The Indian real estate market is adapting to the change brought about by the pandemic, but what are the key trends to look out for in 2022?
After going through a tumultuous two years affected by the Covid-19 pandemic, the Indian economy is showing signs of recovery. A majority of economic indicators shows that there is a change in pre-pandemic and slowly it is bouncing back to normal. The major players in the banking industry are projecting a GDP growth of 9.5% for Financial Year (FY) 2022 on the back of the low base of the previous year. The real estate sector is inclined to benefit from this upsurge in economic activity with sectors like residential, office, warehousing and co-working business space expected to receive the most attention.
After a long period of decline and then stabilization, prices of housing will start to increase again. We forecast value growth of around 5 % in capitals for the domestic
The office space market will be stimulated by the recovery of rental momentum in the IT sector. Based on leases over the past 18 months, experts estimate that the growing demand for office space from the top-five IT companies will soon amount to nearly 1.08 million square meters (11.67 million square feet). According to a report, premium office space in the top seven cities in India (Delhi-NCR, Mumbai, Bengaluru, Pune, Kolkata, Hyderabad and Chennai) stood at 642 million sq. ft. in 2020. With no surprise Mumbai, Delhi-NCR and Bengaluru accounted for 64% of the total office space. Of these buildings, 28% are more than a decade old and now, require modern amenities like newer buildings. Remodeling of these buildings with modern facilities offers an estimated Rs. 5,500 crore (US$ 739.64 million) untapped investment value. The ongoing pandemic has transformed worker expectations in terms of workplace safety and amenities. In line with this, the office space market is expected to witness a change in ongoing building development for modernisation and upgrade of facilities & amenities.
In the uncertain times created by the COVID-19 pandemic, businesses want to remain flexible on most cost parameters. In this shift in planning paradigms, the co-working space will benefit as the pandemic reinforces the need for agility like never before. Agility, a keyword related to the field of co-working, will drive demand for flexible office spaces to recover despite returning to normal. Workspaces must be agile, including an arrangement that can be folded and unfolded according to employee requirements. Sustainability and employee well-being will become key drivers of the workplace. The adoption of technology in the commercial real estate sector is imminent. From space management, contract tracing to analytics-driven behavior, companies are increasingly focusing on technological trends which are here to stay. We can witness a steady rise in the demand for flexible workspaces due to an increasing number of MNCs and businesses investing in coworking space culture due to the sudden boom of agile working.
The E-commerce segment will drive growth in the warehousing sector, with its share in total warehousing transactions increasing to 36% in FY 2023 (Financial Year April-March) from 31% in FY 2021. Overall warehousing transactions are projected to grow at a compound annual growth of 20% in FY 2023. In this scenario, speed and technology will emerge as key considerations for occupiers warehousing strategy. A recently published report indicates that the manufacturing sector, which accounts for 80% of the warehousing market, was estimated to be 739 million square feet in 2019 and is expected to reach 922 million square feet by 2024. Well-placed and planned strategies not only improve consumer services but also create competitive advantages through an efficient supply chain economy. At this rate, the current storage area will double in the 3 years from now.
With the growing businesses in various fields, the need for business space, working space,