India: Indian office market expected to reach 1.2 billion square feet by 2030, report says

The office real estate segment in India is one of the fastest to recover from the impact of the pandemic and the market in the seven major cities is expected to touch 1.2 billion square feet by 2030 and, based on current prices, it will be valued at $165 billion. , said a report from JLL India.

In the post-Covid world, the flexible space segment is expected to grow into a mainstream occupier segment with operator-owner partnerships creating premium office assets.

Due to the move towards a more distributed work model, occupiers will consider strategies to not only make their portfolio more agile, but also to tap into the talent pool of emerging urban centers.

The flexible spaces segment will play a key role in supporting occupant growth strategies given the changing dynamics of portfolio optimization and employee needs. As such, the flexible market is expected to double its footprint in the seven major cities by 2025 to approximately 75 million square feet and cross the 100 million square foot mark by 2030.

“Given the growth momentum, India’s Class A office market across the seven major cities is expected to reach over one billion square feet by 2026 and touch 1.2 billion square feet by 2030. India will continue to remain the leader in technology outsourcing. and build on its gains as the world’s largest R&D center and center of capabilities in financial services, software development, new technologies, artificial intelligence and machine learning,” said Karan Singh Sodi, Regional General Manager, Mumbai and Ahmedabad, JLL.

According to him, with the country’s renewed desire to become a manufacturing hub, engineering and manufacturing companies will set up large R&D centers there, making its office market the most dynamic in the region. India has already proven itself as a global vaccine hub, making it an R&D leader in healthcare and life sciences. The country could potentially account for more than two-thirds of all occupier activity in the Asia-Pacific region.

The office and residential segments in India have experienced a rapid and sustained recovery in recent quarters. With the return of investor confidence, as evidenced by the rise in total institutional investment in the Indian real estate segment, which is set to grow exponentially over the next few years.

“One of the highlights of the post-Covid world has been the recovery of the office segment and this segment is expected to reach over one billion square feet by 2026 in seven cities including Delhi, Mumbai, Pune, Chennai, Kolkata, Bangalore and Hyderabad,” said Sandeep Runwal, Chairman, NAREDCO Maharashtra and MD, Runwal Developers.

India’s Grade A commercial office stock in the top seven cities has a penetration of 42% green certification. The penetration of certified green buildings is expected to cross the 50% mark globally over the next decade. New supply is likely to be rated 70-75% green, even as older projects seek to improve and reduce their carbon footprint.

With occupiers being at the forefront of the green agenda and willing to pay a premium for such green buildings, positive action on net zero carbon commitments by occupiers will drive the commercial office segment to set aggressive targets. sustainability and net zero carbon.

The market capitalization of listed REITs, which currently stands at $8 billion, is expected to grow in several ways as the niche REIT market develops over the next few years.

This will also lead to increased retailer participation. Consolidation of rental assets in all segments Institutional investments in rental assets in all segments will increase, leading to increased consolidation of assets. Portfolio agreements will become important, according to the report.

The rise of e-commerce and “15-minute delivery” has been the strong driving force behind the growth of city logistics and city logistics. Multi-storey warehouses would also be the next step in logistics for efficient land use in last mile delivery locations as well as outlying logistics.

On-demand warehousing provides flexibility and agility for direct-to-consumer sellers to avail of fulfillment or warehousing services as needed. With an omnichannel orientation, customers expect new alternatives such as buying online and picking up in store or shipping from store.

Jose C. Birney