Developers moving to commercial realty

Country's office space stock is forecast to reach 600 mn sq ft by 2019 from 480 mn sq ft in 2017

Real estate developers are moving away from mid-range and high-end residential properties to office spaces and commercial establishments.
 
Experts said the trend had strengthened in the run-up to the implementation of the Real Estate Regulation and Development Act (Rera).
 
The country’s office space stock is forecast to reach 600 million sq ft by 2019 from 480 million sq ft in 2017. This forecast could be conservative because many new office projects are expected to be announced during in the next two years.
 

According to JLL India, with real estate investment trusts (REITs) set to launch in India this year, developers realise commercial property will continue to offer higher dividends. Also, they will be able to capitalise on capital value appreciation when they exit.

 
“The focus is changing to having more office projects in portfolios. Given the low office space supply in the technology hubs of Bengaluru, Hyderabad and Pune, developers are finding these markets lucrative. In Delhi-NCR (National Capital Region) too developers better known for their residential projects have ventured into commercial realty,” said Santhosh Kumar, chief executive, operations, and international director, JLL India.
 
According to experts, developers that are working on large commercial projects include the Vatika Group, Supertech Limited, ATS Infrastructure, the K Raheja Corp and RMZ Corp.
 
“We have seen demand for mid-range and high-end properties go down. More people are looking for affordable housing or commercial and office space. We have observed the trend changing after the implementation of the Rera,” said Sam Chopra, president, NAR India, a real estate industry body.

 
“Commercial property rentals have gone up in the last three years and developers are getting into this space. But residential property demand will grow in times to come,” said Parveen Jain, president, Naredco.