Report Overview

Accelerating economic growth, expanding urban areas, and growing IT/ITeS sector are expected to drive India Commercial Real Estate Market during the forecast period between 2024 and 2030.

India Commercial Real Estate Market – Industry Trends & Forecast Report, 2030

India Commercial Real Estate Market size was estimated at USD 54.56 billion in 2023. During the forecast period between 2024 and 2030, India Commercial Real Estate Market size is projected to grow at a CAGR of 21.5% reaching a value of USD 213.32 billion by 2030. Prominent drivers of the market include government initiatives such as the Smart Cities Mission and Make in India, coupled with robust infrastructure development encompassing metro rail networks, expressways, and airports, are significantly enhancing India's urban landscape. These developments are fostering improved connectivity, logistics efficiency, and overall urban development, thereby attracting businesses and fueling the growth of the commercial real estate sector. The COVID-19 pandemic temporarily disrupted the commercial real estate market, with a notable decline in new office space absorption in 2022. However, the market is demonstrating resilience, with net office absorption rebounding in early 2023. Simultaneously, the retail and hospitality sectors are experiencing robust growth, underpinned by substantial institutional investment. Also, the increasing demand for flexible, comfortable, and convenient office spaces across various industries is driving office space absorption. The integration of technology, including artificial intelligence, virtual reality, and data analytics, is revolutionizing the commercial real estate industry by enhancing customer experiences, facilitating efficient transactions, and optimizing property management.

Commercial Real Estate – Overview

Commercial real estate refers to properties used exclusively for business-related purposes or to generate income, rather than for residential living. This category includes a wide range of property types, such as office buildings, retail spaces, warehouses, industrial facilities, hotels, and multifamily apartment buildings. Commercial real estate is typically leased to tenants for business operations, and the value of such properties is often determined by the income they generate through rent or lease agreements. Investing in commercial real estate can involve direct property ownership, real estate investment trusts (REITs), or other forms of collective investment schemes.

India Commercial Real Estate Market

Growth Drivers

Increasing Economic Growth

India's economic growth serves as a primary driver of the commercial real estate sector. With the GDP averaging around 6-7% annually, the expanding economy fuels corporate expansion, leading to increased demand for office spaces, retail outlets, and industrial facilities. Both multinational corporations and domestic firms are actively seeking prime locations in major cities like Mumbai, Delhi, Bangalore, and Chennai, resulting in a competitive market for commercial developments. Furthermore, government initiatives such as Make in India and Digital India are accelerating industrial growth, which in turn drives the need for industrial and logistics spaces. Economic policies and reforms, including the Goods and Services Tax (GST) and the Real Estate (Regulation and Development) Act (RERA), are enhancing transparency and boosting investor confidence. These reforms help streamline the commercial real estate sector, mitigating risks and making the market more attractive to both domestic and international investors.

Growing Urbanization

Rapid urbanization is significantly shaping India's commercial real estate sector by concentrating economic activities in urban centers like Mumbai, Delhi, Bangalore, and Chennai. As cities expand, the demand for commercial spaces, including office buildings, retail outlets, and mixed-use developments, continues to grow. Urbanization not only increases population density in these areas but also necessitates the development of additional commercial and residential spaces to meet the needs of the growing urban population. Peripheral areas of major cities are also witnessing substantial commercial development, driven by improved connectivity through metro rail projects, highways, and other infrastructure improvements. This trend towards urbanization is creating new opportunities for commercial real estate, as more businesses and residents move into these expanding urban areas.

Challenges

High Real Estate

High real estate prices are a significant factor restraining the growth of the India Commercial Real Estate Market. As property costs in prime urban locations continue to escalate, businesses face increased financial burdens when acquiring or leasing commercial spaces. These rising costs can deter both domestic and international companies from investing in new office spaces, retail outlets, or industrial facilities, ultimately slowing the expansion of the commercial real estate sector. Additionally, high real estate prices reduce the overall affordability and attractiveness of commercial properties, limiting opportunities for smaller businesses and startups to enter or expand within key markets.

Impact of Escalating Geopolitical Tensions on India Commercial Real Estate Market

Escalating geopolitical tensions among countries across regions could have a significant impact on the growth of India Commercial Real Estate Market. These tensions can lead to economic uncertainty, disrupting foreign investments and slowing the expansion of multinational corporations in India. As international investors become more cautious, capital inflows into the commercial real estate sector may decline, leading to reduced demand for office spaces, retail outlets, and industrial facilities. Additionally, geopolitical instability can affect global supply chains, increasing construction costs and causing delays in real estate projects. This environment of uncertainty may also influence domestic businesses, leading them to postpone expansion plans, further constraining the growth of the commercial real estate market in India.

India Commercial Real Estate Market

Segmental Coverage

India Commercial Real Estate Market – By Property Type

By property type, India Commercial Real Estate Market is Office, Retail, Industrial, Healthcare, and other (including Multifamily and Hospitality) segments. The office segment holds the highest share in India Commercial Real Estate Market by property type. It is driven by robust economic recovery and a successful vaccine rollout that has bolstered investor confidence. As the economy rebounds and the need for co-working spaces increases, developers are optimistic about a strong resurgence in office leasing. Research from Colliers India shows a 49% surge in office space supply to 32.8 million sq. ft from January to September in 2023 across six major cities, a significant increase from the previous year. Bengaluru and Hyderabad have been leading in new office supply, while Chennai and Ahmedabad have also seen notable rises in leasing activity. Despite a slight overall decrease in new office supply by 1%, specific cities like Chennai and Delhi-NCR have experienced substantial growth, reflecting the ongoing strength and expansion of the office sector. Companies continue to lease office spaces for daily operations and professional services, with costs influenced by factors such as location, building quality, amenities, and market demand. The trend underscores the dominance of the office segment within India Commercial Real Estate Market.

India Commercial Real Estate Market – By Business Model

Based on business model, India Commercial Real Estate Market is divided into Sales, Leasing, Property Management, and Real Estate Investment Trusts (REITs) segments. The REITs segment holds the highest share in India Commercial Real Estate Market by business model, surpassing other business models such as sales, leasing, and property management. By significantly lowering the minimum investment requirement from INR 25 lakh to INR 10 lakh, SM REITs have broadened accessibility, allowing retail investors to participate in the commercial real estate sector. These trusts offer a compelling advantage through regular rental income and potential for capital appreciation, backed by a mandate that 95% of their assets be in completed, revenue-generating properties. Additionally, the enhanced liquidity and transparency of listed units have contributed to their prominence. As a result, SM REITs are now a leading segment in the commercial real estate market, reflecting their substantial impact and high market share.

India Commercial Real Estate Market – By End User

On the basis of end user, India Commercial Real Estate Market is divided into Small and Medium-sized Enterprises (SMEs), Large Enterprises, Government Organizations, and Investors segments.

India Commercial Real Estate Market – By Region

The in-depth research report on India Commercial Real Estate Market covers the market in the country’s major regions: North India, South India, East India, and West India regions. South India holds the highest share in India Commercial Real Estate Market and is expected to maintain its dominance during the forecast period. According to a recent report by CBRE and the Confederation of Indian Industry, Bengaluru is expected to lead with an office stock of 330–340 million square feet by 2030. This remarkable growth underscores the city's significant role in the market, reflecting its robust expansion from 100 million square feet in 2013 to over 223 million square feet as of mid-2024. Bengaluru's dominance is attributed to its thriving technology, engineering, manufacturing, and BFSI sectors, which drive substantial demand for office space. The city's strategic development in peripheral regions, availability of large land parcels, and infrastructure initiatives further bolster its position. With ongoing advancements and high absorption rates, Bengaluru is set to continue its leading role in South India's commercial real estate landscape.

Competitive Landscape

Major players operating in India Commercial Real Estate Market include DLF Ltd, Godrej Properties Ltd, Housing Development and Infrastructure Ltd (HDIL), Oberoi Realty Limited, Equinox India Developments Limited, Prestige Estate Projects Ltd, Supertech Limited, Savills Property Services (India) Private Limited, Brigade Group, and Unitech Real Estate Pvt Ltd. To further enhance their market share, these companies employ various strategies, including mergers and acquisitions, partnerships, joint ventures, license agreements, and new product launches.

Recent Developments

• In August 2024 - DLF announced plans to expand its residential and commercial real estate operations into new markets like Mumbai and Goa.

Scope of the Report

By Property Type

• Office

• Retail

• Industrial

• Healthcare

By Business Model

• Sales

• Leasing

• Property Management

• Real Estate Investment Trusts (REITs)

By End User

• Small and Medium-sized Enterprises (SMEs)

• Large Enterprises

• Government Organizations

• Investors

By Region

• North India

• South India

• East India

• West India