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The adage, “what doesn’t kill you only makes you stronger”, perfectly describes the journey of Indian real estate over a period of more than a decade. The sector has registered robust growth despite headwinds including the global financial crisis of 2008, demonetisation, and the Covid-19 pandemic, among others. As the global economy is gripped into recession fears again, India is better positioned to lead the world towards growth, and the Indian real estate sector will contribute to this growth from the front.

The crown jewel of the Indian real estate sector, the commercial real estate segment, has been leading the sector and contributing actively to nation-building. While the sector witnessed sluggishness due to the pandemic over the last three years, the return to the office, mushrooming of shared workspaces, and entry of organized players in tier-2 cities and beyond are driving the demand for quality office spaces across the country. These factors will continue to contribute towards expanding the sector in the coming years while enabling the industry to remain healthy during the crisis.

International property consultants state that gross leasing volume (GLV) for the period January-September 2022 is higher by 88% and 13% as against the same periods in 2021 and 2020, indicative of the resilience of the Indian office markets. The net absorption for the first nine months of 2022 (Jan-Sep 2022) is at a three-year high of 30.3 million square feet, backed by strong supply completions with healthy pre-commitments. Markets such as Delhi NCR and Bengaluru emerged as the two biggest office markets during this period.

And while the market is posting healthy growth overall, the occupier profile saw a shuffle. Over the past few years, the share of sectors other than IT and ITeS, which includes start-ups and small businesses, in office space absorption have been increasing. Reports suggest that the share of the IT/ITeS segment fell from 33% to 27% in the third quarter of 2022 while the banking and financial services sector posted impressive gains with its share rising to 16% from 10% during the same period.  This was followed by manufacturing and telecom, healthcare, and other real estate segments holding market shares between 14% and 16%. The shared workspaces segment is scripting new trajectories. However, at the same time, the IT / ITeS sector, India’s leading office demand driver has seen absorption declining from 49 per cent in H1 2021 to 36 per cent in H2 2022, which is indicative of an industry-wide trend.

There are umpteen reasons why the commercial real estate segment emerges victorious during challenging times and its ability to reinvent itself over the years is a key highlight of its journey. By remaining agile in its methods and offering stronger investor and customer propositions, the sector continues to be an investor favourite, who bet big on its ability to create long-term value. From introducing new and effective construction techniques to bringing down the cost of construction to enabling retail investors to participate through fractional ownership and real estate investment trusts, the commercial real estate segment has continued to outperform. Furthermore, the shift of India’s demography from the lower middle class to the middle class which is being led by the large domestic and international technology and consumer durable companies rests on the availability of Grade A commercial spaces

As the country gets back to normalcy with trade and commerce picking up, employees returning to the office and the rapid emergence of new-age start-ups, commercial real estate is most likely to benefit from these developments and create numerous opportunities for landlords, developers, service providers, and the ecosystem players. It is also setting benchmarks globally in developing financially sound properties, incorporating aspects of sustainability and technology in construction to set the path for its long-term growth.


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