Real estate sees spurt in demand, fresh flow of funds in 2022: CBRE-CII Report

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The real estate sector has witnessed a steady upward momentum through the year 2022, stated the CBRE-CII joint report named ‘Indian Realty – Charting the growth roadmap for 2022'.

This upward growth was primarily on the back of rising demand from office, retail and residential spaces as the government reforms continued to encourage the overall realty sector.

1.     With the opening up of markets in the country, the demand for office spaces picked up the pace. This buoyancy was majorly witnessed in Q2 2022 which witnessed record leasing activity – space take-up grew by 220% Y-o-Y in Q2 2022 to 18.2 million sq. ft. Overall, in H1 2022, 29.5 million sq. ft. of leasing activity was recorded, up 157% Y-o-Y. Despite this, the hybrid mode of work still remains the most favored workplace policy.

2.     The real estate investments went through a robust recovery in India with its space growing by 4% Y-o-Y in H1 2022 to USD 3.4 billion. The office sector dominated the investment activity during this phase where they occupied a share of 48%, followed by developmental land/sites that occupied 33% of the same. There was a significant improvement within the retail sector that held 13% of the total inflow s in H1 2022 compared with 1% in the entire 2021.

3.     Retail, as mentioned is going through vigorous recovery due to the unleashing of the so-long bottled up demand and the ever increasing demand of e-commerce. Y-o-Y growth of 166% caused leasing activity to touch 1.54 million sq. ft. in H1 2022. This includes the blend of industry with retail by many stores, the need for spaces by many home-grown D2C brands for a physical presence, among many others.

4.     Multiple property prices are seen rising in H1 2022, due to the unprecedented launch momentum in the residential sector. This rise in prices is prevalent across most micro-markets and across segments due to record sales and developers’ decision to pass on rising construction costs to buyers. But, going forward, this appreciation of prices could be selective and the sale of new launches may reach a decadal peak in 2022 and cross the 200,000-mark.

5.     The industrial and logistics sector expects an overall leasing activity in 2022 to remain range-bound at about 28-32 million sq. ft., a growth of up to 12% on an annual basis. This may be a result of the continued expansion of 3PL and FMCG and other manufacturing players taking up space, ones that are the backdrop of every macro-economic recovery. Given the supply chain firms have started to mellow in the recent past, supply addition is expected to improve H2 2022 and about 25-28 million sq. ft. of new warehouses to become operational during the entire year – a growth of up to 12% on an annual basis.

Mr. Anshuman Magazine, Chairman & CEO, India, South-East Asia, Middle East & Africa, CBRE, spoke on the changing dynamics. “The real estate sector in India performed well in H1 2022 amid the evolving market dynamics. As economic recovery continues to gain momentum, we expect a further boost to the leasing activity across the sectors. We estimate alternative segments such as flexible space will pave the way for innovative new age RE solutions and supplement economic growth. Robust policy and regulatory environment will encourage overall infrastructure growth in the long term.”