India Commercial Real Estate Market Size

India Commercial Real Estate Market Analysis

The India Commercial Real Estate Market size is estimated at USD 40.71 billion in 2024, and is expected to reach USD 106.05 billion by 2029, growing at a CAGR of 21.10% during the forecast period (2024-2029).

• The COVID-19 pandemic resulted in the work-from-home (WFH) culture, which had a short-term impact on new space obligations. In 2022 New office space in the seven cities ((Mumbai, Delhi NCR, Bengaluru, Hyderabad, Chennai, Kolkata, and Pune) in India was 38.25 million sq. ft that year, down by 30% from the previous year. In the first quarter of 2023 (January-March), net office absorption in the top six cities stood at 8.3 million sq. ft.
• 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 that year. As of the second quarter of that year, other regions of Gurugram had the highest vacancy rate combined at 35.9%. In comparison, the Cybercity of Gurugram in India had a vacancy rate of 5.4%, 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 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, and data analytics.