By Sanchit Bhutani
The overall narrative that real estate is a capital-intensive investment, moreover, in the overarching Indian economic scenario of tight inflation, has been dispelled by commercial real estate ventures and projects. While the statement could be true for the residential housing sector, it is quite frankly a misnomer for commercial real estate. Commercial real estate has become a bankable and reliable investment channel, providing opportunities for practical investment modules. High-end, mid-sized, and small-sized investors can invest in commercial projects as per their financial capabilities and bandwidths.
Indian economy, from a macro level perspective, and the real estate sector, from a micro level, have gone through rough patches due to the events that unfolded after the pandemic. Circumventing the challenges, commercial real estate has witnessed a spectacular uptick in demand, interest, and investments, showing its resilience and market stronghold. Commercial projects, offering a mix of stylised office and retail spaces, are typically in demand nowadays. These types of projects are providing multiple investment modules for diverse group of investors, retail brands, and corporate companies. The confluence of diverse, varied, large-scale, and optimum-scale space offerings are able to attract heterogeneous brands and patrons to these projects, leading to a promising scale-up in footfalls and customer engagement.
As highlighted by many industry reports, retail space leasing has witnessed a consistent accentuation from quarter to quarter. Buoyant sentiments are chalked out in the case of retail space lease deals as a recent CBRE report, titled, CBRE report – ‘2023 India Market Outlook’ outlined the projection of retail space leasings reaching the mark of 5.5 – 6 million sq ft in 2023, which would be grossing the previous year’s figure except for the 2019 peak which stood at 6.8 million sq ft.
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Commercial real estate has established itself as the best-performing asset. One of the key findings of the Anarock’s report, FLUX, was that the office space market of Delhi-NCR received private equity inflows of 40%. The waning effects of the pandemic have trebled up the office space markets, with well-established companies and incipient start-ups showing massive interest in expansion plans, lateral hirings, and the desire to open offices in new-developing commercial belts, especially in Delhi-NCR. While the global scenario is dichotomous compared to the Indian case, where workforce downsizing, lay-off, and lean phase of the start-up ecosystem make front-page news, the Indian economy, mainly commercial real estate, is heading off to greener pastures with the demand for office spaces reigning supreme.
Even though retail inflation had coerced commercial real estate developers to surge the prices of rental stores and spaces, it did not create a corollary impact on the demand for retail rental spaces. The prices, nevertheless, saw a brief uptick, but they did not become too pricey or costly for investors to grow second thoughts about investing in them. The expansionary psyche of retail brands was solidified, and they invested in newly announced commercial projects to extract the benefits of an expanding target customer base.
The renaissance in demand for commercial real estate brought it back into the leagues. There is no stoppage to its growth story based on its favourable and diverse investment models catering to different requirements of multiple investors.
(The author is Managing Director, Grandthum. Views are personal.)
