The Indian startup ecosystem is at the forefront of the commercial real estate market.

The growing presence of startups in India has led to a surge in demand for commercial real estate, encompassing offices, retail spaces, warehouses, and industrial areas. India boasts the third-largest startup ecosystem globally, with thousands of new startups emerging annually. With over 70,000 registered startups and more than 100 in incubation, currently valued at hundreds of billions of dollars, the country's startup scene is on an exponential growth path. This growth has also been fueled by the pandemic-induced reverse migration of talent, creating numerous opportunities for local startups. Factors such as changing attitudes towards entrepreneurship, advancements in technology, tax incentives, and various government initiatives have created a favourable environment for startups to thrive. As Tier I cities face challenges like increased urbanisation, high labour costs, and soaring rents, Tier II and III cities have become attractive business hubs, especially with the expanding startup landscape. Approximately 50% of startups registered with the Department for Promotion of Industry and Internal Trade (DPIIT) are from Tier II and III cities. This growth has positively impacted the Indian commercial real estate sector, causing significant disruptions across various segments.

Increased demand for real estate

The expanding startup scene in India has significantly increased the demand for commercial real estate, including office spaces, retail locations, warehouses, and industrial areas. This heightened demand, coupled with the rising consumption of commercial spaces in prime areas, has driven up rental prices and the value of commercial assets, enhancing profitability for real estate players across the sector.

Growth in Tier II and III segments

As Tier I cities struggle with increased urbanisation, high labour costs, and rising rents, their attractiveness as business hubs is diminishing, especially with the startup boom. With cost-effective talent, investor confidence, and robust infrastructure, startups are increasingly moving their operations to Tier II and III markets, boosting the demand for commercial and flexible workspaces in these areas.