BMI View: The government's reform agenda will lead to an improvement in India's business and investment environments. This includes this includes funding for key infrastructure developments and allowing greater levels of foreign direct investment (FDI). We believe that these developments will present opportunities for growth in the commercial real estate market in the long term. However, external challenges and slowing headline growth will limit the scope for sector growth in 2016.
Slowing global demand is dampening growth in the Indian economy. This is exacerbated by domestic issues including the slow progress of economic reforms, high interest rates and a struggling agricultural sector. India's real GDP growth decelerated to 7.3% y-o-y in the third quarter (ending December 2015) of the 2015/16 financial year, from 7.7% the previous quarter. However, we do expect the services and manufacturing industries to perform well in 2016, which bodes well for continued demand for office and industrial space.
Overall we see rental rates remaining stable in the office real estate industry in 2016. The steady growth of India's IT and business process outsourcing (BPO) industries, as well as the local pharmaceutical industry, has led to good demand for grade A office space, putting upward pressure on rental rates in the premium segment. Meanwhile, government reforms are conducive to small company start-ups, which could see demand rise for lower grade property in less central locations.
In the retail segment, changes in regulation of foreign direct investment (FDI) should lead to an increase in interest from foreign retailers, and thus a rise in demand for space. This offers good long-term potential for the real estate industry, but in the short term the pipeline of new supply will slow on the back of lower absorption rates. We see rental levels remaining stable in 2016, although demand will be strong for premium space.
In the industrial real estate sub-sector demand is set to be driven by India's strong manufacturing industry, as well as its rapidly growing retail, particularly e-commerce, sector. The autos industry is a major driver of demand, and is performing well. Demand for premium logistics and warehouse space is good, although there is ample space available, which is limiting the scope for rental rate rises.
The Indian economy has been resilient in the face of slowing global economic growth, boosted by rising local demand. Along with the government's structural economic reforms, this should lead to continued investment in Indian commercial real estate.
The India Real Estate Report features BMI Research's market assessment and independent forecasts of major construction projects in the residential and commercial markets, plus rental prices and yields in major cities. The report critically analyses the prospects for real estate within the broader economic and financial context - both domestic and global - via our econometrically-modelled and clearly explained banking and economic forecasts and follows this through to evaluate the implications for REITs.
BMI's India Real Estate Report provides industry professionals and strategists, sector analysts, business investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the real estate industry in India.
- Benchmark BMI's independent real estate industry forecasts for India to test other views - a key input for successful budgeting and strategic business planning in the Indian real estate market.
- Target business opportunities and risks in India through our reviews of latest industry trends, regulatory changes and major deals, projects and investments.
- Assess the activities, strategy and market position of your competitors, partners and clients via our company profiles (inc. SWOTs, KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis covering real estate and construction, regulatory changes, major investments and projects and significant national and multinational company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the real estate sector and within the broader political, financial, economic and business environment.
Industry Forecasts Outlook
Historic data series (2010-2013) and forecasts to end-2019 for the domestic real estate industry and for the local and global finance industry.
- Real Estate: Office, retail and industrial real estate yields for all major cities (%); short term forecasts on minimum and maximum real estate rental prices by sub-sector (USD per square metre and local currency per square metre).
- Construction: Industry value (USDbn); contribution to GDP (%); employment (‘000); real growth (%).
- economy: Economic growth (%); nominal GDP (USDbn); unemployment (%); interest rates (%); exchange rate (against USD).
BMI’s Real Estate Risk Reward Index
BMI’s Risk Reward Indices provide investors (real estate vendors, construction companies and financial investors) looking for opportunities in the region with a clear country comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide an indices of highest to lowest appeal to investors, with each position explained.
Overview of the real estate sector, including analysis of existing/planned real estate developments and emerging industry trends in the office, industrial and commercial sectors
Features detailed city-level data and analysis on rental prices, yields, contract terms and real estate availability with separate chapters covering the office, retail and industrial sub-sectors.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.