Commercial real estate is a rapidly growing industry in India backed by a plethora of reasons. With the shift in office trends post the pandemic era, most offices are now encouraging their employees to return back to office in a hybrid or a work from office model. Interestingly, a 2023 report by CBRE showed that rentals in top Indian cities are about 50% lower than competing Asian markets and 60% lesser than the Europe markets, which make India the ideal place for commercial investment.
As the economic landscape continues to evolve, Bangalore stands out as a thriving hub for commercial property investment. A report by Cushman and Wakefield suggests that, “Gross leasing volumes (GLV) stood at 8.3 msf in Q4, a record high for the city and a nearly 4x jump as compared to the previous quarter.” The Silicon Valley of India has been a magnet for businesses and investors alike, and the year 2024 brings with it compelling reasons to consider commercial real estate investing in this vibrant city.
Why Turn to Commercial Property Investment?
1. Booming Tech Industry:
Bangalore - rightly called as the Silicon Valley of India, has a reputation of an IT hub that remains unchallenged. With numerous multinational tech giants and a burgeoning startup ecosystem, the demand for a commercial space, especially in tech parks and IT hubs, is on the rise. Ranging from commercial leases to rental property, an investor can pick from a variety of options to diversify their investment portfolio. In fact, real estate investment also allows you to tap into this ever-expanding market and secure a reliable long-term tenant base.
2. Global Connectivity:
A CBRE report recently predicted that GCCs will likely lease office space of around 60-62 million square feet (msf) in India between 2023 to 2025. Bangalore's Kempegowda International Airport serves as a major gateway for international travellers. With direct flights to key global destinations, the city's commercial real estate market benefits from increased global connectivity. This accessibility is attractive to multinational corporations looking to establish or expand their presence in India, further boosting demand for a commercial space.
3. Thriving Start-Up Ecosystem:
Bangalore is home to a vibrant and dynamic startup ecosystem. As new businesses emerge and existing ones expand, the demand for office spaces and flexible working environments continues to grow. Commercial real estate investment allows you to cater to the needs of these startups, positioning your investment at the forefront of innovation and entrepreneurship. Depending on the variety of property type that a property owner or tenant might pick from, it also gives them a good place to set up a reliable cash flow.
4. Infrastructure Development:
The city has witnessed significant infrastructure development in recent years, with ongoing projects enhancing connectivity and accessibility. Improved road networks, metro expansions, and the development of business districts contribute to the overall attractiveness of commercial real estate in Bangalore for both active and passive income. Furthermore, investing in areas with upcoming infrastructure projects can lead to substantial appreciation in property value.
5. Stable Real Estate Market:
Despite economic fluctuations, Bangalore's real estate market has displayed resilience making it a good investment opportunity. The city has consistently ranked high in terms of property appreciation, making it a reliable choice for long-term investors and even a wide tenant base. Commercial real estate investment in Bangalore offers stability and the potential for attractive returns, making them an appealing option for those looking to diversify their investment portfolios with a higher rental income.
6. Educational Institutions and Talent Pool:
With over 70,000- 80,000 fresh talent pools in Bangalore, per a 2023 CBRE report, it is a great place for GCCs to establish office spaces and commercial investments. Bangalore boasts a robust educational ecosystem, producing a skilled and diverse workforce. Businesses, especially in the tech sector, are drawn to the city due to its access to a talented pool of professionals. Commercial property investment options cater to the needs of companies seeking proximity to renowned educational institutions and a skilled labour force with effective property management.
7. Cultural and Lifestyle Appeal:
Bangalore's cosmopolitan culture, pleasant climate, and quality of life make it an attractive destination for professionals and businesses. The city's appeal goes beyond business, contributing to the overall demand for commercial spaces. Commercial property investment allows you to align with the lifestyle preferences of businesses and professionals seeking a vibrant and dynamic work environment.
Why Should You Be Investing in Commercial Property?
As we step into 2024, Bangalore's commercial real estate market stands as a beacon of opportunity for a commercial real estate investor. With the booming tech industry coupled with the perfect mix of weather, culture and talent pool, Bangalore is an ideal destination for a real estate investor with a good investment strategy. In fact, it is one of the top cities in the country where an investor looking to make a lucrative commercial real estate investment can heavily benefit.
If you’re looking for more information on understanding commercial real estate and diversifying your investment portfolio, get in touch with our team at Strata!