The recent increase in leasing activities and rising rental prices in malls and commercial complexes in NCR are a positive sign for the commercial real estate sector in the region. This trend reflects the recovering economy and increasing demand for commercial spaces from businesses looking to expand their operations, says Amish Bhutani, Managing Director, Grandthum.
In an exclusive interview with Sanjeev Sinha, Dr Bhutani shares his views on the latest trends in the commercial real estate sector and why it is gathering considerable steam post-pandemic. Excerpts:
Can you please elaborate on the current trends in NCR’s commercial real estate sector?
The commercial real estate market in India, especially in NCR, is expected to witness a boom in 2023 with some interesting trends shaping the future of the segment. Delhi NCR is among the most favoured and will record positive growth, both in terms of rentals and returns. Retail and office spaces are expected to witness a price appreciation of 18%-20% in 2023. Strong demand is expected from industries like IT/ITES, startups, etc. following the growth momentum. Overall, with the demand-supply dynamics in place, the segment is gaining traction like never before.
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Post-pandemic the commercial segment has gathered considerable steam. What, according to you, is the main reason for this? Can you talk about your project?
In the post-pandemic period, the commercial real estate segment has experienced a massive surge in demand. One of the main reasons is the shift towards the hybrid work model, especially in the IT/ITES sector. This has led to businesses opting for more flexible and adaptable spaces. The co-working model has been a huge success in this respect.
Further, the mega-shopping that had a significant impact during the pandemic has also undertaken a major transformation. It is more evident in the new construction. The effort is to incorporate more openness in the architecture, improving their experiential quotient and offering office spaces inside the same complex.
Grandthum was launched in the year 2019-20 in Greater Noida west. The project features anchor stores, hypermarket, multiplex, fine dining, food court, service apartments and three acre water body with a yacht.
The office twin tower would be the tallest in the region and boast of a unique design.
What key factors should potential investors consider when evaluating to invest in commercial property and how does this differ from residential property investments?
When evaluating whether to invest in a commercial property, potential investors should consider the project’s location, catchment area, and the developer’s reputation. A strategic location near major transport hub, business districts, and amenities can increase the property’s rental income and value. Investors should also consider the catchment area, including the proximity to residential sectors and demographics of the surrounding regions, to gauge the potential success of their business venture. One should also consider the developer’s reputation. Reputable developers with a track record of delivering quality commercial properties are likely to attract high-quality tenants/customers and increase the property’s value.
Your comment on the recent increase in leasing activities and rising rental prices in malls and commercial complexes in NCR, and how sustainable is this trend?
The recent increase in leasing activities and rising rental prices in malls and commercial complexes in NCR are a positive sign for the commercial real estate sector in the region. This trend reflects the recovering economy and increasing demand for commercial spaces from businesses looking to expand their operations. This segment had suffered a significant setback during the pandemic. With people back in the malls, recovery is welcome. However, commercial realty has also adopted a cautious approach, seen in its desire to explore multiple formats and provide value-for-money propositions for developers, investors, tenants and shoppers. As far as the sustainability of this trend is concerned, we foresee no short or long-term bottlenecks.
With the growing popularity of mixed-use developments that combine shopping, leisure, and office spaces, how are commercial real estate developers creating hybrid commercial spaces that cater to multiple needs and maximise space utilisation? What are these hybrid spaces’ design features and amenities, and how are they being received by tenants and investors?
Mixed-use developments combining shopping, leisure, and office spaces have become massively popular in the last few years. The idea is to create hybrid commercial spaces that cater to multiple needs, maximise space utilisation, and are relatively leaner in composition. These spaces integrate various elements of commercial real estate, such as shopping, leisure, and office spaces, into one cohesive structure.
The new reality forced the developers to redefine traditional architecture. As it included the addition of office spaces to shopping areas, it meant that a structure could grow vertically. The presence of office staff also ensured a steady stream of customers on each day of the week. Overall, the emergence of medium-format developments and the addition of office spaces have significantly transformed the commercial real estate industry, allowing for more floor space and a range of amenities to attract tenants and investors.
These hybrid commercial spaces are being well-received by tenants and investors alike due to the convenience and variety of amenities they offer, providing them with a steady stream of shoppers. As a result, these mixed-use developments are emerging as a popular investment opportunity, attracting a wide range of tenants and increasing demand.