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Last Updated : | Source: Housing.com/news

Commercial and office demand determine residential realty trends

Currently, commercial property and office spaces are the true indicators of the future of the real estate market. It is always the absorption of office space that reflects the potential economic activity and job R


Currently, commercial property and office spaces are the true indicators of the future of the real estate market. It is always the absorption of office space that reflects the potential economic activity and job catchment areas, leading to the demand of residential units. That is precisely the reason why some of the traditional city centres across major Indian property markets, are losing to the newly developed locations on the outskirts.


This is because the central business districts (CBDs) of these cities are losing out to the peripheral business districts (PBDs). Businesses are increasingly evaluating the cost of doing business per sq ft in these places. However, this also raises a fundamental question as to whether this trend indicates that there will be a shift from the top eight cities in terms of real estate opportunities.


Urban planning experts believe there is a deeper issue at hand because it is not just about the existing urban centres but also about the way urbanisation will spread in the country. As per the United Nation statistics, the Indian urban population of 40 crores, will increase to 60 crores in less than 20 years. It clearly suggests that the existing cities won’t be able to absorb the additional population, whether indigenous or migrants. So, it is going to be a natural progression to urbanisation with the development of new urban centres; whether that is created artificially or organically.

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See also: Buyers prefer homes in areas with good employment prospects


Naushad Panjwani, managing partner, Mandarus Partners LLP, points out that whenever someone plans to invest in office space, the parameters that they look for, is no longer restricted to Delhi or Mumbai. According to Panjwani, businesses want to go where real estate is cheap; Ahmedabad, Jaipur, Mangalore and even Kolkata. “There are many factors that make a city grow as an investment magnet. The first and foremost criteria is the availability of the talent pool, which has nothing to do with real estate,” explains Panjwani. “That is the reason why Bengaluru and Pune have done so well in IT. They are education hubs with well-educated and English-speaking people. You cannot imagine taking IT to Baroda or Rajkot, even though they are fine cities. Secondly, what are the regulatory environment and government views with regards to these places? That is why the state governments’ policies are very important,” continues Panjwani.


If a heat map of the commercial or office market areas is to be created today, Arvind Nandan, director – south Asia, with Colliers International, states that it will clearly show where the working class is densely located. For instance, Mumbai’s commercial hub has moved from Nariman Point to BKC, Powai, Goregaon, etc. So, someone buying afresh, will want to be close to these areas. “It all depends on where a potential home buyer is working or is most likely to work,” elaborates Nandan. “Suppose someone has zeroed in on one of these three-four areas, then the second consideration is his social life,” adds Nandan.


Nevertheless, the commercial heat map suggests a paradigm shift is in order. The changing preferences for commercial real estate opportunities, are going to change the demand for housing as well.  


(The writer is CEO, Track2Realty)


By: Housing.com/news



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First Published on Sep 8, 2016 11:43 am
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