Emerging Markets and Real Estate Costs

“It must be super cheap there!”

A misperception I often hear when discussing commercial real estate projects in India and other emerging markets. Having managed projects globally and tracked international portfolios, I've gained deep insights into the nuanced economics of real estate across different regions.

Total cost per seat, employee, square meter, or square foot – whatever metric you prefer – often surprises those with preconceived notions. While variations exist within countries, the reality is far more complex than simple cost assumptions.

Here are 3 reasons why:

1️⃣ Expectations by key talent
Top talent demands modern, well-located offices with comprehensive services. Quality workspaces are essential for attracting and retaining skilled employees, and this comes at a price regardless of location.

2️⃣ High market demand
Unlike western markets, India, for example, experienced a record-breaking year for real estate take-up in 2024. Called the “Office of the world” by JLL, this trend is projected to continue, particularly for modern, premium office spaces or logistics. And demand is a cost driver.

3️⃣ Infrastructure and technology investment
Emerging markets are rapidly investing in advanced infrastructure and cutting-edge technological amenities. Smart buildings, sustainable design and digital connectivity significantly impact real estate costs. But ensure competitive, future-ready workspaces that command premium pricing.

The notion of "cheap" real estate in emerging markets is an outdated perspective. Complex factors like talent expectations, market dynamics, and substantial infrastructure investments create a high quality real estate ecosystem that defies simplistic cost assumptions.

Something your Corporate Real Estate team should be aware of.



Sources: Fortune India, JLL

Image: ChatGPT

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