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How are Start-ups impacting the Indian commercial and residential segment?

How are Start-ups impacting the Indian commercial and residential segment?

From Flipkart to Ola, the new age are not only helping the growth of Indian economy but are also positively impacting the  commercial & residential  sector of the country. Leasing segment in both the sectors have seen an uptrend, especially by the demand generated from such start-ups and e-commerce organisations.

According to NASSCOM Start-up India 2015 report, currently, there are over 4200 registered start-ups in India, making it the third biggest start-up ecosystem in the world. At one side, this new ecosystem is generating a lot of employment opportunities and increasing the spending capacity of people, while on the other hand, these companies are favouring locations in peripheral areas of the city where the rents are affordable.

Aditya Vora, Director, Adytum Designs says, “Start-ups are initiated by young minds who need a desk and shared infrastructure better than a home address. That’s where the co-working spaces come in the picture. When these start-ups become full-fledged funded businesses is when they move into rental office spaces. These companies prefer rental spaces over other options as it gives them the flexibility to down-size or scape up based on the market demand.”
This has led to a shift of focus from Central Business Districts (CBDs), which have become expensive to the Secondary Business Districts (SBDs). Mehul Thakur, the Director of Viva Homes, “To begin with, start-ups are taking up office spaces in suburbs where the rents are affordable.” Only after these companies grow, they prefer to buy or lease big office spaces.

Instead of looking for corporate favourites’ Grade A offices, start-ups are looking for plug-and-play offices, which offer them ample flexibility and low long-term commitment.
Then there is the impact on residential sector.

In 2015, start-ups brought-in nearly $5 billion of funding, a 125 per cent rise as compared to 2014. With start-ups making their presence felt in the cities like Bangalore, Gurgaon, Pune, Hyderabad, Ahmedabad and Jaipur, the residential sector is evidently being impacted.

By 2015, start-ups created nearly 80,000 jobs, according to the NASSCOM report. This has not only led to jobs but subsequent increase in disposable income as well. Hence, professionals working in these companies are either looking for leased out properties or those available in the mid-income and high-income housing segments. With nearly 26 per cent of the total start-ups based in Bangalore, the city is the best case-study of how start-up ecosystem is impacting both commercial and residential segment. Whitefield, Sarjapur Road, Electronic City and nearby areas are witnessing a lot of demand for both rental and on-sale properties by the professionals working in start-ups.

With the recent launch of Start-up India campaign by central government and creation of a favourable environment, the ecosystem is expected to continue its exponential growth in the coming years. According to the NASSCOM report, by 2020 the number of start-ups will grow over 12,000 creating over 250,000 new jobs. Hence, the ecosystem is expected to play a pivotal role in country’s overall development subsequently impacting all other sectors.

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Axiom Landbase

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