COMMERCIAL REAL ESTATE MARKET IN INDIA SIZE & SHARE ANALYSIS - GROWTH TRENDS & FORECASTS (2023 - 2028)

 

India Commercial Real Estate Market Analysis:

The estimated size of the India Commercial Real Estate Market is USD 33.62 billion, with a projected growth rate of 21.1% CAGR during the forecast period, reaching USD 87.57 billion. The COVID-19 pandemic has resulted in the adoption of the work-from-home (WFH) culture, which has had a short-term impact on new space obligations. In 2022, new office space in the seven cities of Mumbai, Delhi NCR, Bengaluru, Hyderabad, Chennai, Kolkata, and Pune in India was 38.25 million sq. ft, down by 30% from the previous year. However, in the first quarter of 2023 (January-March), net office absorption in the top six cities stood at 8.3 million sq. ft.

Industry experts suggest that from September 2022, grade A offices in Indian cities such as Bengaluru and Mumbai had an average cap rate of 8.25 in core locations, while the cap rate of grade A offices in Taipei was 2.35 on average that year. As of the second quarter of that year, other regions of Gurugram had the highest vacancy rate combined at 35.9%. In comparison, the Cybercity of Gurugram in India had a vacancy rate of 5.4%, the lowest amongst other submarkets of the Delhi NCR region.

The retail and hospitality sectors are also experiencing significant growth in the commercial real estate market, providing the much-needed infrastructure for India’s growing needs. The country’s commercial real estate sector is expected to be accelerated by large-scale investments by institutional investors in the coming years. The retail real estate sector in the country has been dramatically boosted by government initiatives such as Make in India, and other reforms in the realty sector, such as the introduction of the Real Estate Regulatory Authority (RERA) and GST.

Despite initial challenges, developers and buyers are increasingly moving towards the commercial real estate sector due to the transparency and competence of the industry, which has attracted increasing amounts of foreign direct investments (FDI) in commercial estate. The country’s economic growth is driving demand for commercial property, and government initiatives and urban development policies and programs such as Smart City and AMRUT are expected to contribute to the need for real estate infrastructure.

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