2018 – A Turnaround Year For Indian Commercial Real Estate; Here’s How

As 2018 is almost coming to an end, now is the perfect time to look back on everything about how much you have grown and achieved goals in the entire journey of your business. In 2018, there is no doubt that commercial real estate has created unprecedented efficiencies in driving and flourishing a market among the rest of the industries. From evolving business models to adopting a new modern office structure, commercial real estate has come up with an added dimension of speed and flexibility.

Since hitting the bottom line in late 2009, CRE construction, prices, and investment have thrived and sparked the development of an economy. Also, as per some advanced experts, the commercial real estate sector has been a roller coaster ride. According to CBRE India, 2019 year is likely to be a positive year. Many office spaces properties have derived tremendous demand, whereas disruptions in the tech sector have caused a slight dip in leasing activity.

Key highlights of CRE Market 2018:

Retail Market: The real estate sector is one of the most globally recognized sectors that includes four sub sectors  like retail, hospitality, housing and commercial. In Southern India which includes primarily Hyderabad and Bangalore has achieved much growth in retail supply market, with nearly 6 million sq.ft. Retail Supply in India has emerged as a new concept of developments that improving and enhancing its alignment with global trends.

India Warehouse Boom: After the prominent changes introduced for the sake of economy, the logistics companies like Mahindra Logistics and ECom Express have tight hugged the opportunity that has shown significant growth prospects in warehousing. These are the implementation of GST in India and the rapid growth of e-commerce large scale warehousing channels across various locations such as Delhi NCR, Mumbai, Bangalore and Pune. In 2018, the logistics sector has anticipated robust this year that includes smaller cities accounting for most of the growth. In warehouse sector, India is set to witness investments close to 50,000 crores for in the creation of warehousing facilities across the country between 2020.

Commercial Sector: While residential real estate sector is struggling, commercial real estate statistics has proven to be India’s most organized sector is seeing healthy demand, especially in the office space segment According to a recent office leasing report by Cushman & WakefieldIndia, “Commercial office market witnessed a robust streak, buoyed by strengthening business confidence, and optimistic prospects in the fastest-growing economy in the world. Office leasing registered strong gains of 15% at 33 million sq.ft across the top 8 cities of India, during January-September, as compared to the corresponding period last year.

A report has been shared by Business Standard where Mr. Prasoon Chauhan, CEO of NCR-based HomeKraft, was upbeat about the outlook for the sector and said: “It is expected that the coming quarters will continue to witness more commercial supply across key markets. As a result of the stricter regulations in the real estate industry, commercial real estate will continue to see healthy leasing volumes.”

The trend of co-working spaces: Co-working spaces are thus increasingly becoming popular and are in demand among big firms and startups that are providing benefits such as flexibility, cost savings and on-demand accessibility being provided.  As per a report by KPMG, the co-working industry seen around 200 co-working spaces offering around 400 shared workspaces across different parts of India.

(Coworking analysis by KPMG)

Hence, the real estate sector holds significance in the Indian economy as it contributed about 6-7 percent to the Indian gross domestic product (GDP) in 2017 and is expected to contribute about 13 percent by 2023. By 2030, the Indian real estate industry is expected to touch USD1 trillion, becoming the third largest globally.

ORC’s (Office retail Complexes): Another emerging opportunity that has been quite successful is the growth in the development of Office Retail Complexes. The growth of ORC is a great example of the change in the mindset of developers. ORCs are planned to mix well with the office crowd and for retailers it’s a foreseeable business.

As per all the statistics of commercial real estate during the year 2018, has shown that commercial real estate has started to embrace new trends towards becoming the 21st century industry. It would be more interesting to know about how CRE sectors will remain high in the  coming years.