Housing sales jumped nearly 46 percent q-o-q to 50,000 units in Q3 2021 and sales rebounded by approximately 86 percent y-o-y on a year-to-date basis on the back of an attractive mortgage regime and government incentives. Office leasing activity reached 13.5 million sq. ft. in Q3 2021 growing at about 140 percent q-o-q, with the YTD number reaching 25 million sq. ft. for the key cities, says a report by CBRE South Asia Pvt Ltd titled India Market Monitor - Q3 2021.
With 3PL and E-commerce fuelling demand, the Industrial and Logistics leasing activity crossed 9 million sq. ft. in Q3 2021, growing at about 6 percent q-o-q and touching 23 million sq. ft. for nine months in 2021, it said.
Pune led housing sales in Q3 2021 with 33 percent, followed by Mumbai (23 percent), Bengaluru (17 percent) and Hyderabad (13 percent). At 47 percent and 31 percent, mid-segment and affordable/ budget respectively were the dominant growth driver of sales in Q3 2021. New project launches jumped by nearly 37 percent q-o-q to reach 48,950 units in Q3 2021, the report said.
Going forward, mid-end and affordable segments are expected to drive sales; state government incentives and an enabling mortgage regime would reinforce upward momentum.
Rental housing is expected 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, it said.
There will be an increased appetite from millennials and first-time homebuyers; larger unit sizes and plotted developments to gain momentum. Project execution capabilities and cashflow management would be critical; stress funds to witness increased traction, the report said.
It said that appreciation of commodity and asset prices, as well as hardening of interest rates, could be key risks that could limit growth in sales.
As for commercial spaces, the report said that recovery has strengthened after occupier decision making picked up. Supply addition in Q3 2021 touched nearly 13.5 million sq. ft. growing by about 30 percent q-o-q.
It noted that small- to medium-sized deals (up to 50,000 sq.ft.) dominated space take-up with a share of almost 80 percent in Q3 2021. Hyderabad, followed by Delhi NCR and Mumbai dominated supply, with a combined share of 84 percent. Hyderabad, Bengaluru and Mumbai closely followed by Delhi-NCR led demand and accounted for over 80 percent of total office absorption, the report said.
As mobility improves and a comeback to the physical office environment picks up, overall absorption is expected to grow. 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, the report said.
Warehouse leasing activity witnessed a 6 percent 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, the report said.
Medium-to-large sized deals dominated the leasing activity with a share of 55 percent. Bengaluru led I&L demand with a share of 32 percent, followed by Delhi (22 percent) and Mumbai (12 percent). Leasing momentum is expected to remain strong on the back of demand by 3PL players and e-commerce sectors, the report said.
On retail leasing, the report noted that activity touched 0.6 million sq ft in Q3 2021 across Grade A malls and high streets, witnessing a q-o-q growth of nearly 165 percent. The retail leasing activity was led by Hyderabad (38 percent) followed by Delhi-NCR (26 percent) and Bengaluru (12 percent). Fashion and apparel, and supermarkets were the major growth drivers for the retail segment - contributing 26 percent and 16 percent to the demand in Q3 2021, the report 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 on the back of an accelerated vaccination drive, policy reforms, and increasing urbanisation,” said Anshuman Magazine, Chairman & CEO, India, South East Asia, Middle East & Africa, CBRE.