CoreNet Global Research Findings: India's Young Middle Class Driving Its Economic Transformation
BANGALORE, Feb 20, 2013 (GLOBE NEWSWIRE via COMTEX) --
With the significant economic, demographic and technological strides that India is taking, the future of corporate real estate (CRE) on the subcontinent looks robust, according to a new research study from CoreNet Global on the state of CRE readiness to serve the India market.
"Increasing urbanization, a strong middle class and a young population will continue to propel India further," as the report indicates. "All of these factors will continue to enhance the role CRE can play in India's business environment."
Despite India's explosion onto the world economic stage, many Indian-national companies are still in a 'catch-up' mode on increasing the degree of global business-management sophistication in the corporate sector. The CoreNet Global report identifies the CRE function in India as "nascent (but) heartening."
As with China, recent months have seen India's red-hot GDP cooling down. "The high fiscal deficit and lack of tax and manufacturing reforms are some of the hindrances slowing the Indian economy," the report notes. "Most experts agree further reforms are needed to give an extra push to the growth of the Indian economy."
While its current, projected annual GDP growth of 5.9 percent is lower than in years before, "the Indian economy will still grow much faster than the world economy's 2.5 percent predicted growth," as the CoreNet Global findings outline.
As the world's leading professional association for CRE and workplace executives, CoreNet Global's strategic objective to expand its global footprint is centered, in part, on India, as well as China.
"With the recent downturn, there has been a spotlight on CRE and how it can be optimized to leverage its value for corporations," commented CoreNet Global Senior Research Associate Sonali Tare, who oversaw the group's India research project. "CRE in India is relatively new. With the influx of multinational corporations, or MNC's, beginning in the late 1990's and early 2000's, the door opened for CRE to be regarded as a professional discipline there."
The report concedes that while CRE is still much more prevalent in India's MNC sector, Indian companies are beginning to embrace the concept, though still somewhat warily. "Traditionally in India," the findings state, "CRE was the purview of the COO, CFO or under general administration." For that reason, "there is still a long way to go before an unequivocal acceptance of CRE takes place."
As George McKay, South Asia Director for Office & Integrated Services for Colliers International, observed in the CoreNet Global report, "The CRE function in India is still struggling to get its voice listened to at the C-Suite level. In this respect, it is definitely lagging behind the West."
"Part of the issue here," added Sanjeev Tuli, Regional Head of Operations for Nokia, "is that the demand for CRE and related talent has far outpaced the supply. With the rapid growth of the IT and IT services sectors, as well as the financial and banking services sectors, the demand for quality talent has grown."
Globalization is the main factor that will push the advance of CRE in India, the report also finds. "With the expansion of Indian companies across India and increasingly across the world, the need for paying special attention to real estate, portfolio optimization, sustainability, project management and process management is going to grow."
The CoreNet Global report examines other strategic facets of CRE as they correlate to India's economy and culture, including alternative workplace strategies, or AWS. "AWS is an approach that is gaining momentum in India, albeit slowly," the research findings also show.
"In many companies, employees are able to avail of special budgets put into place by the employer to set up the adequate technology to work from home," Captain K. Srinivas, Vice President of Global Real Estate and Facilities Management for Aditya Birla Minacs, told CoreNet Global.
These policies have not always been successful, however. The report also points out how culture and society plays a role in the challenge to add more mobility, telework, desk-sharing and other flexible work options in India. "Having to say that one might not have their own desk at work is difficult in India, as it is in many Eastern cultures," according to CoreNet Global's research. "Additionally, many homes accommodate family members of multiple generations in relatively small spaces, and finding a quiet place to work at home can be challenging."
The country's lack of reliable power and internet infrastructure can also be a factor limiting the adoption of flexible work practices in India.
The CoreNet Global report cites World Bank rankings showing India with almost 30 percent of its 1.21-billion people living below the poverty line, but that as recently as five years ago, it was 37 percent. Poverty is linked to another challenge: about 70 percent of the country is still rural and relies on agriculture for its livelihood.
Regardless of this and other challenges summarized in the CoreNet Global study, the CRE function has a viable future for both multi-national and state-owned companies in India, including its so-called "demographic dividend" that 65 percent of India's population is between the ages of 15 and 64.
"The demographic dividend of India's growing, young population is one of the key drivers of long-term growth," CoreNet Global reports. "However, if this growth is to be leveraged adequately, employment opportunities will have to be generated."
Aside from the world's youngest middle class in the making, and the positive implications it holds for India's labor supply over the long term, India is enhanced by a large English-speaking population, the growth of its major cities, the level of education, and its expertise in technology and scientific industries. The latter contribute to India's growing sustainability and green buildings movement.
With nearly 8,000 members internationally, CoreNet Global is the world's leading professional association for corporate real estate and workplace executives, service providers, and economic developers. For more information, please visit www.corenetglobal.org
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