As per the survey, done by The Economist, India has emerged as the fastest growing country in terms of economy by outsmarting 40 nations. It has witnessed a huge growth of 7.7% every year till March 2018. The gains in the manufacturing segment, corporate investment, and spending of the consumers have led the development in the gross domestic product securing 6th position in the global list before France. The GDP is set to double by the end of 2029.
Commercial real estate market in India
The excellent growth in GDP has also resulted in higher demand for office spaces across the leading cities in the country. This is the reason why the commercial real estate industry is hitting the highest level using the boost in the economy in its favor. The real estate companies are also taking this opportunity to create their own landmarks in the upcoming locations. Both domestic and international companies are showing excellent growth due to the increased prospects in the industry. In fact, the availability of skilled labor and other resources has also boosted the market throughout the country.
As per the report from Colliers, the Indian commercial real estate market has witnessed a 23% increase in the rate of absorption of commercial space. The total area absorbed in the first quarter of 2018 is 11.4 million square feet approximately. The rate of absorption has been noticed highest in Bangalore (34%) followed by Delhi NCR (26%) and Pune (16%).
The market is expected to grow and reach a huge size of US$ 1 Trillion within 2030. The current market value is US$ 120 Billion. It is expected that the real estate industry will contribute to India’s GDP by 13% by the end of 2025. It is easy to imagine the humongous growth expected to hit the commercial market by the end of this decade. The upsurge in IT/ITES firms, e-commerce operations, entrepreneurial ventures, consulting services and retail outlets has contributed to the growth of the commercial real estate industry.
Development and investment in commercial real estate market
The Tier I and II cities will be the prime beneficiaries in this aspect. The growth of commercial space in these cities will contribute to the swollen market value of US$ 100 billion by the end of 2026. As per the information released by the Department of Industrial Policy and Promotion, the FDI received by the construction industry in India within a time span of 18 years starting from 2000 is US$ 24.87 Billion.
The most prominent among such investments is the announcement of Embassy Office Parks. The brand has estimated to raise INR 52 Billion via the first Real Estate Investment Trust listing. In the similar context, the housing development in the leading locations of Tier I and II cities has increased by 50% from the previous quarter. Blackstone Group took over One Indiabulls in Chennai by paying INR 900 Crore in May 2018. DLF took a step forward and bought 11.76 acres of land to expand its commercial setup in Gurgaon. The deal was closed in February 2018 and the brand paid INR 15 Billion.
The government is also taking a step forward. The Pradhan Mantri Awas Yojana in the urban segment has sanctioned 6,028,608 houses till September 2018. The governments in the leading cities are also taking care of the expanding perimeters by providing excellent civic amenities such as roads, allotted green space, etc.