The demand for excellent commercial properties is continuously increasing due to fast job generation and the imminent prospect of the first REIT guides. Commercial spaces, located in Grade-A constructions and business parks are producing the stable and reliable ROI that investors and buyers previously found in housing projects.
The commercial office space has seen an increase in private equity inflows last year, and the same trend is going to continue this year as well. The first listing is about to happen in Indian REITs, we are going to experience additional infusions of liquidness into the commercial real estate, and this is expected to go to a long way in strengthening the aptitude and inclination of builders focused on the commercial property market to deploy more possessions.
Also, the ongoing sluggishness on the housing market along with the related re-investment cycle menaces will play an essential part in pouring more investments towards numerous types of commercial properties.
Initially, commercial spaces were focused only in some major cities in India such as Mumbai, Delhi, Chennai, Bengaluru, Hyderabad, Pune, and NCR. But with increasing property costs and accessibility of commercial spaces in smaller cities, big companies and corporates started moving in tier II and III towns too. Likewise, SEZs and IT parks are also growing their presence in the smaller cities.
If we talk about logistics and industrial parks, these properties are generally situated in zones that support the efficient transportation of goods and people. Consequently, smaller cities with business expansion prospectus have seen a significant evolution.
The growth factor in start-up businesses
In India, the start-up growth is driving to more investments and career prospects. A number of new companies which were started many years ago have already transformed into considerable firms hiring vast numbers of individuals. One more point to consider is that many international e-commerce companies have started operating in India.
While their participation in commercial space usage was primarily less than nominal, these e-commerce businesses now account for more than 3% of the yearly overall business space absorption in the country. Seeing the enthusiastic customer response to e-commerce stores in our country, the situation is going to be better and higher in the future.
With great human resources rationalization going on in the IT/ITeS segment, organizations are now willing to enhance their commercial space in the best possible ways in the present scenario. With consideration of better economies of scale, these companies are likely to combine workplaces and operations in several locations. Knowing that commercial properties are costly in bigger cities, IT firms may also want to start procedures in smaller towns.
Seeing all the mentioned aspects, we understand that commercial property is undoubtedly a more striking investment plan for both affluent individual investors and institutional funds.