Housing Set To Benefit As Businesses Target Millennials With Revamped Leasing Strategies

By 2020, the average age of Indians would be 29 years. While other leading economies are ageing with more seniors than youngsters, India has a distinct advantage. A direct advantage can be seen in the way businesses are growing every day and there is increased investor interest in terms of commercial real estate. Increase in space take-up owing to the youth force is also helping shape housing demand in terms of rental and capital purchase. Here’s a look:

Longer leases, more leases

The hint is clear. The likes of Gartner, Bank of America, BCG, Google are pre-committing space in properties include DLF upcoming Cyber Park and Unitech Signature Tower on the National Highway (NH-8) in Gurgaon.

Some others such as IKEA bought 10 acres of land parcel in Gurgaon from HUDA, Lava International opted for Greater Noida to set up manufacturing unit, Hyundai is relocating its office to Gurgaon and buying commercial space in Sec 29, GSK in the past few years bought close to 60,000 sq ft in Hines One Horizon Center on Golf Course Road in Gurgaon, etc. Can you see this march from leasing to buying? It speaks of a long-term commitment.

Where they are leasing, the lease time is longer. Typically, the lease term may be of nine years but the National Capital Region (NCR) is seeing negotiation in such contracts, some of them being extended to 12-15 years. These businesses may be shielding themselves against market uncertainties. However, it is clear that they are here to stay. This should give not just job-hunters but homebuyers as well to look at properties close to such coveted job markets. If you are investing early on, you may have the first-mover advantage as well.

Space efficiency

More and more corporates are looking at making the most of space. Smaller offices at affordable prices may be the reality now but this way companies are able to save. Co-working spaces are the modern-day flexible reality. To cut down on costs, some companies have also shifted their support functions to affordable zones making it easier for the organisation to save up. This has helped residential real estate as well. Property developers have moved to the peripheries to construct budget homes for the mid-income segment.

Going further, we may get to see a favourable impact on residential buying and renting.