The commercial realty sector is back on the track of fast growth, coming out of the slow-down phase during 2016-2017, following the economic reforms implemented in the country. Unlike the residential housing sector, growth in the commercial realty sector is back on track. Thanks to the regulations implemented in the economy, the transparency in the realty sector has increased and investors are interested in buying these properties. The commercial sector has witnessed rapid development in the post-reform period. It has undergone several corporate funding, M&A deals and companies are interested in taking rental office spaces in the key cities of the country. Particularly, in the past month, a number of transactions in the commercial realty sector have strengthened the real estate market.
The experts have noted that the developers are more interested in buying commercial spaces in the important cities than residential properties. The demand for commercial property in India is high, as several blue-chip companies and MNCs are expanding to the big cities. In the previous month, Ghodawat Enterprises sold off Pinehurst, its fully leased building, to an overseas fund. The asset was leased to an MNC and it was sold at a value of approximately INR 350 crore. The real estate companies are receiving a number of offers from the bidders. This clearly highlights that the domestic and international funds are coming in and the investors are looking for grade ‘A’ pre-leased assets for office spaces.
In the previous month, Indiabulls Dual Advantage Commercial Assets Fund purchased a commercial office tower from Hines India, a reputed real estate company in India in Gurugram. This was its first transaction from the new office fund. Apart from this, Indiabulls has entered a partnership with Interglobe Real Estate Ventures, its co-investor for an acquisition. Indiabulls Dual Advantage Commercial Assets Fund was launched by Indiabulls Asset Management in 2017 to raise about INR 1500 crore. This includes INR 500 crore from the co-investors. This is an alternative investment fund and will be invested in buying office properties generating stable income on rent, along with capital appreciation on exits.
The growth of the commercial real estate sector is important for the realty economy, as it will help the industry to recover from the crisis that it had landed in. After demonetization, implementation of GST and the inception of RERA, the realty sector suffered a slowdown. The investors, too, were waiting for the RERA guidelines for months, that slowed down the sales process during the period. However, with the norms finally being implemented, the investors are back and the real estate economy is showing signs of recovery. The residential sector has also been recovering; however, the commercial real estate sector has been developing fast. The returns on selling commercial property in India are high. The rental returns are also good, which is the key reason behind the high demand for commercial real estate in India. If you are interested in buying a commercial real estate, this is the right time for you. The prices of these properties are likely to rise in the coming months. You can strike a lucrative deal now by investing in the commercial real estate in India.
