Strong recovery on the anvil

NT Correspondent

The real estate sector can expect the total investments to rise by 5 to 10 per cent in 2022 to possibly touch the 2019 pre-pandemic level. CBRE, the leading real estate consulting firm, expects the gross office space absorption to increase by 13 to 14 per cent on year-on-year (YoY) basis in the current year. Leasing in retail sector is also expected to surpass pre-pandemic levels in the current year. However, industrial & logistic (I&L) leasing is likely to be the major gainer with a growth of 25% to touch 35 to 37 million square feet (mn. sq.ft.) in the current year.

Market outlook
Releasing its report “ Market Outlook 2022: Reigniting India’s Growth Engine’ on Wednesday (Nov. 23), Anshuman Magazine, Chair man, CBRE, India, South East Asia and the Middle East & Africa, said embedding the realty with Environmental, Sustainability and Governance Goals (ESG), tech application to the office space with latest tech tools such as Augmented Reality (AR), Virtual Reality (VR), blockchain, Artificial Intelligence (AI) and Internet of Things (IoT) across all realty formats will be the defining features of the real estate market.

Expressing optimism, the report says the Indian realty is now showing sure signs of revival and the sector has largely remained resilient despite cyclical upswings and downswings. It said sectors such as Datacenter (DC), logistics and manufacturing would be the focal nods of growth.

According to Mr. Magazine, who was addressing CII Annual Real Estate Conference in Kolkata, leasing activity across all sectors has witnessed an uptick in the past six months and the growth is likely to continue through 2022. “In fact, a few sunrise sectors such as Industrial & Logistics (I&L) are expected to surpass prepandemic levels as well in terms of leasing as well as supply addition,” he added. He however added that ESG is expected to accentuate all sectors, even as technologies such as AI and AR/VR will find more takers.

Office spaces
The reports says the gross absorption in office space is expected to touch 45 to 47 mn.sq.ft., recording a 13 to 14 per cent of growth. Technology firms will continue to dominate leasing while flexible space operators, BFSI, engineering & manufacturing and life sciences segment are expected to contribute to the growth in office space take-up significantly. Bengaluru, Hyderabad and Delhi-NCR will be main drivers of transaction activity. CBRE expects around 51 to 53 mn.sq.ft. of new office space to become operational in 2022, up by four to five per cent on annual basis.

The leading trends characterising the workplace would be convergence of four generations working together. These will be baby boomers (1945-64), Gen-X (1965-79), Millennials (1980- 96), Gen-Z (1997+), and AI. The report says t e c h - e n h a n c e d spaces would be the key to retention of talent.

The report identifies four Indian cities—New Delhi, Mumbai, Bengaluru and Hyderabad--which are likely to be home to the largest Gen Z population in the prime workforce by 2030. These would accelerate the rise of emerging cities as influential epicentres of the country’s economy. The Report projects six technologies namely SaaS (Software as a service), Artificial Intelligence (AI), Internet of Things (IoT), Robotic Process Automation, Virtual/Augmented Reality, and Blockchain will lead the transformation of the commercial real estate (CRE).

Warehouses and residences
The report projects continued upgradation and expansion of warehousing opportunities in tier-I cities and new market penetration in lower tier cities as local distribution networks will need logistics hubs. It also expects rental growth to continue across all cities in 2022, especially in investment-grade, tech-enhanced and strategically located assets. It also projects the Cold Storage (CS) facilities to double over 2019-23 period to touch 70-75 million tons and i n - volving 1.4 t o 1 . 5 bn.sq. ft respectively as egrocery, food manufacturing and delivery sectors and life sciences will be the catalyst of growth.

Residential growth will be driven by revival of economic activity coupled with a low mortgage rates. Q3 of 2020 provided the developers an incentive to launch new projects. Traction is expected in premium and luxury housing categories while a demand for mid-segment units—ranging from Rs. 45 lakh to Rs. one crore is likely to push up the demand for affordable and mid-end segments in 2022, the report projected.

Investments
The report expects the total investments in 2022 to rise from 5 to 10 per cent to reach around the prepandemic levels of 2019. Mumbai, Delhi-NCR, Hyderabad and Bangalore are expected to remain on investors&