– By Sunil Sisodiya
A significant change in the commercial and residential real estate market is happening in India in 2024 owing to a combination of economic factors, changed consumer preferences, and rapid advances in technology. While the Indian economy is recovering from the aftermath of the pandemic and has advanced at an increased rate of urbanization, the growth of the real estate sector will be steady. The landscape, however, which the real estate developers, investors, and buyers need to be attentive to is undergoing significant transformations.
The office space market in India continues to witness a slow and steady revival in the commercial real estate segment. According to a report, the office leasing activity in India’s top cities is likely to reach over 45 million square feet in 2024. This marks a recovery of about 80% of pre-pandemic levels, mainly because of the IT, BFSI, and consulting sectors, which have taken the lead in office leasing. Demand now favors grade-A office spaces, where business is no longer in favor of new, well-located offices fitted with state-of-the-art facilities. The boom in hybrid working has shifted demand since, when reassessing their needs for office space, businesses have tended to add flexibility to layouts. Flexible office spaces and coworking hubs are rising on account of a diverse set of business players: from start-ups to big enterprises.
The growing demand for warehousing and logistics facilities through rapid growth in e-commerce drives the market for commercial real estate. The industry report also hints that demand for warehousing space has jumped 30% in the last year alone. Not surprisingly, more than 40% of this rise comes from e-commerce companies. Be it global or domestic players who are dealing with the need to have a robust logistics infrastructure, it is prompting investment in warehouse facilities in the key logistics hubs across the country as the adoption of e-commerce is rapid.
Demand is expected to sustain in 2024 for the mid-to-luxury segment, marked by a focus on premium residences that are connected and new localities start to take shape. The shift is now towards integrated townships that enable holistic living, with access to schools, hospitals, shopping centers, and recreational spaces. It appeals to the growing middle class and the young professionals who increasingly rate lifestyle as much as location.
This demand for affordable housing does not seem to be fading, especially with the push from the government in the form of Pradhan Mantri Awas Yojana (PMAY). It is propping up the fortunes of first-time homebuyers. Yet, affordability remains a concern as prices at key cities, mainly Delhi, Mumbai, and Bengaluru, continue to escalate, bringing even more people into the market whose affordability is questionable. Developers are now increasingly looking towards state governments to develop affordable housing projects and take advantage of subsidies.
There is a booming aspect in residential and commercial real estate markets is sustainability. Green buildings are much in demand as the growing awareness of climatic changes has compelled builders to focus on environment-friendly buildings. According to the reports of the Indian Green Building Council (IGBC), there are more than 7,500 green buildings in India, and these figures will be augmented when more builders focus on environmentally-friendly building practices, such as energy-efficient designs, rainwater harvesting systems, and waste management solutions.
The Indian real estate market for 2024, therefore, marks a period of recovery and transformation. The commercial market is healing with new office space and logistics facilities getting unprecedented demand again. While sales volumes in the residential markets are on the increase and lifestyle-oriented houses are gathering ground, affordability, regulatory hurdles, and rising costs remain a challenge. The general trend has been to grasp higher ownership in innovation, sustainability, and consumer-centric offerings for real estate developers and investors forward in a highly competitive market.
(Sunil Sisodiya is the Founder of Geetanjali Homestate.)
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