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Investment in Commercial Realty Grows with Growing Economy

May 17, 2024: Commercial real estate in India is booming, and its market size, which is currently estimated to be USD 40.71 billion (2024), is expected to grow at a CAGR of 21.10% and reach USD 106.05 billion by 2029, as per a report by Mordor Intelligence.

Much of it is due to the country’s unprecedented economic growth along with government initiatives, such as Make in India, and other reforms in the realty sector like RERA.  

As the country’s economy grows from the world’s fifth-largest to the world’s third-largest, the commercial realty sector offers immense investment opportunities. Institutional investors and NRIs are also betting on commercial real estate’s potential. 

“Investing in commercial real estate offers a range of benefits. Commercial properties typically yield higher rental returns than residential ones, especially in prime locations of NCR like Dwarka, where annual rental yields can be quite high. This provides a steady and often substantial passive income, offering more stability compared to volatile assets like stocks or mutual funds,” says Mohit Goel, Managing Director, Omaxe Group.  

Strategic investments in commercial properties in high-growth areas can lead to substantial appreciation over time. For example, areas like Noida Expressway, Yamuna Expressway, Dwarka Expressway, Dwarka Sector 19B, Sohna Road, etc., are experiencing rapid growth and are likely to witness a massive surge in demand for commercial spaces, making investments lucrative.

“Commercial real estate presents opportunities for diversification, enhancing resilience against economic downturns. It also serves as a hedge against inflation, as property values and rental rates tend to increase during inflationary periods. Moreover, owning commercial property can facilitate business expansion, providing readily available space for entrepreneurial ventures while offering potential savings on rental expenses,” says Salil Kumar, Director (Sales & Marketing), CRC Group. 

“Leveraging commercial properties for loans can further optimize financial strategies, with lower interest rates than unsecured business loans, providing additional liquidity for business endeavours. NCR’s rapid infrastructure expansion, the growth in its stature as a global corporate hub coupled with a surge in leasing activities make investing in commercial real estate an exceptionally promising and lucrative decision,” says Sanchit Bhutani, MD, Group 108.

“This sector holds strong appeal, especially for Non-Resident Indian (NRI) investors who regard it as a cornerstone of their investment strategy. Notably, office spaces within the commercial real estate sphere garner significant interest from NRIs, who demonstrate a keen inclination towards allocating a considerable portion of their investment portfolio to this thriving sector,” says Sanjay Sharma, Director, SKA Group.

“Leasing is anticipated to remain robust going forward along with rental values also expected to increase, which will lead to substantial returns on investment in the commercial real estate sector. Even though the quantum of money to be invested in real estate is vast, obtaining finance for commercial real estate investments is not very easy. If there is availability of finance for this sector this sector is likely to boom even more,” says Uddhav Poddar, Managing Director, Bhumika Group.

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