Introduction:
The property market in India is segregated into two broad divisions; residential and commercial. The commercial real estate sector of India is a lucrative opportunity for investors due to its high return on investment and appreciation in price.
This sector relies heavily on the performance of the Indian Economy and an upward-moving economy provides tremendous growth potential for the Commercial property market.
India’s commercial real estate (CRE) landscape is rapidly evolving, with emerging markets gaining prominence due to infrastructural developments, economic growth, and favourable government policies. Here’s an overview of the key emerging CRE markets in India:
- TIER-2 AND TIER-3 CITIES: Cities like Jaipur, Coimbatore, Chandigarh, Ahmedabad, and Kochi are becoming increasingly attractive for commercial real estate investments. These cities offer lower operational costs, increasing demand for office spaces and growing industries, especially in IT, logistics, and manufacturing.
- Key Drivers: Government initiatives such as the Smart Cities Mission, improving infrastructure, and the expansion of tech parks. These cities are increasingly preferred by companies looking to reduce costs while still accessing skilled talent pools.
- Examples: Ahmedabad has emerged as an industrial city, while cities like Coimbatore are expanding in the logistics sector.
- HYDERABAD AND BANGALORE: While traditionally strong markets, Hyderabad and Bangalore continue to expand, particularly in the IT and technology-driven sectors. Both cities have attracted significant investments due to their robust infrastructure, connectivity, and growing pool of highly skilled workers. Hyderabad has been dubbed the "Pharma Capital of India," with growth in biotech and pharmaceuticals industries adding to its appeal.
- Key Drivers: Expansion of IT corridors, business parks, and SEZs, along with tech giants setting up offices in these cities. Hyderabad has witnessed growth in office space leasing, driven by demand from IT/ITES, BFSI and co-working sectors.
- GUJARAT’S INDUSTRIAL CORRIDORS: Cities in Gujarat, particularly Ahmedabad, Surat, and Vadodara, are witnessing strong demand for industrial and commercial spaces due to the Delhi-Mumbai Industrial Corridor (DMIC) project and government incentives for manufacturing. The state's pro-business environment has positioned it as an attractive market for real estate investors in warehousing, logistics, and office spaces.
- Key Drivers: Growing manufacturing base, favorable state policies, and the development of dedicated industrial zones.
- NAVI MUMBAI: Navi Mumbai is emerging as a significant commercial real estate market due to its proximity to Mumbai and the ongoing infrastructure development, such as the upcoming Navi Mumbai International Airport. The city is attracting investments in retail, office spaces, and logistics, driven by its excellent connectivity to Mumbai and other parts of Maharashtra.
- Key Drivers: Real estate development around key transportation projects, growth of the logistics sector, and the expansion of IT parks.
- LUCKNOW: The capital of Uttar Pradesh, Lucknow, is rapidly developing as a commercial real estate hub, especially in the retail and office space sectors. The city is benefiting from infrastructure development, improved connectivity, and government policies promoting industrialization and economic growth.
- Key Drivers: Expansion of the IT sector, improving road and metro connectivity, and the state’s push toward industrial and infrastructure development.
- INDORE: Indore, the commercial capital of Madhya Pradesh, is gaining traction in commercial real estate, driven by the growth of IT and industrial sectors. With smart city projects and robust infrastructure improvements, Indore has seen an increase in demand for office spaces and business parks.
- Key Drivers: Smart city projects, connectivity, and a growing IT sector presence.
- NOIDA-GREATER NOIDA: The Noida-Greater Noida region in Uttar Pradesh is emerging as a preferred destination for companies looking to establish corporate offices and industrial units. The Yamuna Expressway and upcoming Jewar Airport are key infrastructure projects driving demand for commercial spaces in the region.
- Key Drivers: Proximity to Delhi, affordable real estate, and large-scale industrial development along the Yamuna Expressway.
Conclusion: Emerging markets in India’s commercial real estate sector offer substantial opportunities for investors due to growing urbanization, infrastructure improvements, and government policies. Tier-2 and Tier-3 cities, in particular, provide attractive returns with lower entry costs, making them a hotbed for future growth in the commercial real estate market.
