Commercial real estate becomes asset in favorable ecosystem for investors looking for assured higher returns
Green shoots in the economy are now visible and acceleration in economic activities, increased spending, and return of confidence in the market are opening new vistas of growth. The investors are stepping out and entering the market, and buoyed by such positive sentiments, commercial real estate, with mass inoculation drives, is in an overdrive mode to meet the seismic demand across segments. Commercial transactions are gaining currencies, and companies are also planning to bring back their workforce to offices. Amid heightened emotions with the festive season in the offing, the positioning of commercial real estate as a promising asset class is creating a favorable ecosystem for investors looking for assured higher returns on their investments.
Indian economy is booming at a very rapid pace and huge infrastructure developments and the setting up of economic corridors have once again opened new avenues of investment in commercial realty. The National Statistical Office data show GDP expanded 20.1 per cent from a year earlier. With this promising double-digit growth, the real estate sector that is expected to contribute around 13 per cent to India’s GDP by 2025 will unlock myriad opportunities for potential investors to reap maximum benefits in the years ahead. Industry reports too confirm the buoyed sentiments and reveal that India’s net office absorption stood at 4.39 million square feet in the Q2, showing 32 per cent YoY growth in major cities, which also clearly tells that the foundation stone of growth in commercial real estate has been laid. An Anarock report also says that 7,400 office leases of 90 million square feet are up for renewal in the top 6 cities in 2021. Additionally, increased mall opening hours, rise in food and beverage demand, chances of increased spending over the festival season are setting high prospects in the market.
The Central Bank has kept the repo rate unchanged this time, and historically low-interest rates, favorable government policies, easy financing opportunities are creating more ways for inflows into the commercial real estate asset class. This year the construction activities and the supply chain have continued at a normal pace and soon developers will be doling out their ready products to give customers a huge chance to add value to their investments.
Investment in commercial real estate has always been rewarding and with a significant increase in high-paying professions along with world-class infrastructure and excellent connectivity, Delhi-NCR has become one of the most influential real estate markets. As pandemic subsides, offices will again witness the return of employees, and the increased demand will undoubtedly create a domino effect in its micro-markets as well. Demand here is being driven by technology, BFSI, consulting, and manufacturing occupiers and with the huge presence of grade A office assets, warehouses, shopping malls, coworking spaces, even Delhi’s biggest micro-market Noida (contributing to around 66 per cent of the inventory) is being seen as the best investment bet.
Noida is constantly enhancing its infrastructure with the expansion of metro services, road developments, and expressways. All these infra upgrades will ultimately result in a significant increase in demand and the value of properties will rise further. With excellent career opportunities due to the presence of multinational companies, investment in Noida’s commercial realty is a wise choice for investors. The government too is paying attention to develop as a world-class city with an airport in Jewar in the offing.
No doubt, Delhi-NCR being the country’s most sought-after realty hotspots is already catering to a diverse range of end-users and is now bolstered by strategic location and reasonable rates, even Faridabad which is the epicenter of growth in Haryana is also taking giant leaps forward. Better connectivity, infrastructure development, the presence of global companies, affordability, and industrial corridors are positioning the region as a self-sustained commercial destination in the region.
Faridabad’s significance can be gauged from the fact that it has the maximum number of MSMEs in the state with 32,033 MSME units, followed by Gurgaon with 31,029 units, Panipat with 21,117 units, Karnal with 15,711 units, and Sonipat with 12,205 units. The region’s connectivity with other cities in NCR including Delhi, Gurgaon, and Noida has improved tremendously and it has emerged as a key trade hub that has rekindled the interest of investors in the region. The presence of grade A offices, logistics facilities, warehouses are enabling the investors to get steady and assured returns on their investments. It is expected that retail and hospitality will also gain currency as the economy picks up.
Many developers are investing in commercial developments and coming up with new workplaces, and other developments have transformed the region into an economic hub that offers a steady flow of profits. How growth possibilities of commercial real estate have unfolded in recent times, it will continue to be the preferred choice of investors.
The author is Senior Lead Marcom, Viridian RED
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