Numbers do not always tell the whole story. But they are revealing nonetheless. In 2013, direct investment transaction volumes in India’s commercial property sector stood at around US$1.3 billion. By contrast, in China (excluding Hong Kong), investment activity reached US$27 billion. In South Korea, transactions stood at US$12.2 billion, data from MSCI shows.
The woefully low level of investment in India – a leading emerging market that at the time was already the world’s third-largest economy in purchasing power parity terms – spoke volumes about the problems bedevilling the country’s property industry.
As recently as a decade ago, the sector was notoriously opaque, poorly regulated, beset by delays in project delivery and starved of institutional capital. According to Colliers, Indian commercial and residential real estate was only a US$70 billion industry in 2010, accounting for just 5 to 6 per cent of the country’s economic output.
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However, the sector has undergone a transformation. In one of the most profound shifts in global real estate, a mix of policy reforms, a world-beating information technology (IT) outsourcing sector, an aspirational middle class, the professionalisation and institutionalisation of the industry and the forces of digitalisation and decarbonisation have turned India into one of the world’s best-performing property markets.
The facts speak for themselves. India’s office market is the fourth-largest in the world. The stock of office space surpassed 1 billion sq ft this year, with grade A buildings accounting for 54 per cent of the stock. In Bengaluru, India’s thriving tech hub, the share is nearly 70 per cent, data from Knight Frank shows.
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Multinational companies have tapped into India’s vast talent pool and capitalised on cheaper occupancy costs, driving spectacular growth in global capability centres.