What are the new opportunities in commercial real estate?

What are the new opportunities in commercial real estate

India’s commercial real estate market has been growing steadily, driven by innovative office space ideas, top-notch amenities, prime locations, a business-friendly environment, and more. The size of the market has been determined to be $67.08 billion in 2023 and is anticipated to reach $223.25 billion in 2028, growing at a CAGR of 27.19%, according to a study by Mordor Intelligence. 

The data proves that commercial real estate has become an appealing investment avenue owing to its unique advantages and potential for long-term prosperity. In conjunction with the growth, there have been several new opportunities in the market that are emerging.

There are many reasons for the increase in the growth of the commercial real estate landscape, including the potential for high rental returns, an increase in the demand for commercial properties, and the overall stability of the asset class. 

Due to its excellent returns, stability, and diversification benefits, commercial real estate has drawn the attention of investors looking for a lucrative outlet that can withstand economic swings. In this context, office spaces, commercial stores, and flex space properties have been in high demand.

Exceptional office spaces

The rise of startups and businesses in Tier-1, Tier-2, and Tier-3 cities has led to a rise in the development of and demand for exceptional office spaces. According to a report published by Colliers and Qdesq, over sixty million square feet of office space are anticipated to be used by the end of 2023 in both metro and non-metro areas. 

Most tenants and buyers are businesses operating in quickly expanding industries like consulting, e-commerce, business process management, and information technology. Additionally, domestic and international companies are showing interest in Indian commercial real estate as a means of expanding their operations due to the country’s remarkable locations, excellent amenities, and affordable purchasing and leasing costs.

Commercial shops at prime locations

A CBRE report states that leasing deals for retail spaces have risen by almost 130% year over year. Furthermore, the chances for sizable returns have multiplied as transactions doubled to 1.5 million square feet in the first quarter of 2023. 

This proves that the commercial real estate market is flourishing for several reasons, including prime locations and well-designed and constructed stores. 

Since these areas see a lot of footfall, there is a high likelihood of customer traffic and greater visibility for retail businesses. These properties also frequently increase in value over time, which makes them potentially profitable long-term investments.

Rise in demand for flex space centres

The flexible office market in India is predicted to expand further as businesses quickly adopt flex spaces due to their adaptability, cost-effectiveness, and flexibility. Flexible spaces are becoming a crucial component of occupiers’ portfolios in India, and Colliers predicts that their share will tend to rise from 5-8% before the COVID-19 pandemic in 2019 to 10-12% in 2023. 

Furthermore, India’s flex space penetration was 6.5% in the first quarter of 2023 and is still growing, driven by occupiers’ quick adoption of hybrid and decentralised work strategies in a bid to curate modern workspaces at an affordable cost.

In 2023 and beyond, it is anticipated that India’s commercial real estate market will rise to new heights. This market is currently among the most favourable when it comes to experiencing positive growth in both rentals and commercial real estate. 

As a result, there will be many new opportunities in office spaces, retail stores, and flex space properties in 2023, and commercial real estate in India is predicted to experience overall stellar growth. Hence, commercial real estate will offer alluring avenues for savvy investors seeking to navigate the constantly shifting investment landscape thanks to its appealing returns, long-term advantages, portfolio diversification, and resilience against market volatility.

Source : Construction Week Online

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