The real estate market in India is known to be one of the most promising sectors in India. A sudden increase in the development activity, especially with a focus towards affordable commercial spaces and infrastructure growth, is indicating the revival of the real estate sector in India. According to a 2019 report by IBEF, the real estate market in India is expected to hit US$ 1 trillion by 2030. In addition to this, it is expected to contribute 13% to the country’s GDP by 2025.
While real estate has been a late-starter, its recent inceptions and use of technology has made it attractive with the aid of numerous innovations and advancements. With regard to this, technology has played a major role in the growth of real estate in India. It has simplified various processes such as the buying process, property scouring, etc.
From making the customer experience 10x better to engage with them within seconds, at present, the real estate sector is moving at a tremendous pace. Mobile-centric technology has essentially transformed India’s evolving real estate landscaped and taken it to new heights.
According to a 2019 CBRE report, office space growth is expected to be constant, where demand and supply will be focused across major cities. The office leasing activity will continue to be dominated by major cities such as Bengaluru, NCR, and Hyderabad. In addition to this, technology is expected to shape the office space demand largely in order to support various workplace strategies. Another interesting development includes the approaching date of the sunset clause which is further anticipated to propel occupier demand within the SEZ segment.
A 2019 report by CBRE has identified the key drivers of change that are going to influence the real estate market in the coming years. Let’s take a look –
Evolved Sources of Demand
With American corporates driving about 40% of the total leasing in India for the past few years, this trend is expected to continue. It is also expected that India is one of the most preferred outsourcing destinations that will attract corporates from other geographies as well, such as, EMEA and APAC. The changing nature of jobs in the country, the rise of start-ups and the increased office demand for domestic needs are also going to influence the space take-up rate in the coming years.
Unique Workplace Strategies
Tenants are expected to increase agility in the workplace portfolio and try to find a healthy mix of flexibility and collaborative spaces within their existing workplace layout. Another trend gaining immense popularity is the practice of remote working which is in turn likely to result in lower space requirements per employee.
The ‘Smart Building’ Movement
The inception of tech across all aspects of development is likely to be on the rise in the coming years. It is suggested that tech will not only improve the quality of the space but also greatly influence the occupier and landlord relationship. An interesting development in this aspect is that customization is also going to take a front-seat in the coming years.
Mobility & Flexibility
Work is expected to become more mobile and technically-skilled individuals will be in great demand. Occupiers will continue to adopt tech keeping in mind the best possible and sustainable design elements. Some of the factors would involve installing tech for optimizing and monitoring space usage, increased energy efficiencies and also a mix of space formats offering options such as ‘we’ and ‘me’ spaces.
Wellness Will Take a Front-Seat
Developers will start addressing and implementing WELL features, which are a culmination of more than 100 features across 7 concepts (air, water, light, comfort, fitness, nourishment and mental health). There will be a strong focus on the design and operations of the development and how it will create an impact and influence human behaviour. Some ways this would be implemented include –providing different choices of work settings, implementation of healthy food joints and fitness centers, etc.
The road ahead
It is expected that the rental growth will taper across cities such as Bengaluru, Chennai, and Pune. In Bengaluru, the lack of readily available office spaces will lead to rental growth only on the basis of residual demand. On the other hand, with larger supply in cities such as Chennai and Pune, better quality spaces are likely to drive rental growth.
Moving ahead, technology is expected to influence the current functioning of the real estate market, to a large extent. The expanding role of technologies influence can be clearly understood with the rise of new segments such as flexible working and wellness in the space. In addition to this, the growing adaptiveness of new ideas in this sector will be detrimental towards unlocking the potential of India’s commercial real estate sector in the future.