Commercial actual estate has emerged as a resilient segment in the previous handful of years. According to a Colliers International report, the sector has witnessed an enhance in leasing activity from 41.6 million square feet to 58.6 million square feet at a compound annual development price (CAGR) of 12% more than the previous 3 years. The segment, therefore, appears to have vibrant prospects of development in 2021, owing to the expectations of financial stability. Another report by Colliers India has highlighted the industrial space absorption shot up to 58% for the quarter ended September 30th, 2020. This improvement is a testimony to the green shoots of recovery.
With the Unlock phases followed by the festive season, industrial spaces are re-opening, albeit with security measures and precautions. The government has also undertaken various measures such as slashing of the repo price and reverse repo price, granting of Emergency Credit Line Guarantee Scheme (ECLGS) to actual estate, to revive buyer sentiment. A Fitch report predicts customer spending to rise by 6.6% in 2021.
“In the commercial segment, the high-street concept has gained momentum as compared to malls and this will continue in the year 2021. The model that provides all amenities to consumers under one roof, i.e mixed use property, has emerged as a preferred trend for the commercial segment owing to its self-sustainability. We have signed up nearly 150 brands in the commercial segment in Gurugram, leasing around 5 lakh sq ft of space,” stated Pankaj Bansal, Director, M3M.
Commercial actual estate has been on investors’ radar owing to assured and profitable return possible. The development of the IT/ITes sector and a spate of infrastructural developments have fuelled the demand for industrial spaces. A Knight Frank report estimates that the industrial segment has attracted investment worth $15.4 billion more than the previous decade. The lately-concluded Brookfield and Blackstone offers are the testimony to the immense possible of REITs in attracting investment, particularly in Grade A spaces.
Anuj Kumar Garg, Vice President-Customer Engagement & Distribution, Viridian RED, stated, “The prospect of Indian commercial real estate seems resilient in 2021. In the last few months, a couple of transactions led by global firms in the Noida region have strengthened the market sentiments. In the wake of the pandemic, we foresee some trends strengthening the commercial sector in the coming year. A sanitized environment coupled with wellness amenities to ensure hygienic and safer space would be the priority of developers and occupiers. Technology has played a vital role in the realty business during the lockdown and transformed the business strategies. The trend is here to stay as more and more firms are likely to adopt technology-enabled systems to ensure sanitization and hygiene in office spaces.”
The COVID-19 has heralded a paradigm shift in industrial actual estate patterns. According to a JLL report, net absorption enhanced by 63% to 5.4 mn sq ft in Q3 2020. As opposed to IT/ITes, demand for leasing was driven by the manufacturing and e-commerce sectors. The well being and hygiene issues are evident via stringent measures undertaken by industrial spaces to revive the customers’ self-assurance. This phenomenon will inevitably lead to consolidation of the market, thereby benefiting organized players. The COVID-19 pandemic has led to the proliferation of technologies to increase operational efficiency and maximize buyer encounter.
Developers anticipate the industrial segment to stay buoyant in 2021 owing to improvement in the ease of performing business enterprise amongst other conducive measures and the prospect of various firms relocating to India.