Demystifying CRE Investing in India – A Closer Look with Nuvama
Commercial real estate (CRE) includes income-generating properties such as offices, retail spaces, warehouses, and industrial parks. It differs from residential real estate not just in function but also in structure. CRE, as an investment avenue, typically offers longer leases, lower vacancy volatility, and higher rental yields.
India’s commercial real estate market is set to double by 2029, with 21% CAGR
India’s commercial real estate market is valued currently at USD 200 billion, with projections to reach a trillion dollars, driven by demand across offices, warehousing, and retail.
Office space dominates the market, contributing 40–45% to the overall market size
2024 marked a record high for office leasing at 81.7 million sq. ft. (msf), with major contributors of demand being technology firms (42%). Vacancy rates have declined from over 17% in 2021 to around 15% in 2024. India’s office market maintained strong momentum, recording about 42 million sq. ft. (msf) of leasing activity in H1 2025.
India is the global leader in commercial real estate, not only because of its real estate depth but also due to its unmatched pool of skilled manpower which has been a long-term moat. This synergy makes India a dominant destination for global occupiers—especially multinational corporations looking to establish Global Capability Centres (GCCs) and innovation hubs. The combination of workforce scale and modern infrastructure makes India an unparalleled value proposition in the global CRE landscape.
CRE’s importance in portfolios
CRE has always been important in global portfolio construction for its ability to deliver:
- Commercial real estate provides consistent rental cash flows alongside the potential for capital appreciation over time.
- As a physical asset, it has a tangible backing with low correlation to equity, hence offering true diversification.
- Registered Lease agreements with built-in rent hikes help preserve real returns and offset the impact of inflation.
Traditionally, access to quality CRE has been the domain of global institutions and domestic investors have suffered due to lack of access. However, domestic institutional ownership is now being actively encouraged through AIFs, and multiple channels are opening up to enable broader investor participation. From direct investments to fractional ownership models and pooled vehicles such as REITs and AIFs, there are now diverse avenues for Indian investors to be part of this growth story.
Exhibit 1 -Office Space in India (2019-2024) (MN.SFT)
Key growth drivers of CRE led by Office Spaces within India
- Global Capability Centres (GCCs): GCCs now account for ~30% of total office leasing across major cities. This demand will continue to accelerate further as India’s role as a global GCC hub is being solidified India’s role as a global GCC hub is being solidified . With over 1,800 centres currently operational and projections of 2,400 GCCs by 2030, this demand is shaping new office supply and institutional interest.
- Domestic Tenants & MNC Expansion: India’s growing economic influence has not only attracted global corporations but also encouraged domestic companies to expand aggressively. A key trend has been the “flight to quality” — with businesses increasingly opting for Grade-A office spaces that offer modern amenities, wellness features, and ESG compliance.
- Co‑working & Flexible Space Operators: Co-working/flex space leasing reached 13 msf in 2024, up ~30% year-on-year and leased 65 lakh sq ft across seven major cities in H1 CY2025, a 48% YoY , signalling shifting workspace preferences. India’s flexible office space market is projected to expand to 125 million sq. ft by March 2027, up from 80 million sq. ft in December 2024. The demand for flexible spaces has increased rapidly, driven by the need for flexibility, short-term leases, and lower upfront costs for tenants.
The shift toward Grade A+
A defining theme in Indian commercial real estate is the growing shift toward Grade A+ office spaces—high-quality, future-ready assets that meet evolving tenant expectations. These buildings go beyond basic functionality, offering a full suite of features that drive long-term occupancy and value. Grade A+ offices stand out for their ESG compliance, design efficiency, superior maintenance, tech integration, and tenant experience—all of which are increasingly becoming key decision drivers.
In core markets like NCR, Chennai, Bengaluru, Pune, Mumbai, and Hyderabad, these buildings are seeing stronger demand and commanding premium valuations. For investors, they offer greater rental resilience, lower vacancy risk, and more attractive exit opportunities.
The missed opportunity — And the path ahead
India’s commercial real estate market presents a large, addressable, and fundamentally strong opportunity. With relatively stable returns, low volatility, and lower correlation to public equities, CRE stands out as an attractive asset class.
Yet, Indian domestic investors remain underexposed to this segment — missing out on a long-term wealth-building opportunity.
Given India’s global positioning in terms of talent, cost, and infrastructure, CRE is not just a real estate play — it is a nation-building asset class. Platforms like AIFs are democratizing access and enabling greater Indian ownership of India’s commercial growth story.
Harnessing CRE opportunity through AIFs
Alternative Investment Funds (AIFs) are emerging as a vital investment channel for India’s real estate sector, offering ownership of Grade A+ office assets through. Unlike REITs, AIFs follow a growth-oriented approach, entering earlier in the value chain to realise greater value. AIFs allow fund managers to buy higher-quality assets, engage earlier in the value chain, and capture upside through value creation strategies.
AIFs are especially critical in supporting wider domestic ownership in India’s CRE sector. Through AIFs, Indian investors can now access premium office assets and participate in a sector that has historically been dominated by foreign institutional capital. This shift is helping align national wealth creation with national economic assets.
| PRIME Offices Fund — Creating REAL Value in REAL Estate. At Nuvama, the PRIME Offices Fund offers qualified investors access to a curated portfolio of next-generation commercial office assets through a differentiated, institutional-grade AIF platform. Backed by a strategic partnership between Nuvama Asset Management and Cushman & Wakefield, PRIME blends global real estate capabilities with deep on-ground execution to build a resilient and high-quality portfolio. Structured around India’s top six office markets and focused only on Grade A+ “offices of the future”, PRIME targets capital appreciation by investing across new-build and leased assets in high-growth micro-markets. With a target IRR of 20%+, the strategy captures superior entry yields, rental premiums, and lower vacancy rates, while maintaining strong tenant quality and long-term leasing visibility. |
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