The Indian real estate sector is on the right track now.

The Indian real estate sector is on the right track now. Flexible space operators will be in high demand, and leasing will be on the rise, says a report from CBRE.

Even though the COVID-19 pandemic keeps having ups and downs, the Indian real estate market has been stable. India’s strong position as a driver of the global economy and optimistic growth projections for office, I&L, residential real estate, and other real estate types are now showing signs of recovery.

According to a report from CBRE South Asia, the real estate consulting firm, the Indian real estate market is expected to grow at an average annual rate of 3.6% from 2017 to 2022. The report explains what to expect in the Indian real estate market for the year 2022, and it shows how things are going.

As the government continues to focus on infrastructure development and industrial growth, the report says, “In 2022, we expect the sector to benefit from these efforts.” The focus will be on logistics and manufacturing. As investors, developers, and occupiers incorporate health and wellness into their strategies, we expect ESG to become more critical to businesses. Investors, developers, and occupiers will also be more concerned with energy efficiency and reducing their carbon footprint.

Office Space Leasing and Flexible Workspaces

CBRE CEO Anshuman Magazine: “The second wave of the pandemic hurt the Indian economy, and by extension, on real estate. It also hurt the real estate market.” Before, we were not very far along. We have come a long way. In the last six months, there’s been a rise in leasing activity across all sectors and segments. We expect this growth to continue into 2022, and we’re not sure why. A few new industries, like I&L, are expected to grow even faster than they did before the pandemic. We also expect the Indian market for other types of businesses, like life sciences, to grow more. It will allow investors to diversify their portfolios and give investors more opportunities to invest.

Gross office space is expected to reach 45-47 million sq. ft in 2022, up about 13%-14% from 2021. Technology companies are expected to keep leasing office space in 2022. Still, flexible space operators, BFSI, engineering & manufacturing, and life sciences companies are expected to play a significant role in the growth of office space take-up. Similar to 2021, Bengaluru, Hyderabad, and Delhi-NCR are expected to be the areas that do the most business in 2022.

CBRE thinks there will be about 51-53 million square feet of new office space in 2022, which is up about 4-5 per cent on a year-over-year level.

Growth in Warehousing and Logistics

Physical offices and hybrid working are here to stay, as is the desire of office occupiers to expand their space.

Workplace strategies would likely change as the office takes on a new role as a place for collaboration and a way to get more done.

The top trends

By 2030, there is a good chance that four different generations will work together for the first time in history.

Indian real estate will change a lot with the help of Real Estate Companies in the next 15 years or so. SaaS, Artificial Intelligence, the Internet of Things, Robotic Process Automation, Virtual / Augmented Reality, and Blockchain are the six technologies that will be most important in the real estate industry in 2022.

It is expected to keep going strong in 2022 and reach 35-37 million sq. ft., which is more than 20% growth each year. The development of e-commerce and 3PL companies (third-party logistics) is expected to keep up with the growing popularity of online shopping and the economy’s recovery. As warehouses get taller, next-generation logistics facilities are likely to be an essential part of the following supply chain.

Warehouse space will be taken up even more in 2022. New markets in lower-tier cities, more distribution networks in new logistics hubs, and more upgradable cities will help this growth.

CBRE thinks there will be a lot of new warehouse space available in 2022. They believe there will be 32-34 million square feet of new space. The regionalization of supply chains in Asia and the Pacific is expected to help other manufacturing centres, like India, get more business.

Residential Real Estate and Investment Trends

Rental prices are likely to keep rising. Cities like Hyderabad, Mumbai, Ahmedabad, Chennai, and Pune saw rental prices rise between 10 and 20% over the last year. Cities like Kolkata, Bengaluru, and Delhi-NCR saw a rent increase of 2% to 7%. We think rental prices will keep going up across cities in 2022, especially in high-quality, tech-enhanced, and well-located properties.

Rise of Cold Storage (CS) facilities: CBRE Research says that the capacity and stock of CS facilities in India will double over the next three years to reach 70-75 million tones and 1.4-1.5 billion sq. ft. To help the economy grow, e-grocery, food manufacturing and delivery, and life sciences will help.

It’s taking a long time, but retail is steadily rising. Even though Omicron slowed down the retail recovery, we think there will still be a lot of pent-up demand that will make people want to buy things.

This year, there is expected to be more demand for things to grow. Demand for QSRs, supermarkets, electronics, and consumer durables is expected to stay strong.

Stores will become more than “pure retail”. Omnichannel retail and hybrids will become more visible between digital and bricks and mortar. Stores may be able to help with supply chain problems because they can cover the last 50 feet, which is the most expensive part of the process.

A sharper focus on the experience: It would become more critical for retailers and shopping centres to give customers a reason to visit brick-and-mortar stores. Innovations like themed stores, promotional events, more extensive display areas, and new food and drink ideas will be the main drivers. A lot of people live in this area.

Residential growth is being fueled by a strong policy push, a rise in economic activity, and a low mortgage rate regime. Post-Q3 2020, there has been a lot of interest in new projects and new phases in existing projects because of solid sales.

People who buy homes in the middle and high end of the market are likely to see a rise in the value of their homes in 2022. Factors like solid sales momentum and rising input material costs could force developers to pass the costs on to homebuyers. However, asset prices are expected to differ across sub-segment types and cities because unsold inventory and sales growth are expected to drive changes in capital value.

Mid-range and low-cost segments will help keep things going: A steady demand for housing units priced between 45 lakh and 1.0 crore is expected to push the need for affordable and middle-class housing in 2022.

Focus on bigger units and planned developments: With more people working from home and home-schooling likely to continue, bigger houses, plots that can be changed, and extra amenities are necessary for developers to build it for consumers.

Investment and Future Real Estate Trends

Investments: Investment activity is expected to pick up in 2022. Investors are likely to go with the opportunistic route. We also think that alternative investment funds will become more powerful in the future. In 2022, total investments are expected to rise by about 5% to 10%, so they will be about the same level as in 2019 before the pandemic.

A lot of attention is expected to be paid to office and development sites and I&L assets when investors look at real estate in the cities in 2022. The demand for warehouse space is likely to rise in tier-II cities because they have become the new engines of growth. Investors are the potential to want to buy warehouse space in these cities.

In the post-pandemic era, there aren’t a lot of high-quality or core assets for sale. Investors may be more willing to take advantage of opportunities as they rebalance their risk and return in the market.