Indian real estate gained a significant amount of lost ground in 2021. Residential PE investments during January-September 2021 stood at $420 million, surpassing the volumes of 2020, says a report by Colliers, an investment management company.
Office space demand in 2021 will surpass average gross absorption between 2016-2018, while the industrial segment will likely see investments close to $1 billion this year.
In a company statement, Colliers said that occupier confidence has improved in the latter half of 2021 with large office deals, cementing the resilience of the sector and the underlying importance of offices. Occupiers remain focused on enhancing the well-being and experience of their employees as they plan to return to the office, chasing lucrative leases while realigning long-term plans.
“India’s office sector is coming out of the woods, with demand back to pre-record levels. Gross absorption in 2022 should be about 15-20 per cent higher than this year as occupier confidence is back in the market. In terms of global capital chasing real estate, the office will continue to remain a dominant sector, but residential and industrial & warehousing will strengthen in 2022 aided by strong business fundamentals,” said Ramesh Nair, CEO, India and Managing Director, Asia, Colliers.
Flex spaces stock in Tier II cities is estimated to have grown more than two-fold in 2021 to 5.5 million sq feet. Flex spaces have come to the fore after a gap of a year to occupy a significant share in leasing at 16-18 per cent in 2021. Total flex stock in metro cities is likely to rise to about 40 million sq feet in 2021.
The residential segment saw strong recovery gains led by government stimulus, market-led price discovery, and new demand says the company.
"In the first nine months of the year, investments in the residential sector stood at USD420 million, surpassing the volumes seen in the whole last year. Investors are seeking a buy-in in the asset class, especially in the near-completion stage. Investments are spurred by renewed residential demand, led by a higher inclination to own homes, low home loan rates and steady prices," the company said.
Further, the industrial segment is likely to see investments of around $1 billion in 2021, led by large global investors buying ready and greenfield warehousing projects.
“Despite a devastating second wave, investments into the real estate sector have been unwavering, especially from global investors. Interestingly, investors are also betting on new-age sectors like life sciences and data centres. This shows the immense potential. Moreover, the centre’s new warehousing policy has the potential to transform the warehousing sector to make it more competitive," said Vimal Nadar, Senior Director and Head of Research, Colliers India.
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