends, Covid-19 Impact, And Forecasts (2022-2027)

The Indian Construction Market is segmented by Sector (Commercial Construction, Residential Construction, Industrial Construction, Infrastructure (Transportation) Construction, and Energy and Utility Construction). For each segment, the market sizing and forecasts have been done on the basis of value (USD billion).

Market Snapshot

Construction Market Size in India
Study Period: 2018-2027
Base Year: 2021
CAGR: >10 %
India Construction Market Companies

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Market Overview

The Indian Construction Market is expected to register a CAGR greater than 10% during the forecast period (2022 - 2027). As COVID-19 expanded across the country in April 2020, the face of the Indian construction industry, which was already battling with inadequate management and a lack of tracking of its labour force, lost its central grip completely, bringing the industry to a halt. COVID wreaked havoc on the value chain at all levels and scales. Availability of construction materials and price inflation became important concerns. Cost overruns, severe delays, and even project cancellations resulted from the lack of timely implementation owing to lockdowns. The cancellation and postponing of projects had a direct impact on MSMEs, with many being forced to close their doors or reduce their operations. This was particularly concerning because the construction industry consists mostly of small-scale specialty construction firms and design studios.

Despite the impact of Covid limitations and lockdowns on construction activity, India saw a fresh supply of 45 million sq ft this year, with 36 million sq ft coming from tier I cities and 8.9 million sq ft coming from tier II and III cities. In 2021, the 3PL and e-commerce sectors, which accounted for 62 percent of total absorption in 2020, continued to drive warehouse demand, followed by the manufacturing sector, which accounted for 14 percent. In 2021, Delhi NCR had the largest absorption among India's main cities, at 18 percent, followed by Pune at 15 percent. Absorption rates were 14 percent and 11 percent in Mumbai and Bangalore, respectively, with 20 percent in tier II and tier III cities.

In 2021, investments in the industrial and logistics sector exceeded USD 1.5 billion, making it the second-highest recipient of such funds after the office sector. This asset class has maintained its popularity due to its high growth potential and consistent returns. In 2022, the market is projected to see ongoing and growing investor interest in this asset class. The commercial real estate sub-sector is positioned for development as people return to workplaces and businesses adapt to hybrid working arrangements. The need for commercial office space is gradually increasing as more companies return their employees to the workplace.

Scope of the Report

Construction is the installation, maintenance, and repair of buildings and other stationary structures, as well as the construction of roadways and service facilities that form fundamental components of structures and are required for their operation. Construction encompasses the processes involved in constructing buildings, infrastructure, and industrial facilities, as well as related operations, from start to finish. A complete assessment of the Indian Construction Market includes an assessment of the economy and contribution of sectors in the economy, market overview, market size estimation for key segments, and emerging trends in the market segments in the report. The report sheds a light on the market trends like growth factors, restraints, and opportunities in this sector. The competitive landscape of the Indian Construction Market is depicted through the profiles of active key players. The report also covers the impact of COVID – 19 on the market and the future projections.

The Indian Construction Market is segmented by Sector (Commercial Construction, Residential Construction, Industrial Construction, Infrastructure (Transportation) Construction, and Energy and Utility Construction). For each segment, the market sizing and forecasts have been done on the basis of value (USD billion).

By Sector
Commercial Construction
Residential Construction
Industrial Construction
Infrastructure (Transportation) Construction
Energy and Utilities Construction

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Key Market Trends

Infrastructure Projects Driving the Market

More than 610 projects (costing INR 7.78 crores) have been identified for implementation as part of the Sagarmala Program between 2015 and 2035 in the areas of port modernization and new port development, port connectivity enhancement, port-linked industrialization, and coastal community development. Bharatmala Pariyojana is a new highways umbrella program that focuses on improving the efficiency of freight and passenger movement across the country by bridging critical infrastructure gaps with effective interventions such as the development of Economic Corridors, Inter Corridors and Feeder Routes, National Corridor Efficiency Improvement, Border and International Connectivity Roads, Coastal and Port Connectivity Roads, and Green-field expressways.

In 2022-23, the PM Gati Shakti Master Plan for Expressways will be implemented, allowing for faster transit. In 2022-23, the National Highway network would be expanded by 25,000 kilometers, costing INR 20,000 crore. In 2022, India's road sector will experience enormous growth as additional stretches of national highways are constructed, as well as the approval and completion of several projects and fundraises, making it a better year than the previous one. An integrated multi-modal national network of transportation and logistics, connectivity with isolated and difficult terrains, decongestion of key sites on the road network, and progress with the voluntary vehicle scrappage program will all be on the radar in 2022.

The government approved the development of 21 greenfield airports in the country in January 2022. The country's largest airport will be built in Uttar Pradesh's Gautam Buddha Nagar area. The Ministry of Civil Aviation intends to build 21 additional airports across India in the next years. In the next four to five years, the Airports Authority of India (AAI) plans to create new airports as well as expand and upgrade many existing airports at a cost of INR 25,000 crores. This comprises the expansion and alteration of existing terminals, the construction of new terminals, the expansion or strengthening of existing runways, technical blocks, aprons, and the control towers of the Airport Navigation Services. In addition, by 2025, three PPP (Public-Private Partnership) airports in Delhi, Bengaluru, and Hyderabad will have invested INR 30,000 crore in expansion plans.

Growth of Construction Industry in India

Demand for Luxury Homes Driving the Market

According to an industry report, the residential segment is likely to exceed pre-covid quarterly sales volumes in 2022, and given its strong speed, it could even match pre-demonetization quarterly sales in the second half of 2022. Given the boost that a luxury dwelling has come to lodge in the broader perspective of work-life choices, owning a home is no longer a matter of investing preference, but a necessity. Buyers seek a lifestyle that seamlessly incorporates the work-from-home concept while maintaining the opulence and amenities of luxury living. In 2022, these patterns are projected to continue. In global cities such as Mumbai, Bangalore, and elsewhere, a new class of ultra-rich people is on a luxury home purchasing binge.

Large-scale residences have emerged as a favored choice in residential township developments and will continue to drive real estate expansion in the years ahead. The real estate sector is expected to have a big year in the coming year, thanks to robust demand, changing trends, and new growing markets driving growth. Non-metro cities are rising real estate markets that are expected to lead the industry's growth in the future year. Despite the increase in housing demand, luxury residences in Mumbai are expected to be in high demand, with property prices likely to remain constant.

Following the pandemic, the luxury home market has gained impetus; purchasers are responding positively to residential purchases across segments, with selling prices having corrected in recent quarters, making real estate investment attractive, particularly in the premium sector. According to a January 2022 industry survey, 89 percent of those who wish to acquire real estate chose luxury houses (city apartments, city bungalows, and vacation homes), while the remaining 11% want premium commercial real estate. The most popular budget range for a luxury city apartment or villa was INR 10-25 crore, with 69 percent of respondents choosing this range. Around 21% like to buy in the INR 5-10 crore range, with the remaining 10% preferring to buy in the INR 25 crore range.

India Construction Market Outlook

Competitive Landscape

The Indian construction market is highly competitive, owing to the presence of major local and international players. However, the market holds opportunities for small and medium players due to increasing government investments in the sector. The Indian construction market presents opportunities for growth during the forecast period, which is expected to further drive market competition. Large players competing with others for a significant share leave the Indian construction market with no observable levels of consolidation.

Recent Developments

January 2022: The Heavy Civil Infrastructure business of L&T Construction won a prestigious order from Delhi Metro Rail Corporation Limited (DMRC) to design and construct the Underground Metro Project of Phase-1 of Patna MRTS. The major scope of work for the project comprises design & construction of a Twin Tunnel by Shield TBM of approximately 6 Km, Tunnel by Cut & Cover, an Underground (UG) Ramp at Rajendra Nagar and six UG Metro Stations located at Rajendra Nagar, Moin Ul Haq Stadium, University, PMCH, Gandhi Maidan, and Akashvani, along with other associated structures including architectural finishing, water supply, sanitary installation, and drainage works on the new ISBT to Patna Station of Corridor-2 of Phase-1 of Patna MRTS. The project passes through the heart of Patna City and is scheduled to be completed within 42 months.

December 2021: Indian Hotels Company (IHCL) collaborated with TATA Projects Limited for the construction of its new Ginger hotel at Santacruz, Mumbai, by an all-woman engineering team. The 371-room hotel with a built-up area of over 19,000 square meters will be constructed over a course of 19 months. The building process will incorporate the latest construction techniques and technologies. Located at a prime location in close proximity to Mumbai Airport and Western Express Highway, this will be a flagship Ginger hotel and is being constructed by one of India’s leading construction companies.

Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Assumptions

    2. 1.2 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

    1. 2.1 Analysis Methodology

    2. 2.2 Research Phases

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET INSIGHTS

    1. 4.1 Current Economic and Construction Market Scenario

    2. 4.2 Technological Innovations in the Construction Sector

    3. 4.3 Insights into Supply Chain/Value Chain Analysis

    4. 4.4 Impact of Government Regulations and Initiatives on the Industry

    5. 4.5 Review and Commentary on the Extent of Government Infrastructure Development Schemes

    6. 4.6 Comparison of Key Industry Metrics of India with Other Countries

    7. 4.7 Comparison of Construction Cost Metrics of India with Other Countries

    8. 4.8 Impact of COVID-19 on the Market

  5. 5. MARKET DYNAMICS

    1. 5.1 Drivers

    2. 5.2 Restraints

    3. 5.3 Opportunities

    4. 5.4 Porter's Five Forces Analysis

      1. 5.4.1 Bargaining Power of Suppliers

      2. 5.4.2 Bargaining Power of Consumers/Buyers

      3. 5.4.3 Threat of New Entrants

      4. 5.4.4 Threat of Substitute Products

      5. 5.4.5 Intensity of Competitive Rivalry

  6. 6. MARKET SEGMENTATION

    1. 6.1 By Sector

      1. 6.1.1 Commercial Construction

      2. 6.1.2 Residential Construction

      3. 6.1.3 Industrial Construction

      4. 6.1.4 Infrastructure (Transportation) Construction

      5. 6.1.5 Energy and Utilities Construction

  7. 7. COMPETITIVE LANDSCAPE

    1. 7.1 Market Concentration Overview

    2. 7.2 Company Profiles

      1. 7.2.1 L&T

      2. 7.2.2 Megha Engineering & Infrastructures Limited

      3. 7.2.3 Shapoorji Pallonji Co. Pvt. Ltd

      4. 7.2.4 Tata Projects

      5. 7.2.5 KEC International Limited

      6. 7.2.6 Afcons Infrastructure Ltd

      7. 7.2.7 Dilip Buildcon Limited

      8. 7.2.8 Hindustan Construction Co. Ltd

      9. 7.2.9 NCC Limited

      10. 7.2.10 Lodha Group*

    3. *List Not Exhaustive
  8. 8. MARKET OPPORTUNITIES AND FUTURE TRENDS

  9. 9. MAJOR INFRASTRUCTURE DEVELOPMENT PROJECTS (PROJECT DESCRIPTION, VALUE, LOCATION, SECTOR, CONTRACTORS)

    1. 9.1 Existing Infrastructure

    2. 9.2 Ongoing Projects

    3. 9.3 Upcoming Projects

  10. 10. APPENDIX

  11. 11. DISCLAIMER

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Frequently Asked Questions

The India Construction Market market is studied from 2018 - 2027.

The India Construction Market is growing at a CAGR of >10% over the next 5 years.

L&T, Megha Engineering & Infrastructures Limited, Tata Projects, KEC International Limited, Shapoorji Pallonji Co. Pvt. Ltd. are the major companies operating in India Construction Market.

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