The commercial real estate industry in India is booming today. And rightly so! From leading mega-giants including Meta, Amazon, Apple, Netflix, Google and others, to startup ecosystems, India is currently home to a varied range of business and industries. Interestingly, we have the third-largest startup ecosystem in the world. No doubt, this growth has been the underlying thread driving the growth story of our commercial real estate industry.
The boom has fuelled the development of robust office infrastructure to meet the demands of growing economic activity in the country, and has generated large-scale employment for both- blue and white collared workforce.
In recent years, the commercial real estate market in India, has grown stronger, due to increasing buyer/occupier interest, and the rise of small and medium real estate land developers and industries. Studies by a leading market analyst, the total leasing during the year 2022 was calculated to be 50.3 million sq.ft, the highest figure recorded in any year.
Commercial real estate also poses as a lucrative investment for investors. The income potential from commercial real estate can be substantially higher than other properties, with tenants typically opting to sign multi-year leases and willing to pay higher rents than residential tenants in prime localities. Additionally, investments in commercial real estate help in the diversification of an investment portfolio.
Commercial spaces supply to hit a new high
While recession grips major economies globally, the growth and stabilisation of the Indian economy looks like a ray of shining hope. The economy expects to see a significant inflow of investments across sectors, including commercial real estate. No doubt, developers are looking to launch new commercial projects and office spaces in the leading Indian cities.
Occupiers and developers both are looking to capitalise on the demand and supply of commercial spaces, in this post pandemic era, especially before the recession significantly impacts the economy. The rising demand also signifies the reducing vacancy levels, and the return of work-from-office models.
Options galore
The democratisation of commercial real estate in the country in the last decade has also impacted the growth. Companies of all sizes, and across all sectors are now able to occupy prime office properties across locations. Earlier, only the top-tier companies could occupy Grade A offices in prime locations, and smaller companies were left out due to the high entry costs. With the proliferation of co-working spaces across the country, spaces are more democratised today and now companies of all strata work together under one roof and avail similar services. This model has also proven to be more cost-efficient for all the players involved.
In the coming years, the growing demand for co-working is likely to hit new highs and is expected to branch out significantly to cities beyond metros.
The expected launch of Real Estate Investment Trusts (REITs) and fractional ownership are also expected to aid the growth of commercial real estate in the country. These interventions are likely to allow retail investors to make low-ticket investments, and reap rich dividends. This will enable a huge inflow of retail investors to the market, who are looking to invest in commercial properties.
In a nutshell, the future looks prosperous for the Indian commercial real estate industry. Industry experts hope that the new financial year 2023-24 marks a new era of growth, leaving behind the shadows of the COVID-19 impact. As the sector readies itself to become the fastest-growing commercial real estate markets in the world, both domestic and global investors across all demographics will be looking to invest in commercial spaces in India.
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References:
https://www.financialexpress.com/money/commercial-real-estate-to-scale-new-heights-in-2023/2939348/