India’s Emerging Demand Factors For Commercial Real Estate

Here are some of the variables that will likely drive demand for commercial real estate in India in the future.

Commercial Demand In India: When it comes to commercial real estate in India, growing demand drivers are receiving a lot of attention since this is where the major money, especially international investors, is project to flow in. As a result, analysts are assessing the future commercial property demand drivers. This might be in terms of company or geography.


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Commercial real estate in India: Key Trends

According to a recent analysis by Savills India focusing on future tech towns, the next demand drivers would come from tier-3 cities. These forthcoming destinations were divided into two groups by Savills India’s research, namely ‘challenger cities’ and ‘developing cities.’ According to the research, some of the significant trends in demand commercial real estate include:


  • IT-BPM (information technology-business process management) will extend to tier-3 cities.
  • During the previous decade and a half, the IT-BPM industry has been swallowing enormous office spaces. Its current market share is projecte to be greater than half of all office space leased in the previous five years.
  • Over the next five years, it is predicted that 80-120 million sq ft of space in grade-A office buildings, including co-working spaces, will be taken up.
  • By 2026, the IT-BPM industry is estimate to have leased 100 million square feet.
  • Leader cities have already established themselves as IT-BPM hubs, with a large supply of trained personnel and a solid infrastructure.
  • Leader cities and challenger cities have a symbiotic relationship and are already seeing major IT-BPM activity.
  • In the medium to long term, emerging cities are likely to be the next large potential hotspots.
  • In a world finely balanced in terms of employee safety and wellness, return to offices in calibrated measures, increased adoption of remote work through enterprise-level digital transformation, and cost-benefit analysis in real estate portfolio allocations, Tier-2 and Tier-3 cities are likely to feature prominently.


India's emerging demand factors for commercial real estate


Segments of commercial real estate that might generate demand

What remains to be seen is which segments will emerge as demand drivers. While the business is split, it appears that logistics and warehousing are still favoure.

gross office absorption surged to 13 million sq ft in the first quarter of 2022, a three-fold rise year-on-year. “Demand for industrial and storage spaces increased by 11% to 6.2 million sq ft during the quarter, boosted by third-party logistics.”

Throughout the year, there will be considerable demand for office and industrial space. Investors continue to bet on conventional assets while the economy improves, indicating that investment confidence is still intact.”

Since corporations and organisations have been inviting employees back into the office following the COVID-19 outbreak. Commercial real estate has been picking up. “A rise in IT, e-commerce, logistics, data centres, and other areas is also driving commercial real estate.” This industry is undoubtedly growing strong, and the trend will continue,” with commercial real estate investing being a favoured alternative for many investors.


Future hotspots for commercial real estate

The way Indians work in the post-pandemic era, as well as the impending industrial corridors, are anticipated to have a significant influence on commercial real estate. The first big adjustment would be in terms of geographic distribution. with tier 1 cities no longer being the primary contributors to office or retail space absorption.

Even within Tier 1 cities, there is a movement away from overcrowded CBDs (central business districts). And toward EBDs (economy business districts) (emerging business districts).

The relocation of offices from Mumbai’s Nariman Point to the Bandra-Kurla Complex (BKC) is an example. Some tier-2 and tier-3 cities might serve as investment magnets if they were connected to prospective industrial corridors.


India's emerging demand factors for commercial real estate


Projects in commercial real estate that may be in high demand

In terms of projects. The developing economy plainly shows that standard office and retail buildings will no longer attract the majority of investment. The new attempt would be an office-cum-retail hybrid paradigm.

Nonetheless, large-scale investments are anticipated to be made in commercial real estate’s rising segments. In India, for example, internet retail has already acquired traction, and there is a warehouse shortage. As a result, logistics and storage will continue to draw significant investment in the future.

Another sector that is projecte to develop well is data centres. The number of data centre projects has increased in recent years, and several global firms have entered the market. NTT, based in Tokyo, has committed to a $2 billion investment in India to build six data centres.

In a nutshell, India’s commercial property demand drivers have expanded outside typical urban areas. These rising areas, on the other hand, would need substantially larger expenditures.




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Disclaimer: The views of this expressed above are for informational purposes only based on the industry reports & related news stories. does not guarantee the accuracy of this article, completeness, or reliability of the information & shall not be held responsible for any action taken based on the published information.
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