Residential vs Commercial Real Estate – Outlook for 2017 to 2020

Residential vs Commercial Real Estate - Sectors spans in the near future.


Residential vs Commercial Real Estate – Outlook for 2017 to 2020

One of the fastest growing G-20 economies, India promises significant growth in the real estate market. The real estate in India is projected to grow at the rate of 30% over the next ten years.

India has landed on the 9th spot on “price appreciating housing markets” among 55 international markets in June’17, according to the Global House price index study by Knight Frank.

The facts and figures

By 2020, it is believed that the Indian real estate sector will be worth US 180 billion dollars. For the period 2008-2020, the market size of real estate sector in India is expected to increase at CAGR 11%. The PEI (private equity investments) in this sector was grown US$ 6.01 billion last year in 2016. This year the real estate sector in India is expected to have investments worth US$ 7 billion which is expected to rise to US$ 10 billion by 2020, according to CBRE South Asia.

Residential Real Estate

Affordable housing is the road ahead which is attracting the attention of the private developers. The residential real estate market has grown a whopping 70% q-o-q in Q1 2017. Where 18k units were launched in the last quarter of 2016, there are now 30k units launched in first quarter of 2017. This is no doubt a favorable time to buy a residential property.

Another good news is, the Real estate purchase sentiment index has jumped by 2.5 points to 32.3 in September 17 according to ZyFin Research. This means that in the coming year, more Indian consumers will buy or invest in residential real estate.

Commercial Real Estate

Talking about the commercial real estate, IT, retail, and e-commerce have created the biggest demand for office space. The financial capital of the country, Mumbai is adjudged as the best city in the country for commercial real estate investment where you can expect ROI of 12% to 20% by 2020. Bengaluru and Delhi-National Capital Region (NCR) are also considered as the second and the third best for the commercial real estate buying or investing.

Residential vs Commercial Real Estate

While Commercial real estate has a bright future in the next three years, residential real estate is not lagging behind. So residential vs commercial real estate will both need to be watched. Commercial and residential real estate have their own benefits and challenges. While it is easier to invest or buy residential, commercial property may demand more of your time and attention. Also, the residential property has a larger buyer pool when you wish to rent or sell it and hence are more stable.

Commercial real estate, though it may be trickier to handle, but it can give you way lot more money. Talking about the scope of commercial real estate in India, it will be interesting for you to know that India is becoming a preferred outsourcing hub and as per the recent CBRE 2017 Asia Pacific Occupier Survey report, many multi-national as well as Asia Pacific-based companies have lucrative expansion plans for India and China by 2020. This will create a huge demand for office space. The experts believe that the workspace required by IT, BPO and KPO’s will drive the market for next three years and more. The increase in FDI’s in this sector will make the situation more favorable.

But another thing that the property experts point out is that the growth in commercial real estate market is expected to grow hand in hand with the demand for residential apartments too. The IT boom has created a demand for the residential market too especially in the city of Mumbai and Bengaluru. The affordable residential supply with infrastructure and commercial office market development will be attracting both the end-users and the investors.

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