Commercial Real Estate Market in India - Growth, Trends, COVID-19 Impact, and Forecast (2022 - 2027)

The Commercial Real Estate Market in India is Segmented by Type (Offices, Retail, Industrial and Logistics, and Hospitality) and Key Cities (Bengaluru, Hyderabad, Mumbai, Delhi NCR, Pune, Chennai, Kolkata, Ahmedabad, and Rest of India). The report offers market size and forecast for the Commercial Real Estate Market in India in value (USD Billion) for all above segments.

Market Snapshot

Commercial Real Estate Market Size In India
Study Period: 2018-2027
Base Year: 2021
CAGR: 13.85 %
Commercial Real Estate Market Key Players In India

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Market Overview

The commercial real estate market in India is expected to grow at a CAGR of approximately 13% during forecast period (2022-2027).

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. However, the recovery of the office leasing market was projected to begin in 2021.

By 2022, absorption of Grade-A office space is estimated to exceed 700 million sq. ft, with Delhi-NCR accounting for the majority of this demand. In the first half of 2020, Mumbai saw a 36% increase in demand from consulting firms in terms of total office space leasing.

At 5.7 million sq. ft, the manufacturing sector accounted for 24% of office space leasing in 2020. Between Pune, Chennai, and Delhi NCR, SMEs and electronic component makers rented the most, followed by auto sector leasing in Chennai, Ahmedabad, and Pune. The 3PL, e-commerce, and retail categories accounted for 34%, 26%, and 9% of all office space rentals, respectively.

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 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 are moving to the commercial real estate sector due to the transparency and competence of the sector, 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 demand for real estate infrastructure.

Scope of the Report

Commercial property is real estate that is used for commercial activities like offices of companies, large residential properties that are rented out, etc. The Commercial Real Estate Market in India is Segmented by Type (Offices, Retail, Industrial and Logistics, and Hospitality) and Key Cities (Bengaluru, Hyderabad, Mumbai, Delhi NCR, Pune, Chennai, Kolkata, Ahmedabad, and Rest of India). The report offers market size and forecast for the Commercial Real Estate Market in India in value (USD Billion) for all above segments.

By Major Cities
Bengaluru
Hyderabad
Mumbai
Delhi NCR
Pune
Chennai
Kolkata
Ahmedabad
Rest of India
By Type
Offices
Retail
Industrial and Logistics
Hospitality

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Key Market Trends

Office Markets to Witness Increased Growth in the Country

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 the number of 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.

Between January and June 2021, significant cities in India saw an increase in new office space supply. Bengaluru saw a two times increase in new office space supply in the first half of 2021, from 3.35 million sq. ft in 2020 to 9.53 million sq. ft during January-June 2021.

From 3.88 million sq. ft to 5.23 million sq. ft, Delhi NCR grew by 35% Y-o-Y. The new office supply in Hyderabad increased by 3% Y-o-Y, to 3.84 million sq. ft, up from 3.73 million sq. ft. From 2.29 million sq. ft. to 4.73 million sq. ft., Mumbai's office supply more than doubled. Between January and June 2020, Pune had a 2x increase in space, growing to 1.28 million sq. ft from 0.6 million sq. ft.

Commercial Real Estate Market Share In India

Retail Space Is Likely to Witness Strong Growth

The second wave of the pandemic hit the market in Q2 2021 but despite its severity being much more than first wave, transaction volumes in Q2 2021 have grown 39% YoY compared to Q2 2020. Five out of eight markets have shown an improvement in transaction volumes in Q2 2021 compared to Q2 2020. An improved understanding of the pandemic and increasing availability of vaccines helped keep the needle moving during the quarter. However, in terms of half-yearly numbers, transaction volumes have fallen 29% YoY to 1.14 mn sq m (12.3 mn sq ft) in H1 2021.

The construction situation was better managed during the second wave compared to the first wave of pandemic. However, the 1.39 mn sq m (15.1 mn sq ft) of office space that attained completion during H1 2021 was 18% lower than that in H1 2020 as developers focused on leasing existing projects. The vacancy rate has increased to 16.6% in H1 2021 compared to 14.2% previously. Average transacted rent trended lower for seven of the eight markets during H1 2021 with rents in Bengaluru, Pune and Mumbai falling by 14%, 11% and 9% YoY respectively.

Commercial Real Estate Market Analysis In India

Competitive Landscape

The Indian commercial real estate market is strong and highly competitive. Indian commercial real estate is becoming a preferred destination for global institutional investors, driven by robust office space take-up, declining vacancy levels, and rising rentals. The Indian commercial real estate market is reaching a moderate 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. Some of the country's major commercial real estate players include DLF, Godrej Properties, Housing Development and Infrastructure Ltd (HDIL), and Oberoi Realty.

Recent Developments

December 2021: The construction arm of Larsen & Toubro secured a significant order for its Buildings & Factories business to construct one of the largest residential townships in Bengaluru. The project involves the construction of 6,768 apartments spread across 39 towers with two basements + ground + 27 to 31 floors. The development entails 149 villas, along with clubhouses, swimming pools, and other amenity structures. The total built-up area will be 13.43 million sq. ft. The project is scheduled to be completed in 42 months. The scope of the work includes the design and construction of the entire civil structure, including waterproofing, masonry, plastering, and electrical conducting.

December 2021: NBCC (India) secured work contracts worth INR 392.39 crore (USD 50 Million). The company has been awarded the construction of a drug warehouse at Itawa, Lucknow, Hardoi, Unnav, and Kannoj by the National Health Mission (NHM), Lucknow. The value of the contract is INR 46.04 crore (USD 5.9 Million). The company has bagged the contract for providing additional beds, including six-bed and 20-bed pre-fab unit structures under ESRP-II in Bareli Mandal by NHM, for a value of INR 27.87 crore (USD 3.6 Million). It also secured a contract to construct an interdisciplinary academic, administrative, and research building for the Institution of Eminence at Maurice Nagar (G+six with two basements), with a built-up area of about 1,800 sq. m., for the University of Delhi. The value of the contract is INR 144 crore (USD 18.7 Million). NBCC also bagged a contract to construct an academic building for the technological institution, faculty of technology, at the north campus (G + percent with two basements), with a built-up area of about 2,000 sq, m., for the University of Delhi. The value of the contract is INR 174.49 crore (USD 22.5 Million).

Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Assumptions

    2. 1.2 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET INSIGHTS

    1. 4.1 Market Overview

    2. 4.2 Commercial Real Estate Buying Trends - Socioeconomic and Demographic Insights

    3. 4.3 Government Initiatives and Regulatory Aspects for Commercial Real Estate Sector

    4. 4.4 Insights on Existing and Upcoming Projects

    5. 4.5 Insights on Interest Rate Regime for General Economy and Real Estate Lending

    6. 4.6 Insights on Rental Yields in the Commercial Real Estate Segment

    7. 4.7 Insights on Capital Market Penetration and REIT Presence in Commercial Real Estate

    8. 4.8 Insights on Public-Private Partnerships in Commercial Real Estate

    9. 4.9 Insights on Real Estate Tech and Startups Active in the Real Estate Segment (Broking, Social Media, Facility Management, Property Management)

    10. 4.10 Impact of COVID-19 on the Market

  5. 5. MARKET DYNAMICS

    1. 5.1 Market Drivers

    2. 5.2 Market Restraints

    3. 5.3 Market Opportunities

    4. 5.4 Porters Five Forces Analysis

      1. 5.4.1 Bargaining Power of Suppliers

      2. 5.4.2 Bargaining Power of Consumers / Buyers

      3. 5.4.3 Threat of New Entrants

      4. 5.4.4 Threat of Substitute Products

      5. 5.4.5 Intensity of Competitive Rivalry

  6. 6. MARKET SEGMENTATION (Market Size by Value)

    1. 6.1 By Major Cities

      1. 6.1.1 Bengaluru

      2. 6.1.2 Hyderabad

      3. 6.1.3 Mumbai

      4. 6.1.4 Delhi NCR

      5. 6.1.5 Pune

      6. 6.1.6 Chennai

      7. 6.1.7 Kolkata

      8. 6.1.8 Ahmedabad

      9. 6.1.9 Rest of India

    2. 6.2 By Type

      1. 6.2.1 Offices

      2. 6.2.2 Retail

      3. 6.2.3 Industrial and Logistics

      4. 6.2.4 Hospitality

  7. 7. COMPETITIVE LANDSCAPE

    1. 7.1 Market Concentration

    2. 7.2 Company Profiles

      1. 7.2.1 Developers

        1. 7.2.1.1 DLF Ltd

        2. 7.2.1.2 Godrej Properties Ltd

        3. 7.2.1.3 Housing Development and Infrastructure Ltd (HDIL)

        4. 7.2.1.4 Oberoi Realty

        5. 7.2.1.5 IndiaBulls Real Estate

        6. 7.2.1.6 Prestige Estate Projects Ltd

        7. 7.2.1.7 Supertech Limited

        8. 7.2.1.8 HDIL Ltd

        9. 7.2.1.9 Brigade Group

        10. 7.2.1.10 Unitech Real Estate Pvt Ltd

      2. 7.2.2 Other Companies (Real Estate Agencies, Startups, Associations, Etc.)

        1. 7.2.2.1 MagicBricks

        2. 7.2.2.2 99 Acres

        3. 7.2.2.3 Sulekha Properties

        4. 7.2.2.4 RE/MAX India

        5. 7.2.2.5 JLL India

        6. 7.2.2.6 Anarock Property Consultants

        7. 7.2.2.7 Awfis

    3. *List Not Exhaustive
  8. 8. FUTURE OF THE MARKET AND ANALYST RECOMMENDATIONS

  9. 9. DISCLAIMER

**Subject to Availability

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Frequently Asked Questions

The Commercial Real Estate Market market is studied from 2018 - 2027.

The Commercial Real Estate Market is growing at a CAGR of 13.85% over the next 5 years.

DLF Ltd, Godrej Properties Ltd, Housing Development and Infrastructure Ltd (HDIL), Oberoi Realty, IndiaBulls Real Estate are the major companies operating in Commercial Real Estate Market.

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