Impact of urbanisation and rising middle class on investment trends

India is undergoing a gradual but notable transformation. Urbanisation is rising, and the middle class is expanding, reshaping how people live, work, and consume. These demographic and economic shifts may influence investment thinking by altering everything from infrastructure demand to consumer spending patterns.

Table of contents

• Urbanisation and its economic significance
• Rising middle class: Spending, saving, digital Habits
• Sectoral ripple effects

Urbanisation and its economic significance

Urban population in India has been rising for decades—moving from around 11% in 1901 to over 34% in 2017—and is expected to cross approximately 40% by 20301. This migration is expected to create demand for housing, transportation, utilities, and digital infrastructure. The scale may be large: by 2036, India may require nearly US $840 billion in urban infrastructure investments, averaging about 1.2% of GDP annually2.

For investors, this points to potential long-term growth opportunities in real estate, clean energy, urban transit, and digital connectivity.

Also Read: Megatrend Investing Via Consumption Fund

Rising middle class: Spending, saving, digital Habits

The middle class is also expanding rapidly. Estimates place its share at around 31% of India’s population in 2021, with projections suggesting it could reach 47% by 2031 and ~61% by 20473. This growth is associated with rising disposable incomes, evolving consumption patterns, and increasing digital adoption.

Consumer spending trends reflect this shift. India’s household consumption has doubled over the past decade, and the country is projected to become the world’s third-largest consumer market by 20304. Investors may monitor areas such as retail, consumer goods, healthcare, and digital services, where evolving consumption and lifestyle trends may create potential opportunities.

Sectoral ripple effects

These twin forces—urbanisation and a growing middle class—are reshaping sector dynamics:

• Housing and urban development: The real estate market in India is valued around US $400 billion in 2025 and is projected to grow to over US $1 trillion by 20305.
• Transport and urban mobility: Urbanisation is increasing the need for metro systems, public transit, and electric mobility solutions.
• Digital infrastructure: Urban expansion and rising digital usage are positioning India as a growing data centre hub in the Asia-Pacific region. According to industry estimates cited by CBRE, India’s data-centre market may grow from US$4.35 billion (2021) to ~US$10.09 billion by 2027 (CAGR ~15%)6.
• Healthcare and consumption: An expanding middle class may drive demand for healthcare services, private hospitals, and higher-quality consumer goods.

Also Read: From AI To Climate Change: What Megatrends Mean For Your Portfolio

Summing up

India’s investment landscape is evolving with its cities and households. Urbanisation is driving demand across housing, mobility, infrastructure, and digital services. At the same time, a growing middle class is shifting toward higher consumption, healthcare, and digital convenience.

For investors, attention to how people live, move, and spend—rather than short-term market swings—may reveal areas of potential opportunity. Aligning with these structural shifts, also known as Megatrends, could be one way to consider long-term positioning.

Sources
1&2, World Bank – ‘Gearing up for India’s Rapid Urban Transformation’ (2024).
3. PRICE – The Rise of India’s Middle Class (Executive Summary).

4. World Economic Forum & Bain – Future of Consumption in Fast-Growth Consumer Markets: India (2019).
5. CII & Cushman & Wakefield – Indian Real Estate 2030: Technology, Sustainability and Growth (2025).
6. CBRE – India’s Booming Data Centre Market: A Powerhouse for the Digital Age.

Note: References to any industry/sector are provided for illustrative purposes only. This should not be construed as a research report or a recommendation to buy or sell any security or sector.

At Bajaj Finserv Asset Management Ltd, we aim to harness the power of megatrends by offering investors access to themes shaping the world’s future — from clean energy to technology, innovation, demographic shifts and more. Many of our funds follow a megatrends investment approach to help you participate in these long-term shifts, with a focus on growth potential and diversification. Build your future-focussed portfolio with Bajaj Finserv AMC.

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