These factors can influence the future outlook of commercial real estate

Indians, for long, have invested their household savings in gold and real estate. But, real estate investment for many many today is restricted to small plots of land or apartments. Residential apartment investments have not yielded well compared to investments in Grade-A office buildings due to lower rentals, in comparison to commercial assets. However, Suren Goel, Partner, RPS Group, feels that commercial real estate is a complex and dynamic field that is affected by a range of factors. 

Investing in commercial real estate can be lucrative for those who are able to purchase and manage properties successfully. The income potential from commercial real estate can be substantial, with tenants typically signing multi-year leases and paying higher rents than residential tenants. According to Goel, commercial real estate can provide diversification for an investment portfolio and potential tax benefits. 

Here are some of the key factors that can influence the future outlook of commercial real estate in 2023-24:

Economic conditions: The state of the economy is a major driver of commercial real estate demand. The overall health of the global economy, including factors such as interest rates, inflation, and job growth, will play a major role in the future of commercial real estate.

Technology: The increasing pace of technological change has the potential to greatly impact commercial real estate. For example, the demand for logistics and distribution centers have increased with the growth of e-commerce, while the rise of remote work has caused a shift in demand for office space.

Demographics: The demographic trends of any area can a crucial factor in influencing the demand for commercial real estate. Areas, where young professionals are large in number, may see increased demand for office space.

Government policy: Changes in government policy can have a significant impact on commercial real estate, particularly in areas such as tax policy, zoning laws, and environmental regulations.

Investor sentiment: Investor sentiment also has a major role in the future outlook of commercial real estate. If investors are bullish on the prospects for commercial real estate, they may be more likely to invest in new projects, leading to increased supply and potentially lower vacancy rates.

"Overall, the future of commercial real estate will be shaped by a complex and evolving set of factors. While there are some potential trends that may emerge in the coming years, it is difficult to predict the future with certainty, and investors and industry professionals will need to stay informed and adaptable to succeed in this dynamic field," Suren Goel added.