The India Commercial Real Estate Market size is estimated at USD 67.08 billion in 2023, and is expected to reach USD 223.25 billion by 2028, growing at a CAGR of 27.19% during the forecast period (2023-2028).
· The COVID-19 pandemic resulted in the work-from-home (WFH) culture, which had a short-term impact on new space obligations. New office space in the seven cities in India was 36.34 million sq. ft in 2020, down by 30% from the previous year. Despite setbacks, the recovery period for the industry looks positive, with the reopening of offices and an increase in leasing activity.
· According to industry experts, from September 2022, grade A offices in Indian cities such as Bengaluru and Mumbai had an average cap rate of 8.25 in core locations. In comparison, the cap rate of grade A offices in Taipei was 2.35 on average in 2022. As of the second quarter of 2022, other regions of Gurugram had the highest vacancy rate combined at 35.9 percent. In comparison, the Cybercity of Gurugram in India had a vacancy rate of 5.4 percent, the lowest amongst other submarkets of the Delhi NCR region, according to industry experts.
· Retail and hospitality are also growing significantly in the commercial real estate market, providing the much-needed infrastructure for India’s growing needs. India’s commercial real estate sector is projected to be accelerated by large-scale investments by institutional investors in the coming years. The retail real estate sector in the country has been dramatically boosted by government initiatives, such as Make in India, and other reforms in the realty sector, such as the introduction of the Real Estate Regulatory Authority (RERA) and GST.
· Despite their initial troubles, developers and buyers are moving to the commercial real estate sector due to the transparency and competence of the industry, which has attracted increasing amounts of foreign direct investments (FDI) in the commercial estate. The country’s economic growth is driving demand for commercial property. Government initiatives and urban development policies and programs (Smart City, AMRUT) are expected to contribute to the need for real estate infrastructure.
· The demand for office space in the nation is driven by reasons such as flexibility, comfort, and convenience. Most businesses in various industries, including IT, manufacturing, BFSI, startups, and even boutique businesses, are looking for office space to accommodate their employees. Additionally, many companies intend to expand to new areas, open remote or satellite offices, or both, adding to the demand for these spaces.
· Technology development has elevated commercial real estate to a new level. It is now feasible to offer virtual property tours, improve customer relationship management, conduct online transactions, and improve communication between the seller and the buyer thanks to cutting-edge technology like artificial intelligence, virtual reality, data analytics, and others.
India Commercial Real Estate
Industry Segmentation
Commercial real estate (CRE) is only used for business-related activities or to offer a workspace, as opposed to being utilized as a residence, which would fall under the residential real estate category. Most frequently, renters lease commercial real estate to conduct businesses that generate cash.
The India Commercial Real Estate Market is Segmented by Type (Offices, Retail, Industrial and Logistics, and Hospitality) and By Key Cities (Mumbai, Bangalore, Delhi, Hyderabad, and Other Cities). The report offers market size and forecast for the Commercial Real Estate Market in India in value (USD Billion) for all the above segments.
A complete background analysis of the India Commercial Real Estate Market, including the assessment of the economy and contribution of sectors in the economy, market overview, market size estimation for key segments, and emerging trends in the market segments, market dynamics, and geographical trends, and COVID-19 impact is included in the report.
India Commercial Real Estate Market Trends
This section covers the major market trends shaping the India Commercial Real Estate Market according
to our research experts:
Office Space Demand To Propel The Market In India
Investor confidence in a swift economic recovery is being boosted by the rapid pace of the vaccine campaign, which is backed by a decrease in COVID-19 cases. With the gradual unlocking of economic activities and employers’ shift in office premises for increased demand for co-working space, developers are optimistic about a healthy rebound in office leasing activity.
During the financial year 2022, Bengaluru recorded the highest influx of new office supply accounting for 28 percent of the total new office supply across seven major cities of India. Hyderabad contributed 23 percent of the total share and stood in the second position. In the first quarter of 2022, 31 percent of the total office leasing share in India was held by Bengaluru. Pune and Hyderabad followed with 17 percent respectively, according to Colliers International.
According to research published by real estate consultant Colliers India, office space supply
increased 49% to 32.8 million square feet during the January–September 2022 period across six cities due to the completion of numerous commercial developments to fulfill the increasing demand. According to Colliers India, the same amount was 22 million square feet in the same period across six cities Bengaluru, Chennai, Delhi-NCR, Hyderabad, Pune, and Mumbai.
The new office supply, which was 8.1 million square feet from January through September 2022, decreased by 1% from the year before. From 2.1 million square feet in fresh supply, India’s financial hub saw a 16% decrease to 1.8 million square feet. Chennai experienced the most significant increase in the number of new offices,
which went from 0.9 million square feet to 4.2 million square feet. Delhi-NCR
had a 133% increase in floor space from 2.7 million square feet to 6.3 million
square feet, while a 56% increase in new office space supply increased from 5.1
million square feet to 7.9 million square feet.
The Demand For Flexible And
Co-Working Spaces Is On The Rise
According to industry
experts, as of March 2022, Bengaluru recorded the most operational flex space
centers among all tier-1 cities in India. Mumbai followed with 343 flex space
centers. As of March 2022, Bengaluru recorded around 25 thousand leased flex
seats, the highest among all tier-1 cities in India. Pune followed with more
than 16 thousand leased flex seats.
In the financial year
2022, 147 flex seat transactions were concluded in the Delhi NCR region, the
highest among other tier-1 cities of India. Mumbai followed with 133 flex seat
transactions during the same year. In the financial year 2022, the information
technology and new tech sector contributed 30 percent to the flex seat take-up,
the highest among all other sectors in India. Start-ups also opted for flex and
co-working spaces and took 18 percent of the total share. The demand for
flexible and co-working spaces is on the rise in the Indian office real estate
market.
Once dominated by information technology, office spaces are being increasingly leased by other
sectors such as BFSI (banking, financial services, and insurance), engineering,
manufacturing, e-commerce, and co-working sectors. COVID-19-induced changes include
the introduction of a hybrid work model in workplaces across the country.
Smaller homes and larger family sizes propelled the growth of flex and co-working spaces in the country. IT-ITes, BFSI, e-commerce, and professional
services employees emerged as the key occupiers of these flexible working
spaces. Start-ups and small and medium enterprises (SMEs) focusing on tapping
the talent of the mobile workforce also resulted in the demand for flex seats.
India Commercial Real Estate
Industry Overview
The Indian commercial real
estate market is partially fragmented and highly competitive. Indian retail
real estate is becoming a preferred destination for global institutional
investors, driven by robust office space take-up, declining vacancy levels, and
rising rentals. Some of the country’s major commercial real estate players
include DLF, Godrej Properties, Housing Development and Infrastructure Ltd
(HDIL), and Oberoi Realty. The Indian retail real estate market is reaching an
intermediate consolidation phase as the number of developers offering
commercial properties is decreasing. The small-scale developers are also
merging with the big real estate developers or exiting the market.
India Commercial Real Estate
Market Leaders
1. DLF Ltd
2. Godrej Properties Ltd
3. Housing Development and Infrastructure Ltd (HDIL)
4. Oberoi Realty
5. IndiaBulls Real Estate
*Disclaimer: Major Players
sorted in no particular order
India Commercial Real Estate
Market News
November 2022: Tiger Global sponsored A
cooperation between the occupancy detection platform Butlr and the data and
technology company Propstack that will enable occupancy sensing across
commercial real estate projects in India. To make data-driven real estate
decisions and enhance the workplace experience, Propstack’s Indian clients will
be able to obtain and use occupancy and space usage data offered by Butlr,
thanks to this agreement.
April 2022: The Canada Pension Plan
Investment Board (“CPP Investments”) and TATA Realty and
Infrastructure Limited established a joint venture to build and own commercial
office space in India. Aiming to handle assets worth more than INR 50 billion
(USD 604.18 Million), the joint venture will focus on stabilizing and
developing assets. With a pledge of INR 26 billion from CPP Investments, the
joint venture’s total aggregate equity value will be INR 53 billion (USD 640.43
million).
SOURCE: mordorintelligence.com
The India Commercial Real Estate Market is Segmented by Type (Offices, Retail,
Industrial and Logistics, and Hospitality) and By Key Cities (Mumbai,
Bangalore, Delhi, Hyderabad, and Other Cities). The report offers market size
and forecast for the Commercial Real Estate Market in India in value (USD
Billion) for all the above segments.
The Indian commercial real estate market is partially fragmented and highly
competitive. Indian retail real estate is becoming a preferred destination for
global institutional investors, driven by robust office space take-up,
declining vacancy levels, and rising rentals. Some of the country’s major
commercial real estate players include DLF, Godrej Properties, Housing
Development and Infrastructure Ltd (HDIL), and Oberoi Realty