January 29, 2024: Tamil Nadu’s Nominal Gross State Domestic Product (GSDP) is expected to expand to around US$ 2.6 trillion by FY 2047-48, according to the latest report by real estate consultancy Knight Frank India in association with the Confederation of Real Estate Developers’ Associations of India (CREDAI)- Tamil Nadu. The state stands as the second-largest state economy in India, contributing 8.8% to the nation’s GDP.
The report titled ‘Tamil Nadu: Unveiling Economic Dynamism and Future Potential’ mentioned that in FY 2023, the state GDP is estimated to have expanded to $294 bn. Over the ten years before the onset of the COVID-19 pandemic (FY 2009-2019), the state’s economy witnessed an average annual growth rate of 11%. At this pace of growth, FY 2047-48, when India attains its centenary of independence, Tamil Nadu’s Gross State Domestic Product (GSDP) is likely to expand to $2.6 tn, resulting in the state being one of the key contributors to India’s overall economy.
Industries contributing to the growth
As mentioned in the report, agriculture, services, manufacturing and others play crucial roles in driving the state’s economic prosperity. Presently, the services sector stands out as the primary catalyst, contributing 53% to the overall economic growth of Tamil Nadu.
The state’s growth ambitions are set to drive the need for expanding economic activities into tier 2 and 3 cities of Tamil Nadu, accentuating the pace of urbanisation. This trend is expected to significantly boost the construction sector, encompassing real estate and infrastructure development. As of FY 2022-23, the size of Tamil Nadu’s construction sector is estimated to be $32 bn, contributing 11% to the state’s overall economy. Projected at the current growth rate, this sector is poised to expand to $208 bn by FY 2047-48.
The manufacturing sector, which accounts for 19% of the state’s economy, is expected to expand to US$ 374 billion (bn) by FY 2048. To cater to the expansion of the manufacturing sector in the state, there would be a requirement of 2,25,728 hectares (557786 acres) of industrial land in Tamil Nadu. As of 2021, Tamil Nadu has 19,520 ha (48235 acres) of industrial land.
Estimated Rise In Contribution From Real Estate And Construction Sector
| Sector | FY 2047 – 48 (E) |
| Office | 1.2 bn sq ft |
| Residential | 20 mn units |
| Industrial | 225727.7 hectares |
Shishir Baijal, chairman and managing director, Knight Frank India, expressed, “Tamil Nadu has consistently stood out as one of the most economically advanced states in India, making substantial contributions to the national GDP. Its economic structure is well-balanced across primary, secondary and tertiary sectors, fostering stable growth. This trend is expected to persist in the future, primarily because the state does not rely solely on a single industry for its development. Since 2009 the state has grown at an average of 11% annually. According to our projections, Tamil Nadu has the potential to reach a GSDP of US$ 2.6 trillion by 2047. To realize this potential, the state must strategically invest in industrialisation and urbanisation. Our estimates indicate that an additional capital investment of USD 111 billion from FY 2025-48 is required. This investment will facilitate the envisioned economic growth across sectors including real estate.”
Based on the evaluation by Knight Frank the anticipated growth in the key sectors of manufacturing, construction, services, agriculture, etc. assuming the continuation of the current growth trajectory, by FY 2047-48, the sectors are expected to expand.
The report stated that services and agriculture sectors are expected to expand to $1417 bn or Rs 165 tn and $56 bn or Rs 8 tn respectively by FY 2047-48.
Real estate economics of Tamil Nadu 2047: Residential and office
According to the report, Tamil Nadu currently holds the distinction of being the most urbanised state in India, with 48% of its population residing in urban areas, according to the 2011 Census. By 2047, 68% of Tamil Nadu’s population is expected to become urbanised. This translates to an estimated 35 mn households residing in urban cities, surpassing the projected average for India which is estimated to be 51% according to the India Real Estate Vision 2047, Knight Frank Research. To cater to the urban households housing requirement, cities in Tamil Nadu would require 20 mn additional houses by 2047.
As of FY 2022-23, Tamil Nadu had 1.4 mn employees registered with the EPFO (Government of India). Considering this as a proxy indicator, to reach the potential state GDP estimate of USD 2.6 tn in FY 2047-48, the formal employment in the state is estimated to rise to 19 mn. This would necessitate a requirement of 1.2 bn sqft of office space in Tamil Nadu, which includes office requirements for public, private and multinational agencies.
The expansion of economic activities will generate employment opportunities across sectors, which in turn will generate a demand for office real estate. Already, Tamil Nadu is an attractive destination for companies across categories such as Information technology, manufacturing, Global Capability Centres (GCCs), etc. to establish their workspaces in the state. Currently, the state has the most operational SEZs in the country, i.e. 50 out of 270 SEZs, which include both IT and non-IT SEZs, generating vast employment opportunities.
With the groundwork laid out and projections contemplated for the state, it is pertinent to delve into specific aspects that could accelerate the growth rate or strategically influence key vectors for the state’s advancement.
The report also highlighted the need for a state-level retail-focused policy to unlock the full economic potential. In terms of infrastructure and housing development, the report stated that while the Tamil Nadu government has made substantial investments in ongoing and upcoming projects, there are specific measures that can further enhance the existing infrastructure such as regular debottlenecking of ports and airports, focus on enhancing stormwater infrastructure implementation across tamil nadu and smart urban planning. It also mentioned that the state should endeavour to provide housing facilities for workers, akin to hostel accommodations, which can serve as a crucial factor in attracting and retaining a skilled workforce. The report also suggested strategies for improvement in the promotion of tourism.
| Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at [email protected] |
Harini is a content management professional with over 12 years of experience. She has contributed articles for various domains, including real estate, finance, health and travel insurance and e-governance. She has in-depth experience in writing well-researched articles on property trends, infrastructure, taxation, real estate projects and related topics. A Bachelor of Science with Honours in Physics, Harini prefers reading motivational books and keeping abreast of the latest developments in the real estate sector.
Related Posts
Realty hit hard by demonetisation, awaits ‘white money’ buyers.
RBI rate hike: No major impact on home sales, say experts.
Plea in HC, to nullify land acquisition for Chennai-Salem highway project.
Residential sales grew by six per cent in 2018; launches rise by 76 per cent: Report.
NGT seeks information on solid waste management and air pollution in states, UTs.
High potential for institutional rental housing, with 11.09 million vacant houses in India: Report.
