The trend of the last few years continued even in 2019 in the commercial segment of the real estate sector which continued to flourish.
According to a report by Cushman & Wakefield, private equity investments in the real estate sector during the first three quarters of 2019 rose to Rs 39,182 crore, up 19 per cent from a year-ago period.
The bulk of it was bagged by the commercial real estate segment including the office segment that remained the favoured investment asset class among investors. Institutional interest in rent-yielding office assets continued to be backed by strong occupier demand with 2019 slated to surpass 2018's leasing numbers to a new historic peak.
"The commercial segment is thriving on the back of strong demand for office, as well as retail spaces. The low inventory level in commercial segment makes it an attractive bet and the scenario is likely to remain so for the next two to three years," said Ashish Bhutani, MD, Bhutani Infra.
The Company is currently developing a couple of commercial projects in the Noida-Greater Noida region and has received an overwhelming response from the consumers.
Commercial segment has been the preferred segment of institutional investors for some time now and with the astonishing success of country first REIT, the interest in the segment is likely to continue.
"The Blackstone Group backed Embassy Office Parks REIT, which got listed on the bourses in March, has provided decent returns to investors and has successfully opened up a new investment avenue," said Harinder Singh Hora, Chairman, Realistic Realtors.
"It is expected that more and more companies are likely to take this route. Already some of the companies have indicated towards it," he added.
"Commercial properties yield higher rental returns than residential properties and the big benefit it offers to retail investors that it provides them an opportunity to invest in commercial properties that will earn higher rental income," Anupam Gupta, Sales, and marketing Director, GBP Group.
"With the success of Embassy REIT, retail investors are likely to be inclined towards it and that bodes well for the commercial real estate segment," he added.
Led by millennials and startups, who believe in the sharing economy, the Co-working segment was one of the biggest occupiers of the Office spaces.
"Shared offices spaces lower the cost of operation and hence, co-working will remain a preferred choice for emerging entrepreneurs," said Ashish Bhatia, Founder, and MD, India Accelerator.
"The year 2019 for Co-working started with a host of players coming into this segment. A lot more private equity money came into the industry this year. The market has considerably matured this year as co-working was more adopted as an alternative to conventional lease by several large and small corporate," said Nakul Mathur, MD, Avanta India.
" In the coming year, we expect more corporates to adopt custom made and operated offices. At the same time, private equity investors are likely to invest primarily in profit-making operators," he added.
Besides the office arena, the Indian retail industry is also on a high. While, the traditional and unorganized retail segment is still the dominant one in the country, but driven by technological intervention the organised retail is gaining ground at a brisk pace.
Accordingly, the organised retail segment is expected to grow from 790 billion dollars in FY19 to 1400 billion dollars by 2024 and shopping malls are likely to gain the most from it.
"The retail segment including shopping malls is doing well. During the year, we started operation of Pacific mall at Dwarka 21, New Delhi and right on day one we started with 100 per cent occupancy," said Abhishek Bansal, Executive Director, Pacific Group.
"We see the trend continuing over the next few years and malls are likely to continuing thriving. At the same time, malls need to adopt newer technologies and enhance customer experience," he added.
"During the year, we launched and delivered several projects in New Chandigarh, Ludhiana, Faridabad and Lucknow in both commercial and residential segments. We also launched Omaxe Chowk in association with North Municipal Corporation of Delhi (N-MCD) at the iconic Chandni Chowk. The project is the first organised commercial offering in the area encompassing retail, food court as well as multi-level parking spaces. The response has been overwhelming," said Mohit Goel, CEO, Omaxe Ltd.
The growth of malls is not limited to metropolitan cities as malls in tier II and III cities are also clocking decent business with several brands registering their presence in these markets.
"In absence of major recreational facilities, malls have emerged as the go to choice for the residents of tier II cities. As such, many well-known and reputed brands are increasingly looking to expand in these cities," said Uddhav Poddar, MD of Rajasthan based Bhumika Group.
According to a recent report, tier II and III cities account for 25-30 per cent of mall spaces and it is likely to increase further in the future. At the same time, the metro cities continue to hold their own charm and sway, a reason for which many developers are extremely hopeful.
"India is a huge market and many trends can co-exist simultaneously. The malls and hi-streets located in tier II and III cities are performing great, but so is the case in metro cities. The footfalls at most of the hi-street and malls are increasing day by day and there is no reason for trend to change over the next couple of years. In fact, the best time for hi-street, malls and retail sector is yet to arrive," said Vikas Bhasin, CMD, Saya Homes.
With experts of the commercial segments including office space, retail and malls all expressing confidence of robust 2020, this may be a year to watch out.
This story is provided by NewsVoir. ANI will not be responsible in any way for the content of this article.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)