Indian Real Estate’s road to recovery: Industrial, warehousing, and office spaces
Based on Savills India’s report, commercial office and warehousing will pull the Indian real estate market higher on the charts due to the talent-rich workforce and demand driven by prices. Placing India ahead of other major global players.
Bengaluru was one of the world’s leaders in the office rental market, beating New Delhi, Mumbai, Singapore, and even Hong Kong. Recording an impressive 17.6% growth in office space rentals, the highest in the world. The information technology (IT) hub and flexibility of operators were the key factors driving this area. (Knight Frank)
- Bengaluru had a gross absorption of about 15 million sq feet and total absorption of 60 million sq.ft in 2019.
- Gross Absorption is a measure of the total square feet area leased over a period of time with no consideration for office space vacated in the same area during the same period. Cited from GROSS ABSORPTION. (n.d.). Retrieved July 06, 2020, from Link.
What the future holds?
An expected drop of 40-45% in the absorption rates as compared to 2019 trends. Demand in the sector is believed to restore over the next few quarters: India’s massive talent pool and reasonable rental prices, factors bolstering that demand.
- Hybrid work culture or work from home as we call it will be the significant factor why office space demand will dip in the initial phase. As social distancing at the workplace becomes the need of the hour, more and more firms will lease larger areas for office spaces. Thus a positive boost for the sector.
- H1B visa suspension will drive an increased number of skilled workforce in the nation, hinting at a gradual increase in the demand.
- Foreign players will bring in stable investments from the FDI route. India aspires to become a key player in the market, attracting foreign investors in the post lockdown era.
- GST collection by the Government of Karnataka for June 2020 stood at Rs 6,710 crore, slightly higher than June 2019’s tax figures of Rs 6,559 crore. Hinting at the gradual revival of Karnatka’s economy.
The secret recipe for Indian success in a post lockdown market includes FDI funding, skilled workforce, and affordable prices.
India has the quality and the quantity of talent, and we will bounce back for sure,” said Naveen Nandwani, Managing Director – Commercial Advisory & Transactions, Savills India.
- Khan, S. (2020, June 24). Online retail, industrial, warehousing and offices will lead the road to recovery for real estate: Savills India. Retrieved July 06, 2020, from Link.
- Agarwal, W. (2019, December 25). Bengaluru office rentals growing faster than even Singapore. Retrieved July 06, 2020, from Link.