Who says real estate is bleeding red. On the contrary, things are improving at a fiery pace. In what seems to be immensely positive news for the realty sector, the rapid expansion spree of large corporates has led to a massive shortage of office space in India’s top metros and other developing cities. As a result the rentals have shot up by a whopping 10% in the past few months, negatively impacting growth plans firms.
The year 2014 witnessed a slew of gigantic office deals struck by ecommerce and IT giants in close to 7 major Indian cities. The trend has carried on in the year 2015 as well. For instance, companies like Flipkart, Jabong, and Snapdeal have leased a staggering 335000 sq.ft, 205000 sq.ft and 337000 sq.ft respectively, across Delhi, Bangalore and Mumbai. If experts of realty space are to be believed then there is a massive supply crunch of large office spaces. But the demand is on the rise, thus leading to a continuous spike in rentals and price.
The problem is highly likely to carry on for the corporates as no developer has any office space immediately ready for possession, while existing offices are already sold or leased out. Corporates are therefore forced to look at and analyze alternate office spaces which pale in comparison to the better and grander options currently not available. Companies are researching in detail other nearby cities and areas within a city for space as a result, along with looking at having multiple smaller offices in a city.
But it is important to keep in mind the fact that the rise I demand for office space is just kicking off. Indian firms are expanding at a rapid pace and a torrent of MNCs is vying to enter the Indian market on a daily basis. Not to forget the budding startups and entrepreneurs who are scaling up by the minute. They will therefore obviously require new or more office space for expansion. Corporate India thus rightly has its fingers crossed for new state of the art office spaces very soon.
This is therefore a very positive sign of things to come for India’s real estate sector. And as far as real estate investors are concerned then this trend presents an unmatched opportunity like no other. Tremendously high return on investments and monthly rentals are all but guaranteed. Therefore prudent and wise investors should invest their money in commercial real estate projects in order to significantly multiply their wealth. If they don’t want to sell their property to gain from price appreciation then they have the alternative to lease it out to a large corporate and benefit from the the ever increasing lease rentals.
All in all, this is a very positive breakthrough for the realty industry and realty investors. Just hope that things will improve from their view point of corporates as well.