The realm of commercial real estate (CRE) has undergone a significant transformation, evolving from standalone structures to integrated ecosystems, and this has been in tandem with the infrastructure development. Today, efficient transportation networks, robust internet connectivity, and sustainable energy solutions aren’t just add-ons; they are the primary drivers for attracting occupiers. This synergy has led to integrated infrastructure projects like smart cities and walkable neighborhood, fundamentally reshaping the landscape of urban development.
As businesses increasingly favour flexible work arrangements and hybrid model, there has been a significant increase in demand for flex spaces, with co-working sector accounting for over 30% of the net absorption. And an increasing number of startups, accompanied by substantial investment inflows, have fueled robust growth within the sector.
In the past, commercial real estate projects were often limited in scale and scope, with a focus on basic necessities like base building infrastructure and amenities. Today, the industry is driven by a vision for integrated ecosystems. Modern commercial real estate developments encompass not just office spaces, but also incorporate retail, residential areas, and entertainment options to foster a vibrant and interconnected community. The modernisation and expansion of transportation networks, including the development of new international airports, signal free zones, peripheral roads and metro systems, have not only improved connectivity but have also spurred the growth of commercial hubs and business districts. The landscape of CRE has transformed, with modern, tech enabled spaces becoming more valuable, thereby attracting more businesses, investors, and tenants alike.
The proximity to key transportation hubs and business districts not only enhances accessibility but also attracts businesses, driving up demand for commercial real estate and consequently boosting property values. The availability of shopping complexes, educational institutions and healthcare facilities further enhances the desirability of an area for both businesses and residents. In recent years, the rise of e-commerce has driven the need for last-mile delivery centres, strategically located to ensure quick and efficient delivery of goods to consumers. These centres, along with logistics parks and warehouses, are becoming integral parts of commercial real estate, addressing the growing demand for expedited delivery services. Commercial developments like office buildings and industrial areas play a vital role in job creation and driving economic expansion. Incorporating sustainable practices and green spaces not only meets the growing need for eco-friendly solutions but also serves as a key attraction for investors, businesses, and individuals seeking to set up operations in a specific area.
Government Initiatives:
Below are key government policies shaping the future of CRE:
- Smart City Mission: Launched in 2015, India’s ambitious Smart City Mission aims to develop 100 cities across the country with a focus on core infrastructure, citizen engagement, and sustainable practices.
- Industrial Corridors and Logistics Parks: The Delhi-Mumbai Industrial Corridor (DMIC), Chennai-Bangalore Industrial Corridor (CBIC), and Bangalore-Mumbai Industrial Corridor (BMIC), offer attractive incentives like tax breaks and streamlined approvals, attracting domestic and international players to set up shop which has led to increased demand for modern warehousing and office spaces.
- Transit-Oriented Development (TOD): TOD refers to designing and planning communities around public transportation hubs to encourage walkability and reduce reliance on private cars. This fosters walkable communities with seamless access to commercial spaces, leading to vibrant urban centers and reduced reliance on personal vehicles.
- Real Estate Regulatory Authority (RERA): Established in 2016, RERA is a government body established under the Real Estate (Regulation and Development) Act whose primary purpose is to regulate and promote the real estate sector, ensuring fair practices and transparency. It has boosted investor confidence and paved the way for sustainable growth in the CRE market.
- Focus on Sustainability: With the growing emphasis on environmental responsibility, governments worldwide are incentivizing green building practices and energy efficiency measures in commercial developments.
Major Infrastructure Projects:
- The Golden Quadrilateral Project: GQ is a monumental highway network connecting the four major metropolises – Delhi, Mumbai, Chennai, and Kolkata. It is the largest highway project in India and the fifth-longest in the world. Spanning 5,846 km – Bengaluru, Pune, Ahmedabad, and Surat are also served by this network.
- Bangalore-Mysore Infrastructure Corridor: Commonly known as the NICE (Nandi Infrastructure Corridor Enterprises) Road, it spans ~140 km between Bangalore and Mysore, enhancing logistical connectivity and fostering economic activities and trade. The corridor includes bypass roads for areas that fall along the route between the two cities, namely Bidadi, Ramanagara, Channapatna, Maddur, Mandya, and Srirangapatna.
- Mumbai Trans Harbour Link (MTHL): Officially named Shri Atal Bihari Vajpayee Trans Harbour Link and also known as Sewri–Nhava Sheva Trans Harbour Link and colloquially as Atal Setu, is a 21.8 km (13.5 mi) 6-lane elevated highway bridge that connects Mumbai with Navi Mumbai. It is the longest sea bridge in India that caters to 70,000 vehicles daily.
- Delhi-Mumbai expressway: Nearing completion, this project is aimed at transforming the connectivity between the national capital, Delhi, and the financial hub, Mumbai. Spanning 1,350 km, this expressway is designed to significantly reduce travel time by half between the two cities.
- Hyderabad Outer Ring Road (ORR): Stretching 158 km, the ORR is a modern expressway designed to ease traffic congestion and enhance connectivity across the city and its surrounding areas. Completed in phases, the road boasts multiple lanes, flyovers, and underpasses, thereby linking all the major highways: Mumbai Highway, Vizag Highway, Nagpur Highway, and Bengaluru Highway.
- Bharatmala Pariyojna: An upcoming flagship infrastructure development program, launched with the aim of improving the efficiency of freight and passenger movement across the country. The project envisions the development of a vast network of highways, expressways, and economic corridors to enhance connectivity and foster economic growth. The ambitious initiative focuses on optimizing the efficiency of transportation, reducing logistics costs, and creating new opportunities for trade and commerce.
- Chenab Bridge: Towering above the gushing Chenab River in Jammu and Kashmir, the 1.3-km rail bridge is located 359 metres above the riverbed. It forms a crucial link in the 111-km stretch from Katra to Banihal, which is part of the ongoing prestigious Udhampur-Srinagar-Baramulla Railway Link (USBRL) project.
- National Highway 544: Commonly referred to as NH 544, this is a 340-km-long (210 mi) National Highway in South India connecting Salem city in Tamil Nadu to the city of Kochi in Kerala. Also called the Salem-Kochi Highway, it runs through the states of Kerala and Tamil Nadu, connecting various important cities and towns such as Salem, Erode, Coimbatore, Palakkad, Thrissur, and Kochi. The four-lane widening of the Salem-Kochi highway is nearing completion, with over 90% of the work completed.
- Mumbai-Ahmedabad High-Speed Rail (MAHSR): This megaproject spans 508.17 km, connecting India’s financial powerhouse, Mumbai, with the vibrant city of Ahmedabad in Gujarat. Once operational, the MAHSR bullet train will reach speeds of 320 km/hr, slashing travel time by over half compared to traditional trains.
The commercial real estate market will foresee growth and innovation in the future with the ongoing developments. The ease of conducting business will encourage foreign companies to establish offices and manufacturing units in India. With a growing number of startups, increasing foreign investment, and a rising demand for commercial space, the future of Indian CRE appears to be on a well-paved path to success.