The commercial segment of Indian realty is finally witnessing signs of recovery as property developers are showing an increased interest in office spaces. The demand for office spaces has rocketed so much so that developers are already facing a supply constraint in ‘Grade A’ office spaces. This is because ever since the gloom hit the real estate sector, developers have not launched any major new commercial projects after 2009.
Cushman & Wakefield, the property consultant firm, has estimated that by the end of 2015, net absorption of office spaces in the top eight Indian cities will reach approximately 36.5 million sq. ft. This figure will be the highest since 2008 (40 million sq. ft.), exceeding 2014 by 18 per cent and 2013 by 65 per cent. These figures are a clear respite to the builders, who are not getting much success on the residential front.
Major realty developers such as Supreme Universal, RMZ Corp, Vatika Group and Mantri Developers are in the process of launching new commercial projects to meet the growing demand for the same. RMZ, Bengaluru is all set to expand its portfolio by acquiring assets in Gurgaon, Mumbai, Hyderabad and Pune. The group converted a 5 lakh sq. ft. property in Devanahalli, Bengaluru into office spaces and is further aiming to increase its annual construction of 2 million sq. ft. to 3 million sq. ft.
In addition to constructing new office spaces, many builders are also procuring ready properties. Supreme Universal is launching new commercial projects in Mumbai as well as undertaking many joint ventures and preleased office spaces. While Vatika Group is all set to increase its commercial portfolio in Delhi NCR, Mantri Developers has converted a hotel of one million sq. ft. into office spaces.
Ironically, 2009 witnessed an opposite tendency in the real estate market of India wherein developers were converting commercial property into residential property. But over the last one and a half year, the two segments have reversed roles as the demand for office spaces has gradually gone up. However, Sanjay Dutt, Executive MD, South Asia, Cushman & Wakefield feels confident that the creation of more jobs will result in increased demand for residential properties too. And when his happens, South India will be the first to witness an improvement in its residential sector, say experts.