The accelerated urbanization, rapid migration and the rise in population of the aspiring youth in the major cities of the country have led to the boost in demand for the commercial realty.
India’s real estate sector is the second largest employer in the country after agriculture. The sector – which consists of 4 sub-sectors, namely, housing, hospitality, retail and commercial – is likely to grow at double digit rates during the next 10 years. Out of the four mentioned sub-sectors, commercial real estate has been attracting increased attention from investors from around the world. The segment has changed the contour of the Indian real estate space in recent years.
The accelerated urbanization, rapid migration and the rise in population of the aspiring youth in the major cities of the country have led to the boost in demand for the commercial realty. The Indian government’s initiatives such as relaxation of foreign direct investment, Make in India campaign, and introduction of GST have aided greatly in the growth of the commercial real estate. Technology too has been instrumental in transforming the sector and advanced infrastructure has set a new benchmark. From fully automated control system to personalized lighting system, and from system-enabled connectivity to smart infrastructure, technology is what has been pushing and supporting businesses today. The popularity for flexible and co-working space has increased in the recent past along with the A-grade offices in India, especially in metropolitan cities. The demand for well-facilitated commercial spaces has also increased in the tier II cities along with peripheral areas.
The future of commercial real estate seems bright: The demand for flexible and co-working spaces is likely to triple in the next three years, fuelled by start-ups as well as big corporates. In the coming time, it is expected that the footprint of e-commerce will expand in a big way. According to industry sources, commercial realty markets maintained their momentum of growth through the end of last year, as net absorption continued at a high level across major property types. Demand exceeded supply growth for office, retail and serviced apartment markets. Also, high street retail along with malls is expected to show grow in a big way in times to come.
As per Anarock data, the retail sector is projected to grow from $672 billion in 2017 to $1.3 trillion in 2020. This is definitely an attainable figure if we consider one of the clearest measures of growth – namely, the increasing focus on the retail sector by private equity (PE) players who invested close to $300 million in Indian retail in the first half of 2018.
Looking at the above factors, it can be said that the retail sector in India is going in one direction, that is upward. And this current trend will see more and more people investing in the sector in India. The industry is upbeat with the change and hopes to make the most of this trend. It can be concluded that the segment is undeniably poised to become a game changer of the real estate sector in the coming years.
(By Ravish Kapoor, Managing Director, Elan Group)