Those who missed out on the real estate boom last year don’t have to worry much as the present high in the real estate sector is likely to continue in 2008. As India continues to clock approx. 9% growth rate, the real estate sector will witness a growth of 20% or even more per annum. This rapid economic growth in turn is creating demand for commercial real estate which in turns leads to generating demand for residential units.
According to Cushman and Wakefield, commercial real estate is not just a booming business - it has become the catalyst of growth in a city or location within the city, with retail, residential and hospitality projects planned in and around commercial corridors. According to CB Richard Ellis, another global consultancy firm, in 2007, overall commercial office stock increased by approximately 53 million sq ft, taking the total Grade A (leased) stock to 190 million sq ft showing a growth of around 40%.
Almost all top MNC’s listed on Fortune 500 have started their Indian operations. In order to participate in the India growth story, many new MNCs are planning to enter the market, and those already present, are looking to expand their operations. This has led to a boom in the commercial real estate sector.
The addition of approx. 53 million sq ft commercial office space in 2007 in India is enough to house around 6 million new workforce. This will create huge demand for residential, hotel and retail space. Of the 53 million sq ft, around 6.6 million sq ft of office space has been absorbed in 2007 in the National Capital Region of Delhi.
The story doesn’t ends here another 4 million sq ft of office space will be made available in 2008. Such Large commitment of office space in 2008 clearly suggests that the real estate activity will continue to boom in coming years.
Rentals of office space in most of the NCR went up by around 80%. According to CB Richard Ellis amidst all the buildup in the Indian real estate market, concerns are now being raised about the viability of cost, amongst the MNC ranks, and all eyes are now intently looking at where rentals will move in 2008.
Recently, state governments like Uttar Pradesh, Haryana, have taken a number of measures to supplement the supply of land for the real estate development. The notification of Gurgaon-Manesar Master Plan by the Haryana government has augmented the supply of land for the real estate development. This has provided a new lease of life to the construction activities in Gurgaon and Manesar. Similarly, the construction of Taj Expressway will also make huge tracts of land available for construction purposes.