Emerging Trends in the Commercial Real Estate Services in India

With over three decades of experience in the real estate industry, Anshuman has been instrumental in formulating efficient business strategies for CBRE that have led to the company reaching the pinnacle of success. In a recent conversation with Siliconindia, Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE shared his insights on various aspects surrounding the commercial real estate sector in India. Below are the excerpts from the exclusive interview

Tell us about the evolution of the commercial real estate services segment in India in recent times.

Despite global challenges, the Indian commercial real estate landscape in 2023 was characterized by significant growth, resilience and transformative trends. The office sector saw a 4-year high in office leasing activity, with a gross absorption of 61.6 million sq ft in 2023 across nine cities, registering a growth of seven percent YoY. Owing to the growing focus of developers and occupiers on sustainability, green-certified office stock in India has increased by over 36 percent since 2019 to about 342 million. sq ft across the top six Indian cities as of 2023. The retail sector too has demonstrated significant vitality in 2023, and there has been a trend reversal post-pandemic, with domestic retailers accounting for almost 75 percent of the overall leasing during most of 2023. Interestingly, this leasing is spread across many segments and not limited to only the F&B segment.

In the Industrial and Logistics (I&L) sector, 3PL players dominated leasing with a share of 45 percent, followed by engineering & manufacturing players in a major part of 2023. Balancing occupier demands for flexible working models and sustainable practices, the sector has proven its enduring strength and is likely to reach a 5-year high absorption mark of 36-38 million sq ft in 2023 across top eight cities in India. Supply addition too is expected to outperform and will touch 35-37 million sq ft in 2023, driven by the completion of pent-up projects.

How is the real estate industry using virtual technologies such as AR/VR to their advantage?

Technology is changing how investors and occupiers experience spaces in recent times. For example, occupiers can now tour sites worldwide instead of relying on physical site visits. Evolving AR/VR technologies will make these experiences even more immersive, allowing spaces to be dynamically altered and enabling consumers to instantly assess different layouts and patterns. Real estate developers who are enhancing customer experience by introducing key elements of touchless surfaces, smart homes, and visualisation through VR or metaverse are in the long haul for creating differentiated value among consumers. Not only has this allowed for wide geographical reach, but is also expected to give the benefits of real-time remote monitoring, predictive maintenance, accelerated risk assessment and production time, and better team collaboration, enabling effective financial decision-making.

Innovations in AR/VR, blockchain, and AI-driven property management are streamlining operations, improving decision-making, and enhancing the customer experience. Advanced security systems with AI and ML are making properties safer through facial recognition systems, smart locks, and automated surveillance. Additionally, Generative AI is transforming the future of commercial real estate by supporting property operations, acquisition strategy, and portfolio planning.

How is the commercial real estate sector contributing towards sustainability?

The commercial real estate sector is recognizing its ability to influence the way buildings are built, sourced, and managed, leading to a more sustainable and environmentally focused approach. The influence of global and national directives such as the Corporate Sustainability Reporting Directive (CSRD), standardized climate-related disclosures, and India’s Business Responsibility & Sustainability Reports (BRSR) are compelling occupiers to opt for next-generation, environmentally certified office spaces. By integrating these sustainable practices into their operations, commercial real estate developers, investors, and owners are actively contributing to environmental sustainability. This commitment not only aligns with global sustainability goals, but also results in significant long-term cost savings for stakeholders. Moreover, implementing these practices enhances tenant satisfaction by creating a healthier and more sustainable living and working environment, further reinforcing the value and appeal of such properties in the real estate market.

What does the future hold for commercial real estate services in India?

Going forward, the commercial real estate sector anticipates cautious corporate expansion plans due to the global economic scenario and evolving hybrid workplace models. While India continues to be a draw for leading corporates’ GCCs, domestic companies from sectors such as BFSI and engineering & manufacturing would continue increasing their appetite for offices in the top cities. Hybrid working policies emphasizing the ‘office-first’ model are expected to encourage collaboration and boost productivity. Return-to-office planning, marked by experiential workplaces, is a top priority for occupiers, coinciding with improving office occupancies and utilization rates.

In industrial & logistics sector, the share of project completions by major developers is expected to rise. Driven by the premium commanded by new investment-grade, tech-enhanced, and strategically located assets, rent growth in select micro-markets is anticipated. The 3PL and engineering & manufacturing sectors are expected to lead demand supported by the adoption of ‘multipolar’ supply chain strategies and government pro-investment efforts. Collectively, these factors underscore a promising trajectory for the I&L sector, emphasizing sustained growth and strategic development to meet evolving market needs.

Dynamic trends characterize the future of the retail sector, wherein malls transforming into entertainment hubs contribute to rising footfalls in brick-and-mortar stores, particularly those enhancing the shopping experience. Retailers are committed to upgrading in-store experiences through technology, consumer engagement, space optimization, and personalized services. The sector’s future hinges on innovation, technology integration, and a dedicated focus on personalized & experiential shopping, reflecting a dynamic and evolving retail landscape.

In terms of residential sector, projects in the premium and luxury segment would continue to witness healthy traction amidst a spate of new launches. Affordability will no longer be the sole decisive factor for homebuyers as health & safety, sustainability and integration of smart home technologies have also started to emerge as being core to home purchase decisions.

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