Future of Commercial Real Estate in India

The future of this commercial real estate industry will be impacted by the following factors.

Sep 13, 2021 08:09 IST India Infoline News Service

India's commercial real estate (CRE) market has become stronger in the previous years or so. Strong occupier interest followed with the ascent of real estate land developers, and the section of institutional capital have gone about as catalysts for the development in CRE. The sector has earned strong interest from different sectors including technology, banking, financial services etc. With the rise in co-working spaces and development of flexible spaces a sustainable annual growth in office absorption is seen.

Indians, from time immemorial have invested in gold and real estate. Before, the real estate investment was limited to residential peripherals. Now with the changing times the investments in the industry are expanding boundaries. The future of this commercial real estate industry will be impacted by the following factors:

Real estate investment trust (REIT)

Real estate investment trust (REIT), a famous instrument all around the world, was presented in India a couple of years prior pointed toward drawing in interest in the real estate by tapping rent-yielding resources. With the beginning of REITs, the commercial sector could observer better capital appreciation, when contrasted with the residential sector. The arrangement of REITs isn't only an incredible shelter to financial backers, however a benefit to the developers also. For developers, it could open the worth of their business assets. They can view at REITs as a vehicle to exit, at an amazingly alluring capitalisation rate, subsequently, decreasing their significant debts.

Decline in Covid cases:

With the onset of this pandemic, real estate industry is the worst hit industry among others. It saw shutting down of the offices and hence reducing the demand of the commercial real estate. Now, with the situation normalising to an extent and the government relaxing the restrictions, office spaces are opening steadily.

Recovery across the Metropolitan cities:

The real estate industry is reviving in stages. More so in the cities, inferable from their high speed and versatile way of life. Be that as it may, Tier-2 and Tier-3 urban communities are additionally expected to drive recovery and development, going ahead. Reasons being the normalising of work distribution and work from anywhere-models by enterprises and clients alike.

Rise of Co-working Spaces:

Co-working spaces will play a vital role in the future of the industry. The workforce is scattered and we have learnt to co-exist from anywhere within an enterprise during this past year. Accordingly a JLL Report predicts that by 2023 India’s co-working market is likely to cross 50 million square feet. It is further said that adaptable office space is probably going to develop by a normal of around 15-20% for each annum over the course of the following three-to-four years, albeit this trajectory won't be straight.

The commercials real estate is gaining momentum. According to JLL Report, India’s net absorption of office spaces stood at 4.39 million square feet in Q2 bringing a 32% yoy growth in major cities. Owing to the smooth conditions that lay ahead, the future of commercial real estate looks promising.

The author of this article is Ms. Asma Javed, VP-Leasing, Retail &Commercial, Supertech Ltd

The views and opinions expressed are not of IIFL Securities, indiainfoline.com

Related Story

Open Free Demat Account (Rs699)