India’s commercial real estate market is entering a new stage of development, in which rental income growth and efficient building management are becoming key factors for investment returns. Since 2014, the country has attracted approximately USD 78 billion in institutional real estate investment, with 46% of the capital directed toward the office segment, according to a new report by international consultancy JLL.
According to the analysis, titled A Decade of Change: The Institutionalization of Commercial Real Estate in India, the market is gradually shifting from a model in which investors profit primarily from rising property values to a strategy based on sustainable cash flows and long-term asset management, Construction World reports.
High-quality office buildings continue to offer the potential for double-digit annual internal rates of return over a typical five-year investment period, without taking the effect of leverage into account. The main factors are stable demand from corporate tenants and growing net operating income.
Over the past decade, the Indian market has recorded a significant decline in capitalization rates, which measure the ratio between a property’s annual net operating income and its value. Between 2016 and the third quarter of 2026, they fell by 2.7 percentage points for offices, 3.2 points for retail space and 2.5 points for warehouse properties.
According to Lata Pillai, Senior Managing Director and Head of Capital Markets at JLL India, the scope for further declines in capitalization rates is now limited. This means that future returns will depend to a greater extent on the selection of quality assets, rent increases and improved operational efficiency.
The office market offers significant growth potential. India has approximately 46.5 million sq m of institutional-grade office space, as well as another 18.6 million sq m of lower-grade buildings that can be modernized. An additional 22.4 million sq m is under construction, of which nearly 14.9 million sq m consists of premium offices.
The total volume of Grade A office space has more than doubled – from approximately 40.8 million sq m in 2014 to 88.4 million sq m in the third quarter of 2026. International business and technology services centers play a significant role in demand, accounting for more than 40% of leasing activity over the past decade.
Retail and logistics properties are also attracting investor interest. Nearly 60% of the existing prime retail space, totaling approximately 4.65 million sq m, is still owned by non-institutional investors. This creates opportunities for acquisitions and professional management. By 2030, approximately 3.7 million sq m of additional retail space is expected to be added.
For warehouse properties, planned new supply amounts to approximately 30.1 million sq m, of which 77% will be Grade A. Forecasts indicate that the share of high-quality logistics space will increase from 57% to 65% by the end of the decade.
JLL expects capitalization rates for prime retail and core logistics assets to approach 7%, while those for premium offices are likely to remain below 8%.
The development of real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) is further facilitating the raising of capital and the sale of assets. According to the consultancy, this will strengthen India’s position as an attractive destination for long-term institutional investment.
The analysis shows that the future of India’s commercial real estate market will depend increasingly less on speculative appreciation and increasingly more on the actual income that buildings can generate for their owners.
Detailed statistics on average property prices in Bulgaria by city and neighborhood can be found at imot.bg