Let us proudly start by stating that the commercial real estate market in India is currently facing a boom. This sector is estimated to grow at 30% in the next 10 years or so. Real estate sector comes in second in the race of being the largest employer in India. It follows the agricultural sector. Real estate sector saw a few ups and downs in the real estate sector last year but this year they have been having a few advantages, especially in the commercial real estate sector such that companies like Hiranandani group, Lodha group, Adani, etc are foraying into the industry of warehousing and logistics with an investment capacity of around Rs 3,000 crore. They have their eyes fixated on the huge opportunity that this sector will provide in the coming years. They have witnessed rapid expansion in the warehousing and logistics sector. This will make these companies act as bigger players in this segment. The government’s promotion in the manufacturing sector as well as on policies such as GST and demonetization will only give a greater advantage to the commercial real estate sector of the country.
The heavy players of the residential real estate sector are now foraying into the commercial real estate sector in order to garner all the added profits achieved after the introduction of GST. Warehousing industry, which was earlier led and backed by small and unorganized players, is now witnessing a huge amount of participation from these bigger players.
A few factors that affect the commercial real estate sector in india with regards to investment can be listed as below:
1. India has been witnessing a heavy influx of funds in the form of FDI. The real estate sector has now witnessed a higher flow of capital into this country from global investors. This country has become an attractive offshore destination which has a pool of highly skilled labor force. These global investors are partnering up with larger mainstream companies in India as well as with smaller players of this sector. Such a partnership can prove to be a hit with regards to greater investments leading to a higher share in the commercial real estate market.
2. The country has witnessed higher economic growth in comparison to previous years. This could be a by-product of the rising influx of FDI in the country from the global investors. Government policies have indirectly led to infrastructure development which has prompted high valued players to flock their investments into the real estate sector.
3. The confidence of investors plays a major role in the commercial real estate sector. Whenever any investor, local or global, ventures into a new sector or spreads its wings wider into the sector then they are willing to parade their confidence in that sector.
4. Government regulations have also made it easier for both Indian as well as foreign payers to have a better hold in the real estate sector. Rera bill has greatly influenced the investments in residential real estate sector in India. Policies such as the GST have, on the other hand, greatly influenced the commercial real estate sector if this country.
5. Infrastructure status has been given to the logistics sector by the government. Ever since this has happened, the companies in the logistics and warehousing sectors can easily encourage investments in the long run. Funds can also be accessed at a lower cost. This ensures that the sector would receive a higher amount of funds for a longer period of time. This will automatically boost the sector.
6. The current rate of interest for investments in real estate are highly favorable such that it makes total sense to invest in them. From the point of view of venturing into new opportunities, optimization of delivery time and other cost efficiencies go hand in hand with growth in logistics and industrial parks. Investors are now trying to grasp a share in the Indian real estate market due to its size and attractiveness. Investments can either be made directly in physical assets or indirectly in financial ones through managed funds such as real estate exchange traded funds etc. The glossy outline of the commercial real estate sector will attract huge investments from companies abroad that will further upsurge the whole industry.