Strong recovery seen across real estate in Q3 2021; Residential at the forefront of revival: CBRE report
India, 09 Nov 2021: Real estate consulting firm, CBRE South Asia on Tuesday announced the findings of its ‘India Market Monitor – Q3 2021’. The report discusses the growth, trends, and dynamics across various segments in the real estate sector in India.
According to the report, housing sales jumped nearly 46% Q-o-Q to 50,000 units in Q3 2021 and sales rebounded significantly by approximately 86% y-o-y on a YTD basis. Office leasing activity reached 13.5 million sq. ft. in Q3 2021 growing at about 140% Q-o-Q, with the YTD number reaching 25 million sq. ft. for the key cities. With 3PL and E-commerce fuelling demand, the Industrial & Logistics leasing activity crossed 9 million sq. ft. in Q3 2021, growing at about 6% Q-o-Q and touching 23 million sq. ft. for 9 months 2021.
Anshuman Magazine, Chairman & CEO, India, South East Asia, Middle East & Africa, CBRE, said, “India’s real estate market has proven to be extremely resilient over the last year. The overall outlook for the Indian real estate continues to be positive – back of an accelerated vaccination drive, policy reforms, and increasing urbanization.”
Abhinav Joshi, Head of Research – India, Middle East & North Africa, CBRE said, “With ease of restrictions post-COVID’s second wave, the real estate industry has witnessed steady growth. The green shoots of recovery have been observed across sectors – including office, residential, retail, and industry & logistics, which is likely to sustain momentum for next few months.”
Residential – Sustained attractive mortgage regime and government incentives led to strong sectorial recovery:
- Pune led housing sales in Q3 2021 with 33%, followed by Mumbai (23%), Bangalore (17%) and Hyderabad (13%)
- At 47% and 31%, mid segment and affordable/ budget respectively were the dominant growth driver of sales in Q3 2021
- New project launches jumped by nearly 37% Q-o-Q to reach 48,950 units in Q3 2021
- Mid-end and affordable segments to continue driving sales; state government incentives and an enabling mortgage regime to reinforce upward momentum.
- Rental housing to get a boost post the implementation of the Model Tenancy Act, thereby creating an alternate asset class for developers; fillip expected for co-living and student housing segments.
- Increased appetite from millennials and first-time home buyers; larger unit sizes and plotted developments to gain momentum.
- Project execution capabilities and cashflow management would be critical; stress funds to witness increased traction.
- Appreciation of commodity and asset prices as well as hardening of interest rates – key risks that could limit growth in sales.
Office – Recovery strengthened as occupier decision making picked up. Supply addition in Q3 2021 touched nearly 13.5 million sq. ft. growing by about 30% Q-o-Q:
- Small- to medium-sized deals (up to 50,000 sq.ft.) dominated space take-up with a share of almost 80% in Q3 2021
- Hyderabad, followed by Delhi NCR and Mumbai dominated supply, with a combined share of 84%
- Hyderabad, Bangalore and Mumbai closely followed by Delhi-NCR led demand and accounted for over 80% of total absorption.
- As mobility improves and a comeback to the physical office environment picks up, overall absorption is expected to grow.
- As occupiers recognise the significance of the physical office as a centre for collaboration, connection and culture; a shift in workplace design is likely with more allocation to ‘we’ space over ‘me’ space.
- Occupiers are expected to incorporate more flexible spaces while re-optimising their portfolios with the realignment of ‘core + flex’ themes.
- Despite an increased appetite for hybrid work, the frequency of remote working is anticipated to be low (such as once a month); occupiers are also likely to determine their remote working eligibility post ‘return-to-office’ strategies.
- Developers are expected to enhance existing assets through better amenities, sustainability and health & safety measures, technological upgradation to improve occupancies.
- Investors are expected to take note of strong occupiers’ expansion intentions and monitor working patterns in their assets I portfolios; office assets to continue to remain high on the investor radar
Industrial & Logistics – Warehouse leasing activity witnessed a 6% Q-o-Q growth and crossed 9 million sq. ft. in Q3 2021. Space take-up for the first nine months of 2021 reached 23 million sq. ft.
- Medium-to-large sized deals dominated the leasing activity with a share of 55%.
- Bangalore led I&L demand with a share of 32%, followed by Delhi (22%) and Mumbai (12%).
- Leasing momentum expected to remain strong on the back of demand by 3PL players and e-commerce sectors.
I&L Market Outlook:
- Overall supply to cross 25 mn sq. ft by the end of 2021, while space-take up to cross 32 million sq. ft. in 2021.
- Occupiers are expected to display a strong inclination towards high-quality warehouses located near consumption hubs.
- Global / domestic investors to target both greenfield and portfolio acquisitions – leading to an increase in I&L investment quantum.
- Increased focus on automation / modern logistics facilities and speedy project completions to be key for developers to accommodate surging demand.
Retail – Retail leasing activity touched 0.6 million. Sq. ft. in Q3 2021 across Grade A malls and high streets, witnessing a Q-on-Q growth of nearly 165%
- Leasing activity was led by Hyderabad (38%) followed by Delhi-NCR (26%) and Bangalore (12%)
- Fashion & Apparel, and Supermarkets were the major growth drivers for the retail segment – contributing 26% and 16% to the demand in Q3 2021
- Lease structures between landlords and retailers are expected to continue to evolve with a greater emphasis on partnerships
- Retailers are expected to go beyond malls and expand footprint in high streets, mixed use, and standalone buildings
- Retailers are likely to undertake digital enhancement of stores to enrich the consumer experience and improve store performance
- Accelerated adoption of omnichannel by retailers to carer to the rapid growth of e-commerce and dramatic shift in consumer demand
Store designs likely to evolve in-tandem with a shift in consumer behaviour through re-shuffle in space allocation
Automovill opens 10K sq ft workshop in Kolkata
New Delhi, May 30, 2023: Automovill, a Bengaluru-based Full-Stack Mobility solution provider, has announced the opening of its latest workshop in...
AltF Coworking launches 2 properties in NCR
New Delhi, May 2023: AltF Coworking, a co-working solutions provider, has announced the launch of two new properties in Noida...
Agrocorp forays into residential plotted developments with ALPL One
Bangalore May 29, 2023: Real Estate Development Company, Agrocorp, on Monday announced that it is prepared to introduce resort-style villas,...
CBRE’s Consulting and Valuation business division to expand its portfolio and strengthen government advisory business by doubling the team size
New Delhi, May 29, 2023: CBRE South Asia Pvt. Ltd, on Monday said it plans to strengthen government business advisory...
Gulzar Malhotra is Gera Developments CEO
Pune, May 26, 2023: Gera Developments, has announced the appointment of Gulzar Malhotra, as its Chief Executive Officer. Gulzar Malhotra will...
Nuvoco’s new RMX plant in Vizag
New Delhi, May 26, 2023: Nuvoco Vistas Corp. Ltd., on Friday announced the launch of its new Ready-Mix Concrete (RMX)...
News4 weeks ago
Retail leasing up 130% Y-o-Y in Jan-Mar’23
Guest Column4 weeks ago
Commercial RE: Evolving trends & insights
New Launches4 weeks ago
91Springboard launches 1000+ seater Platinum hub in Gurugram
New Launches4 weeks ago
BPTP launches residential project, District 4 in Sector 84, Faridabad
New Launches4 weeks ago
BST Developers launches “BST-Green Bhoomi”
News3 weeks ago
Tribeca appoints new Head of Business Development, Somendra Sarwal
New Launches3 weeks ago
SAYA launches SAYA STATUS, India’s Tallest Mall
News4 weeks ago
Ganga Realty to invest Rs 400 cr in its maiden high-street retail project in Sohna