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The Commercial real estate market in India is segmented by type (Offices, Retail, Industrial, Logistics, Multi-family, and Hospitality), and key cities (Mumbai, Delhi NCR, Bangalore, Hyderabad, Chennai, and Pune).
The real estate sector in India is expected to contribute nearly 13 percent of the country’s GDP by 2025. In the commercial real estate market, retail, and hospitality are also growing significantly, providing the much-needed infrastructure for India's growing needs. The commercial real estate sector in India is predicted to be accelerated by large scale investments by institutional investors. in the upcoming years.
The commercial real estate sector in the country has been greatly 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 have now hailed the move due to the resulting transparency and competence of the sector which has attracted increasing amounts of foreign direct investments (FDI) in the commercial estate.
Demand for commercial property is being driven by the country’s economic growth. Government initiatives, urban development policies and programs (Smart City, AMRUT) are expected to contribute to the demand for real estate infrastructure.
Sectors such as IT and ITeS, retail, consulting and e-commerce have also registered high demand for office space in recent times. The commercial office stock in India is expected to cross 700 million square feet by 2019. The gross office absorption in top Indian cities has also increased by nearly 25 percent year-on-year to 36.4 million square feet in 2018.
With respect to the commercial real estate segment, REITs are also expected to increase demand in sectors such as manufacturing and IT-related institutions, due to better pricing and growth opportunities. The move is expected to fuel further growth and development in the overall real estate market in India, as they help developers reduce the stress of elevated capital costs involved in funding projects.
The growth of co-working spaces has also been increasing rapidly in the country, with the segment accounting for around 13 percent of the total office transactions in 2019 from 5 percent in 2017. Small start-ups as well as large IT players are finding this an attractive model. Going by the acceptance of this model, demand for shared spaces is also likely to gather further momentum in the upcoming years.
This report aims to provide a detailed analysis of the Indian commercial real estate market. It focuses on the market dynamics, technological trends, insights and government initiatives taken in the commercial real estate sector. Also, it analyses the key players present in the market and the competitive landscape in the Indian commercial real estate market.
|By Key Cities|
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The office market in India is witnessing a steady increase since the second quarter of 2017. Cities like Bangalore, Hyderabad, and Mumbai have witnessed growth rates of nearly 2-3% for the demand for office spaces.
The ever-expanding service sector has increased the demand for office spaces which is one of the biggest drivers of the commercial real estate sector in India. The total office transaction in the first half of 2019 was a strong 28 million sq ft and this office space demand is being led by the IT/ITES sector. The IT sector in India is moving towards high-value segments like artificial intelligence, data analytics, and product development, which is further intensifying the demand. There is a large office supply lined up for 2020 also which indicates that the rental growth may moderate in 2020.
In the second half of 2019, Bengaluru witnessed highest area of about 0.8 million square meters of new office space completions. Whereas, Ahmedabad and Pune recorded completions of about 0.2 million square meters in that year.
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Currently, retail accounts for a small portion of the Indian real estate market. Organized retailers are few and the organized retail space is mostly developed by residential/office space developers. However, the retail space is witnessing strong growth off-late with the organized retail segment in India expected to grow at a rate of 25 to 30% over the next five fiscal years.
The growth of organized retail is expected to be driven by demographic factors, increasing disposable incomes, changes in shopping habits, the entry of international retailers into the market and the growing number of retail malls. The major organized retailers in India currently include Tata-Trent, Pantaloon, Shopper’s Stop and the RPG Group.
The total newly completed malls in 2018 stood at 7.8 million square feet which are expected to see increase further in the upcoming years. The largest contribution to this will came from southern cities of Hyderabad and Delhi which witnessed a significant influx of mall supply.
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Indian commercial real estate has retained a strong position in the market and is becoming a preferred destination for global institutional investors driven by robust office space take-up, falling vacancy levels, and rising rentals. The commercial real estate market in India is reaching a moderate consolidation phase as the number of developers offering commercial properties is decreasing and the small-scale developers are also merging with the big real estate developers or exiting the market. Some of the major commercial real estate players in the country include DLF, Godrej Properties, Housing Development and Infrastructure Ltd (HDIL) and Oberoi Realty.
1.1 Study Assumptions
1.2 Scope of the Study
2. RESEARCH METHODOLOGY
3. EXECUTIVE SUMMARY
4. MARKET DYNAMICS
4.1 Current Economic Scenario and Consumer Sentiment
4.2 Commercial Real Estate Buying Trends - Socioeconomic and Demogpaphic Insights
4.3 Government Initatives, Regulatory Aspects for Commercial Real Estate Sector
4.4 Insights on Existing and Upcoming Projects
4.5 Insights on interest rate regime for general economy, and real estate lending
4.6 Insights on rental yields in commercial real estate segment
4.7 Insights on capital market penetration and REIT presence in commercial real estate
4.8 Insights on public-private partnerships in commercial real estate
4.9 Insights on real estate tech and startups active in real estate segment (broking, social media, facility management, property management)
5. MARKET SEGMENTATION
5.1 BY Type
5.2 By Key Cities
5.2.2 Delhi NCR
6. COMPETITIVE LANDSCAPE
6.1 Market Concentration
6.2 Company Profiles
188.8.131.52 DLF Ltd
184.108.40.206 Godrej Properties Ltd
220.127.116.11 Housing Development and Infrastructure Ltd (HDIL)
18.104.22.168 Oberoi Realty
22.214.171.124 IndiaBulls Real Estate
6.2.2 Other Companies(real estate agencies, startups, associations, etc.)
126.96.36.199 99 Acres
188.8.131.52 Sulekha Properties
184.108.40.206 RE/MAX India
220.127.116.11 JLL India
18.104.22.168 Anarock Property Consultants
7. FUTURE OF THE MARKET AND ANALYST RECOMMENDATIONS
8. INVESTMENT ANALYSIS
8.1 Direct Investments
8.2 Indirect Investments
10. ABOUT US
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