The real estate sector in India is the second largest employment generator after agriculture. One of the most globally recognised sectors, the realty sector in India is comprised of four sub-sectors- housing, retail, hospitality, and commercial.
Out of all the four sub-sectors mentioned above, the commercial real estate in India has been on the rise and the demand for commercial spaces in India is pushing the yields higher than any other major businesses in the cities.
Why commercial real estate is picking up fast
The Commercial real estate in India was impacted hugely by the rapid urbanization, rapid infrastructural expansion and the massive increase in youth population in the key cities of the country.
The Indian government’s focus on improving infrastructure, improving ease of doing business, regular flow of capital and introducing new regulations such as relaxation of foreign direct investment, the introduction of GST and also the IBC (Insolvency and Bankruptcy Code) has made the commercial real estate lucrative for investments.
The sector has undergone a vast change with such reforms and real estate experts believe that these initiatives taken by the government were much needed and have cleaned up the entire sector and brings transparency, quality construction, accountability, and financial discipline amongst major players. Many global investors have been pumping in large scale investments into the commercial real estate sector in recent years.
The rising popularity of co-working spaces
The rising popularity for flexible and co-working space has been on an unprecedented growth over the past decade along with the A-grade offices in India. Commercial office spaces were previously concentrated only in the seven key cities of India: Delhi-NCR, Mumbai, Pune, Kolkata, Hyderabad, Bengaluru and Chennai. But now with rising property prices and availability of good office spaces in smaller cities, well-facilitated commercial spaces began expanding in tier II cities as well. It is expected that office absorption will keep increasing all throughout 2019 and real estate experts believe the demand for office spaces is likely to touch the record levels of 37 million sq. ft. in 2020.
Role of technology
Technological advancements too help in transforming the sector. Drones, blockchain and data analysis has set a new benchmark and has helped in building communication with stakeholders. As a result, faster decision making and smarter concepts like fully automated control system, smart infrastructure system-enabled connectivity have been pushing the sector in the past few years.
Megaprojects will boost the real estate sector
There are several mega projects which are in the pipeline, will give a boost to the commercial real estate sector this year. Realty firm Embassy Group has signed a long-term lease deal with JP Morgan for commercial office space at Embassy TechVillage project in Bengaluru and the 2 million sq. ft. commercial realty venture planned by The Embassy Taurus World Technology Centre in Trivandrum will act as a key factor in the commercial real estate growth.
According to experts, the commercial real estate market in India is witnessing a good growth and several major realty players are coming up with new projects in this segment since they are now backed by global investment companies. These firms are aggressively investing to make their presence felt in the commercial real estate sector in India and also to take advantage of the expected demand for leases and steady rental growth in the coming years.
The future of the commercial real estate
Looking at the above factors, we can say that commercial real estate market is making a strong comeback after being in dumps for past few years, having mega projects in the pipeline and showing the signs of growth.