Real Estate

Despite Covid setback, commercial space see new supply of 32 m sqft in 2020

Anil Urs Bengaluru | Updated on December 30, 2020 Published on December 30, 2020

Despite Covid-19 pandemic setback, the commercial office space in India is expected to see a record new supply of around 32 million square feet and a net-absorption of 24 million square feet in 2020.

The residential realty segment has shown a strong recovery in the second-half (H2) of 2020, with nearly 85,000 units launched across the top seven cities - recording a 2x growth over the first half (H1) 2020. Sales during the second half were recorded at nearly 80,400 units - almost 40 percent more than the 1H 2020.

“The office, residential and warehousing segments have already depicted signs of recovery. The second half of 2020 witnessed revival in many sectors as the pandemic induced lockdowns were relaxed in phases,” said Anuj Puri, Chairman – Anarock Property Consultants.

“Despite the stress created by the pandemic, the trend of sales exceeding new launches continued in 2020 as well. The residential real estate segment seems to have bottomed out now,” he added.

Logistics and warehousing have kept the country’s economy and lifeline active during the lockdown and was critical in ensuring the supplies of essentials across the country.

“Demand for warehousing has been on the rise, and with many large global corporates evaluating to completely or partially shift their production base from China to India, warehousing requirements are likely to rise further,” explained Puri.

Promising 2021

As for the year 2021 it looks to be a promising year for the traditional real estate asset classes including commercial office and residential, and also the new-age ones such as warehousing and data centers. Coworking requirements may also rise once the vaccine is available to the larger masses.

The sector sector has already benefited from the multiple reforms introduced in the past.

“The Covid-19 pandemic has dampened growth, but the real estate sector has nevertheless proved its resilience. Rising employment in the future is expected to further the demand for real estate across all asset classes,” said Puri

He added “The record-low interest rates and rising per capita income have provided an affordability ratio of 26 percent - the lowest in the last two decades.”

Puri predicts consolidation in 2021 among the developers wherein the most capable ones with a consistent track record of execution, fiscal discipline, transparency, and corporate governance, will gain the majority of the market share and thrive. “The ability to scale up and adapt to the changing market forces through investments in research and advisory will help to fortify the real estate sector in the coming years.”

“Having said this, it remains to be seen as to how the government tackles the vaccination of a large nation like India considering that the vaccine is still not available here and the storage and distribution infrastructure is being developed,” he added.

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Published on December 30, 2020
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