The debate of commercial growth surpassing the residential growth in India is never ending. People argue that commercial real estate offers greater returns vis-?-vis the residential sector. There is a symbiotic relationship between the two ? one only needs to define the right parameters to evaluate the elements of growth.
With the opening up of Indian economy in early 1990s several avenues for commercial activity spurred. There was a rush of IT companies setting up their back offices in India and the country became the IT hub of the world. Several MNCs moved their operations to India to take advantage of lower manpower and operational cost. This set the real estate on high growth trajectory.
Over the years there has been a growing perception that commercial segment, which has a huge appreciation potential and yields high returns, has surpassed the growth in residential segment. Moreover, the segment has opened up opportunities in retail segment too. Of late, ?mall-culture? has gained popularity. A large number of international brands are seeing this as an option to enter the Indian market leading to exponential growth here as well. Although one cannot doubt that the commercial development has led to residential and retail growth, it is pertinent to mention that one is not possible with out the other.
The developers also sensed this opportunity to increase their business potential. Houses, dwellings and apartments have mushroomed in Gurgaon, Bangalore and Navi Mumbai where commercial development has led to the development of over all realty. India has never lagged architecturally and this trend is being seen even today when building styles and designs of Indian construction, which are comparable to any building.
From integrated townships, to affordable housing, to theme-based malls, to plush pent houses ? the real estate sector is innovating and inventing. Another trend that has gained importance in the growth of commercial segment, is sustainable and environment-friendly construction. The inflow of the MNCs and the emerging awareness for the buildings that have a longer life, lower operating costs and a healthier environment, are being adopted by leading corporate houses. At 3C Group, we are taking such ?green structures?, a popular in commercial segment, to the residential segment as well.
Traditionally, the residential sector has attracted a multitude of investors. Investing in a residential property means smaller deposit, 100% borrowing of the purchase price depending on credit history and income, easier to let out and lower mortgage rates.
Commercial segment on the other hand demands more capital to be invested. But it also has great benefits. First, the business activity always attracts higher returns in lesser time frames. Also, the leases on commercial property are much longer ? anything from three to 20 years and they are quite often secured by a bank guarantee, which makes the investment a secure one.
In a nutshell, the symbiotic relationship between residential and commercial sectors helps both grow together. Growth in one vertical leads to growth in the other and one cannot progress without the support of other. Such a combination is ideal for a balanced real estate growth in an economy and would augur steady growth for a fast-developing country like India.