Commercial real estate: Upturn amidst downturn

The country is passing through economic downturn and it is likely to continue. Investment avenues are fast disappearing; commercial real estate remains the only silver lining. It has given a positive return in the last four to five years and this trend is likely to continue in year 2020.

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Commercial real estate has performed exceptionally well not only in the year 2019, which was mired by downturn, but has been giving steady returns for the last four to five years. According to Colliers, the commercial office assets accounted for 46.0% of the total inflows during 2019 totaling USD2.8 billion (₹ 19,900 crore), with the sector backed by strong demand dynamics and rental appreciation. During 2019, Blackstone alone invested about USD1.5 billion (₹ 10,650 crore) in office assets. In a latest study by ANAROCK Property Consultants, Indian real estate attracted more than USD 5 billion private equity inflows in entire 2019, out of which commercial real estate attracted USD 3.3 billion of PE funds in 2019. Approximately 60 percent of the private equity inflows was in the commercial real estate. This gives us the level of confidence private equity investors have in India growing commercial real estate. “Commercial real estate segment has delivered a stellar performance in the last four to five years,” says Anuj Puri, Chairman, ANAROCK Property Consultants. “India’s commercial real estate has been on a high since the last few years and 2019 was no different. This segment remained quite vibrant during the year with demand for Grade A office space spiralling upward while vacancy levels seeing a downturn,” adds Anuj Puri. As per ANAROCK research, of approximately USD 14 bn of foreign private equity in Indian real estate between 2015 and 2019, more than 60% (approx. USD 8.4 bn) was in commercial real estate alone. “The commercial real estate has been attracting increased attention from investors from around the world. The segment has changed the contour of the Indian real estate space in recent years. The Reserve Bank of India data has shown a positive trend where lending to the commercial estate has risen to 15 percent by July 2019, as compared to just 4.2 percent of the last year. The lending space left by NBFCs h