Commercial real estate in India is heading towards more vibrant future, presenting unprecedented opportunities for both institutional and retail investors.
Transparency and accountability have provided the much needed kick to the real estate sector in the past few quarters while it has been grappling with both macro and business environment related issues impacting the growth and development. Though there are issues slowing down the pace of recovery, the overall scenario looks inclined towards positive growth.
The real estate sector has been witnessing sweeping changes owing to the government bringing in sector-specific reforms such as Real Estate Regulatory Act (RERA), Benami Transactions (Prohibition) Amendment Act, Goods and Services Tax (GST) and demonetisation, in order to ensure accountability and transparency which have been largely amiss. The developer-driven approach and outlook has changed in order to ensure a level-playing field for investors, who are going for secure income options and Grade A picks.
While growth in the residential real estate segment has been slow, commercial real estate segment is witnessing a robust growth with Grade A spaces making their mark by generating superior returns both in terms of capital appreciation and rental values. The business environment has also seen newer trends that investors are looking to gain advantage from.
Co-working offices provide plug-and-play spaces for businesses to move and operate, and have been instrumental in propelling small, medium and even large occupiers to opt for such spaces. Thanks to the large-scale programmes like ‘Start-Up India’, ‘Make in India’, among others that have boosted the start-up culture in the country, giving it due recognition and acceptability.
Considering the demand for such spaces, a large number of co-working office space providing brands such as We Work, Awfis, CoWrks and Garage have come up to ensure quality services, coupled with competitive pricing and healthy competition which has immensely benefitted the users. As the momentum swings towards co-working office operators and their offerings, the demand for commercial real estate for such spaces is only going to soar.
Office Retail Complexes or ORCs
Another emerging trend that has caught the fancy of investors is Office Retail Complexes (ORCs). In this format, the office campuses have a retail zone as good as a shopping mall. Employees who work in the companies located in the office building get quick access to shopping and entertainment facilities in the vicinity, and that way it makes for additional revenue stream for the developers as well as their tenants.
Since organised retail sector is an integral part of the economy and an epicentre for community activities, owners of such spaces have managed to keep a steady footfall and are even showing signs of vibrant growth, given the right mix of tenants. Mumbai is one such example.
Such ORCs are visible in areas of Bandra-Kurla Complex, Hiranandani Powai and Navi Mumbai. As far as the National Capital Region (NCR) is concerned, Bhutani Alphathum on Noida-Greater Noida Expressway is being developed on this concept of providing end-to-end services to its office space users.
With these new trends driving strong growth in the commercial real estate segment, investors can expect more opportunities across the country.