India’s Commercial Real Estate on the Rise: Key Trends and Insights
India’s commercial real estate sector is awakening from its slumber, and the signs are unmistakable. Like a phoenix rising from the ashes post-COVID, the Indian real estate investment/commercial property investment in India is experiencing a spectacular resurgence, fuelled by a potent mix of policy reforms, technological disruption, and a seismic shift in workforce dynamics. The numbers tell the story! According to Mordor Intelligence, India’s commercial real estate market size is estimated at USD 40.71 billion in 2024, and is expected to reach USD 106.05 billion by 2029, growing at a CAGR of 21.10% during the forecast period (2024-2029). This growth is catalysed by increasing demand for commercial spaces, retail outlets, and industrial parks.
One of the key drivers of this growth is the robust expansion of the IT and ITES sectors. Commercial properties investment in Bangalore continues to attract significant investments from both domestic and international companies, fueling demand for Grade A office spaces. In 2023, Bengaluru alone accounted for 30% of the total office space absorption in India, followed by Hyderabad at 20%.
The Indian government’s policies, such as the implementation of the Real Estate (Regulation and Development) Act (RERA) and the introduction of REITs (Real Estate Investment Trusts), have enhanced transparency and attracted more investors to the sector.
Emerging Markets Gain Traction
India’s commercial real estate boom is extending its reach beyond the traditional hubs, with tier 2 and 3 cities increasingly becoming the focal point of growth. Cities like Ahmedabad, Chandigarh, and Jaipur are witnessing a significant influx of businesses, driven by factors like lower operating costs, skilled talent pools, and improved infrastructure. This shift is leading to a surge in demand for office spaces, with many of these cities recording double-digit growth in absorption rates. As a result, developers and investors are taking notice, with many committing significant capital to tap into the vast potential of these emerging markets.
Creating a Virtuous Cycle
The commercial real estate boom is having a profound impact on India’s residential sector. As businesses expand and new jobs are created, housing demand near commercial hubs is skyrocketing, driving up property values and rental yields. This influx of professionals and families is fuelling demand for amenities and services, leading to more sophisticated and liveable communities. Mixed-use developments and integrated townships are becoming the new norm, blurring the lines between commercial and residential real estate. As a result, invest in commercial real estate india in residential projects near thriving commercial centres, further fuelling growth in both sectors.
CRE 2.0: The Evolving Landscape of Indian Commercial Real Estate Market
India’s commercial real estate landscape is on the cusp of a revolution, as innovation and sustainability converge to create a new era of dynamic, eco-friendly, and tech-savvy workspaces. With the sector expected to reach $1 trillion by 2030, imagine gleaming green buildings, humming with AI-powered efficiency, and vibrant mixed-use hubs that blend work, play, and life. As the country’s tier 2 and 3 cities burst onto the scene, with cities like Ahmedabad and Chandigarh witnessing 20%+ YoY growth in office absorption, investors will chase opportunities in alternative assets like data centres and logistics parks as the country is headed towards digital boom.
