New Face of India’s Commercial Real Estate – from IT Parks in Bangalore to Sprawling Malls of Gurgaon

The country’s commercial real estate has largely been shaped by the service sector. The following article is a perusal of the commercial realty market of India.

Reckoned as one of the fastest growing economies of the world, India has its own share of favourable circumstances owing to its large consumer base. Vast reserves of raw material along with a competitively priced talent base make India one of the most sought-after destinations for business investments.

Propelled by strong drivers, the real estate sector in the country has been flourishing since the last one and a half decade. Residential as well commercial real estate in Indian metros has been on an upswing that has also forayed into the Tier II cities of India. The realty sector has often referred to as the ‘sunshine sector’ by industry experts.

Commercial Real Estate

Commercial real estate comprises chattels like hotels, restaurants, office buildings, business parks, hospitals, and nursing homes. Commercial real estate can be categorized into six heads. The table explains the same.

Economic Liberalization and its Impact on the Realty Market

During the 1980s India faced a balance of payment crisis that led to the government pledging tons of gold to the Bank of England and the Union Bank of Switzerland as deal signed with the International Monetary Fund (IMF). As the country was saved from doldrums, in turn the IMF wanted India to take up serious economic reforms thus leading to Economic Liberalization of the country under PV Narasimha Rao as the Prime Minister and Manmohan Singh as the Finance Minister.

As economic liberalization opened its door to Foreign Direct Investment, the economy began to revive gradually. Foreign companies began to invest and gradually the country’s Gross Domestic Product increased considerably. Slowly, various sectors begin to scale new heights and among them the one worth mentioning is the real estate. Cities like Delhi, Mumbai, Bangalore, Chennai, Gurgaon and Noida came into prominence with a significant rise in the real estate sector.

The commercial space in the country has evolved considerably in the last 15 years. The growth has been fostered by the service sector especially IT-ITeS Companies. However a trend was spotted that commercial development bean to drift towards fringes of the large cities. Thus it resulted in the emergence of cities like Gurgaon and Noida near Delhi, Electronics City near Bangalore, and Malad and Bandra near Mumbai. Initially concentrated to Tier I cities like Delhi, Mumbai, Bangalore and Chennai, the real estate boom has also ventured into Tier II cities like Pune, Jaipur, Nagpur and others. Let us take a detailed look at them.

Commercial Real Estate – the North Zone

As the capital of the country, Delhi has always been the centre of attraction. From politics to business activities, all have chosen this city as its base. The real estate sector was no exception. As explained earlier, the credit for the commercial realty boom is attributed to the service sector—NCR’s commercial real estate has been shaped by the same.

Gurgaon

Gurgaon’s outsource industry was born when Genpact started its operations in India. Gradually, other multinational organisations opened its office and thus the commercial real estate witnessed a boom.

This opportunity was captured by the DLF, the real estate giant who bought lands from existing farmers and began developing the area. Within a decade multistoried apartments, plush office buildings and shopping malls began sprouting like concrete weeds. Today Gurgaon is home to 7 golf courses and 26 shopping malls selling Loius Vuitton and Prada. Some of the leading developers include DLF, Godrej, Unitech and so on.

Noida

Noida on the other hand is a satellite city that has come up in full bloom in the real estate market of the country. Noida has emerged as the automobile hub of NCR with major automobile companies setting up their base in the city. Today, sailing high in the realty market, the residential segment in the city has to offer loads to the end-users. The Yamuna Expressway, Formula 1 Buddh International Circuit and the proposed Taj International Airport have boosted the property market of the satellite city.

Today, the entire NCR is on a development spree with Gurgaon, Noida, Dwarka, Faridabad and Ghaziabad becoming hotspots for realty destinations.

The South Zone

Bangalore, often referred to as the Silicon Valley of India, has a similar story to narrate while it comes to the realty segment. However, it should be noted that IT/ITeS sector was not the only driving force behind the same. A bullish sentiment in the city was noticed way back in 1993 only two year’s after economic liberalization. A large number of expats moved to the city after Hong Kong was handed over to China. An increase in the population witnessed an appreciation in land values and property prices. This was furthered by the state government’s decision to welcome Information Technology (IT) with open arms. This led to the massive infrastructural developments across the city especially areas like Whitefield and Koramangla. Such developments brought Bangalore’s realty market to spotlight.

As in most cases, suburbs began to develop; same was the case with realty market of south. Bangalore’s neighbouring city Mysore also went on to record a high percentage of property appreciation in the commercial segment. Presence of IT companies like Infosys, Wipro and other upcoming IT parks have taken the property markets to a different level altogether.

The commercial real estate market of Chennai on the other hand has been concentrated within the city limits. Growing in similar lines, IT/ITeS companies have opened operations. The state government initiation has fostered the growth and the city continues to bask in the glory. Structures like TIDEL Parks and Special Economic Zones (SEZs) have begun defining the city’s skyline.

And Hyderabad is the latest player in this segment with a huge boom in the commercial segment. Presence multinational organisations, the city has earned the name of Cyber City.

Of late, Tier II cities like Coimbatore and Trivandrum in the southern part of the country has begun showing promising returns in terms of the commercial real estate segment.

Western and Eastern India

The western and the eastern shores were no exception. Malad and Bandra in Mumbai along with the expansion of Navi Mumbai have been responsible for fostering the commercial property of the market. Existences of SEZs, IT Parks, high-rise buildings are a proof of the same.

Today cities like Nagpur and Pune have also joined the bandwagon and equally contributing towards the growth of the commercial property market of the country as a whole. Pune’s Magarpatta City and IT Parks are examples of the realty boom.

Similarly, the eastern gateway of the country, Kolkata’s commercial real estate witnessed a gradual appreciation. Though commercialization and modernization forayed a little later than other cities, nonetheless the city’s commercial realty estate carved out a niche for itself. Sector V (Five) in Salt Lake City has been renamed as the Salt Lake Electronics Complex while the state government has plans to set up a new IT Park in the southern suburbs of the city.

The country’ economic conditions are expected to keep investors on their toes who are forever ready to capitalize on the same. With the major megalopolises scaling greater heights every day and Tier II joining the bandwagon, the commercial real estate of the country seems to have a bright future.

Sampurna Majumder is a professional writer who enjoys creativity and challenges. Barely a year into new media, she has written several posts, articles and blogs for prominent websites like 99acres.com where one can find all kinds of information pertaining to the world of real estate and property. Sampurna has studied English from the University of Delhi.