We have witnessed huge demand for the commercial real estate in 2015
with absorption stood at 35 million sq ft the second highest figure
in the country’s history after 2011.We believe that 2016 will be
another active year for the global real estate investment market.
Government has brought in strong policy reforms that will bring in
more transparency to the investors and end users.
Recent policy reforms by the government, will help to improve the
sentiments in the real estate sector. Foreign nationals and
non-resident Indians(NRIs) can now directly invest into domestic AIF
(Alternate Investment Funds) in India. Real Estate Regulatory Bill
has been long awaited and now finally passed will lead to a huge
amount of transparency in real estate dealings. Apart from tax
pass-through status awarded to investors into Indian real estate PE,
the government has also allowed treaty benefits on withholding tax
for investors who can provide the requisite tax residency status.
Investors are finding the real estate sector appealing mainly due
to the relatively higher returns and stability on offer.
The demand from commercial real estate has increased with improved
occupancy and increased rentals. With increased penetration of
e-commerce, demand for quality workplaces and warehouses will be on
the rise. There is an estimated US$ 180 billion being earmarked for
infrastructural development in the logistics sector in 2016-17,
which will also play a huge role in the availability of high
quality commercial spaces for the manufacturing & retail industries.
Also, the automobile sector is seeing boom with many global brands
looking at India as a hub for their Asian markets. This too will
lead to higher demand for commercial spaces.
In year 2016 & 2017, office space demand to come from
number of sectors such as IT/ ITeS,e-commerce,start-ups ,FMCG, BFSI
Pharma, and Manufacturing. Real estate industry is maturing and next
few years will see huge upside the real estate sector with the
regulation and government policies in place. Growth in the Indian
economy will definitely see favourable reflection in the real estate
sector, as well.
This is the right time to invest in commercial real estate
as the assets are available at attractive valuations on the background
of falling interest rate environment, which increases the appreciation
potential for the investors.Commercial assets provide regular dividend
payouts and healthy returns of around 17-18% p.a.