Commercial Property Development in India can be divided into two constituents. While development of office complexes in and around established or emerging business locations had taken off around mid-90’s ( it was the time when reforms programme had reached to a critical stage and by and large it was accepted that it is irreversible), the development of malls and retail spaces had really kick started around 2000.

But on a cumulative basis now, the graph of both the segments is only moving northwards. That too, not by inches but by leaps and bounds. On an annual basis, the demand for office complexes is increasing by nearly 25 million sq. ft. and India metros and also some tier1 and tier 2 capitals together boast of over 40 malls and another 150 is projected to be in place by 2010.

Commercial development till now in India, no doubt, has remained centered around metros like Delhi, Mumbai, Bangalore, Pune, etc. but it is fast stretching its wings to new destinations like Ahmedabad, Baroda, Chandigarh, Jaipur, Cochin, Goa, Mysore, Visakhapatnam, and Trivandrum. There are concrete evidences to suggest that businesses are now analysing the potential of some 20-25 cities within the country which have an average population of about 1-­1.5 million.

The need to bring down their operational cost has influenced them to look for new locations since the prices in metros have already hit a stratosphere. State governments at many of these locations are playing the supportive role in terms of policy initiative and in improving infrastructure. State Governments have realised that in order to attract FDI and continue the growth momentum in their respective regions and remain competitive, they will have to develop Tier II and Tier III cities.

The State Governments of Gujarat, Punjab, Uttar Pradesh, Rajasthan and even West Bengal and Kerala have already recorded success in promoting Ahmedabad, Chandigarh, Lucknow, Noida and Greater Noida, Jaipur, Kolkatta and Kochi as the next major business destinations in the country. Another key factor is the aggressive role played by NRIs in promoting new locations. The emergence of Chandigarh and Mohali as the next big IT locations has primarily been contributed by the enthusiastic support of some NRIs.

As far as real estate development in the commercial segment is concerned in India, the buzzword is as it moves to the next phase of development (say in 2-3 years); companies will aggressively explore having their bases in Tier III cities for cost advantage purposes. With literacy rate rising in India, getting desirable personnel to work will not be a problem. Furthermore, this talent pool will be available at much cheaper rates. And when this movement will begin, there will be all round development in terms of setting up of mall, multiplexes, etc. at these places and thus the entire value chain of real estate (commercial) development will get a boost.