Top 5 Commercial Real Estate Destinations In India

Commercial real estate in India has experienced a steady growth in 2015 with many mega deals being signed by global companies, e-commerce players and even start ups. Investors in commercial real estate seek increasing rental yield, growing demand for office space and improving capital values. On an average, the rental yields for commercial real estate stands between 8-11 per cent across the country.

Here are the top five cities that have outperformed other cities in India:

Mumbai

The financial capital of India, which faces a space crunch, is still the best bet for investors in commercial real estate. Not only is the demand for office space in Mumbai growing steadily, the city is also seeing a spurt in new commercial structures. Many financial companies have been headquartered in South Mumbai for many years now. With the rise of new business parks offering a myriad of amenities including parking spaces, restaurants, gym, connectivity, and many others, many offices are shifting to Lower Parel and Bandra-Kurla Complex (BKC). The ease of transportation and latest in infrastructure are being added to the city, attracting large conglomerates looking for well-equipped large commercial spaces. This change is raising stakes in the office space market of Mumbai, offering an inlet for investors.

National Capital Region (NCR)

Office space market of Gurgaon and Noida have remained active against all odds in the real estate sector. While Gurgaon is a preferred destination for global financial and technological companies, Noida is emerging as the next best destination for many domestic biggies. The rental yields in Delhi-NCR are around eight percent, offering investors an opportunity to make handsome returns. Along with serving the existing clients, the region is also witnessing a rise in demand for quality office space by corporates planning to switch to better campuses.

Bengaluru

The city is the golden goose of commercial real estate. The factors that are driving the office space market here are plenty but one of them is that the city is a well-established IT sector, which provides for base demand. The rise of e-commerce companies including Flipkart and Amazon, have resulted in mega office space deals here. More such e-commerce companies are expected to make a beeline to Bengaluru to set up office, indicating more opportunity for commercial real estate in the city. Yet another area for the growth of commercial realty is the expansive growth of startups in the city.

Chennai

The city has unique advantage in commercial real estate with narrow supply and growing demand for office space. The city, which is emerging as one of the most sought after market for integrated business parks, is causing large scale migration. Office spaces in Chennai, especially in the Grade A and Grade B locations, has become a sellers' market. This is sure a good news for rental yields and return on investment for investors. Areas which are seeing huge growth are R K Salai, Old Mahablipuram Road, Guindy and Anna Salai.

Pune

The pace of transactions for premium Grade A office spaces have been steadily rising in the few quarters for Pune. The growth in the construction of office spaces here is being matched by the demand, which is mostly driven by the IT sector and its growth. A number of global financial companies, too, have been leasing space in the city, pushing up demand, indicating demand from many areas. Like Chennai, Pune might also face a shortage for office space in the next few years giving a good views of rental yields and capital values of premium office space complexes and SEZs in the near-term. The areas which are seeing the most demand are Magarpatta, Aundh and Baner.