As the demand for quality land parcels and the need for creating self-sustaining communities is growing in India, the country’s leading real estate markets are witnessing a second wave of mixed-use developments. This assumes significance as there’s a spike in migration of citizens to metros in search of new opportunities and vice-versa for a peaceful life, driving demand for mixed-use developments across metros and tier-2 cities.
Leveraging this trend, an increasing number of developers are opting for projects which are a mix of office, residential and retail or two of the categories, thereby offering a bouquet of everything a family needs for a quality life. While cities like Mumbai, Bengaluru, Hyderabad, New Delhi and Chennai are witnessing brisk launches of mixed-use properties, they are spreading to smaller cities as well.
According to various industry reports, the three key segments of mixed use developments namely residential, commercial and retail are witnessing rapid growth across the country. Property consultant Anarock said housing unit sales in the third quarter of 2023 jumped by 36% in India’s top 7 cities – Mumbai Metropolitan Region (MMR), Delhi-NCR, Bengaluru, Pune, Hyderabad, Chennai and Kolkata. Credai in a report said, “the supply of prime workplaces in India is predicted to reach 1 billion square feet in tier-I cities by 2030 from its current level of 700 million square feet of Grade A offices”. On the retail front, CBRE reports “that retail leasing witnessed an uptick of 24% Y-o-Y to touch 2.9 million square feet in H1 2022, a rise of 15% compared to previous year. Fashion and apparel retailers dominated the space take-up by contributing about 34% share in total absorption during H1 2023 while other prominent categories that dominated absorption included food & beverage (~15%), along with homeware and department store categories (~14%)”
Interestingly, developers today are taking a holistic approach while constructing mixed-use developments to fulfil the varied needs of its occupiers, ensuring they have a self-sustaining community. From ensuring proximity between residences and commercial office space to carefully choosing super markets, eating joints, and watering holes, allowing people to fulfil their stay, work, and entertainment needs, all in one project. This further becomes important as both employees and occupiers are looking for ‘walk to work, shop, eat and more’ to be in tandem with today’s evolving lifestyle.
Convenience tops Consumers’ preferences
An increasing number of people today are looking for convenience in every aspect of their life – roughly translating into easy access to office without long commutes, quality residential spaces offering an experience rather than just a concrete structure along with a lively social infrastructure. This is playing a pivotal role in the entry of high-end super markets and premium, eating and watering joints driving up the premiumisation quotient of mixed-use developments.
Interestingly, this has become a key factor for occupiers and employees in shifting to “back to the office” after prolonged remote work due to the COVID-19 pandemic. A wide array of options across live, work and entertainment plays a key role in mobilising people for a common cause and occupiers have realised its value in bringing back employees to the office.
It is good for business
Another reason why mixed-use properties are increasing across the country is because it is good for business. While developers are able to charge a premium for the holistic mix of real estate that they are offering, residents or customers are also willing to pay extra for the convenience they get in terms of location and retail offerings. There is also a greater investment opportunity for investors as mixed-use properties, owing to their structure, are better positioned to survive market dynamics.
The Indian real estate market has emerged as one of the strongest markets in the world, having battled the Global Financial Crisis (GFC) of 2008 and the devastating COVID-19 pandemic. The rise of mixed-use properties to cater to the evolving needs of today’s individuals,is an attempt to make it attractive for all stakeholders and enhancing the value creation ability of the asset. The next decade is going to witness new forms of mixed-use properties being developed with a focus on premiumisation, sustainability and technology trends.