India's $5 Trillion Dream Needs More Office Spaces, Not Just Homes

India is on an ambitious journey to become a $5 trillion economy wherein the role of the real estate sector is more critical than ever. Making up for approximately 8-9% of the nation’s GDP and standing as the second-largest employment generator after agriculture, real estate role in becoming a global economy is far more than just adding homes.

It is the foundation of business growth, innovation, and productivity, particularly through the development of commercial office spaces that makes its role important.  A rising imbalance between residential and commercial real estate projects however has come as a challenge to this economic momentum.

Residential offerings continue to flourish, backed by favourable housing loans and growing homeownership aspirations. But likewise, commercial office space development has not kept pace. A major contributor to GDP is the service sector which depends on a well-structured office space that support businesses, create jobs, and drive economic activity. In absence of sufficient commercial real estate, India cannot shrug away the risk stunting its business expansion potential, limiting job creation, and reducing overall economic efficiency – all of which are extremely important for reaching the $5 Trillion milestone.

In India, the commercial real estate sector has seen a change in the usual dynamics with a shift toward remote working. Work from home has led to reassessment of office space requirements and the emergence of new investment patterns. Innovative approaches to commercial property investments can be seen with flexibility and cost-efficiency being accorded priority.

As India's financial and economic growth capital, Mumbai exemplifies this problem. News reports tell us that the city witnessed a 23% decline in new office space supply in 2023, with available commercial real estate at a historic low of just 2.7 million square feet, according to data collated by global workplace services firm Vestian. The data indicates that serious need for modern, well-equipped office spaces that businesses need. Commercial real estate is closely linked to infrastructure growth with development of quality office spaces requiring the support of well-connected roads, rail networks, and metro systems. This offers significant accessibility and improves a city’s attractiveness for businesses.

While India has made significant strides in infrastructure development, the commercial real estate sector calls for similar development commensurate to ensure a seamless integration of business districts within urban landscapes. The need of the hour is for the development of business parks, IT hubs, and commercial corridors alongside residential expansion. Government policies need to prioritise this need by offering incentives for commercial real estate development. This could be through easing regulatory bottlenecks, and aligning urban planning strategies with business needs thus stimulating office space supply and, in turn, spur economic growth.

Urban India is only possible with embracing digital transformation through which the nature of workspaces is evolving. The rise of technology-driven industries, sustainability initiatives, and hybrid work models have brought out the need for flexible, well-equipped office spaces. The growth of co-working spaces and smart office environments indicates a shift in workplace preferences, although the supply of such spaces remains inadequate. The lack of adequate investment in modern office real estate developments, businesses may struggle to adapt to these changing needs, leaving an impact on productivity and innovation.

India’s $5 trillion economy projections among other growth engines, also hinges on a well-balanced real estate strategy that factors in the significance of commercial office spaces. A residential expansion strategy is necessary to accommodate a growing population, and commercial real estate must not be neglected. By encouraging mixed-use developments, expanding business hubs, and ensuring that infrastructure development supports commercial growth are key steps toward meeting economic objectives.

By addressing the shortage of office spaces and fostering a business-friendly environment, India can easily attain its position as a global economic powerhouse. A thriving commercial real estate sector will sustain business growth while simultaneously attracting foreign investment, enhance job creation, and support the overall economic trajectory. For India to meet its aspirations of reaching the $5 trillion mark, it must also create office spaces where its future economy will take shape.

About the Author:

Hardik is an experienced principal architect with a demonstrated history of working in the real estate industry. He is a strong professional holding a Bachelor's degree focused in Architecture from Sir J.J College Of Architecture. Hardik specializes in project management, customer service, and strategy.