The real estate sector will continue to show growth momentum with leasing activity across the segment showing an uptick in H1 2022, which will tickle down to H2 2022, according to a CII-CBRE report. About 700 acres of land have been acquired for over $1.1 billion during H1 2022 alone across various asset classes. The investments in real estate grew by 4 per cent Y-o-Y in H1 2022 to $3.4 billion, and this is expected to touch $6 billion by the end of 2022. The demand is coming from office, retail and residential spaces, with government reforms encouraging the overall growth. “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,” said Anshuman Magazine, Chairman & CEO, India, South-East Asia, Middle East & Africa, CBRE. This growth is majorly coming from metros which are accounting for a bulk of investments.
Segments to drive realty growth
With offices reopening, the outlook for office space absorption revised upward from previous projections and is expected to touch 53-57 million sqft by the end of 2022. The report said that in H1 2022, 29.5 million sqft of leasing activity was recorded, up 157 per cent Y-o-Y. The outlook for supply addition was revised to 54-58 million sqft for the entire 2022. While leasing from other sectors too witnessed growth, tech firms accounted for 30 per cent of the space take-up in H1 2022.
In terms of trends, hybrid working remained the most favoured workplace policy. “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,” said Anshuman Magazine. The report said that flex stock in India is expected to touch 80 million sqft by the end of 2025.
The industrial and logistics sector will likely clock a growth of about 12 per cent on an annual basis, and the leasing activity in 2022 will remain range-bound at about 28-32 million sqft. This, said the report, would be led by the continued expansion of 3PL, FMCG and manufacturing players.
In the retail sector, a YoY growth of 166 per cent caused leasing activity to touch 1.54 million sqft in H1 2022. The retail sector investments accounted for 13 per cent of the total inflows in H1 2022 compared with 1 per cent in the entire 2021. This demand is mainly being contributed by demand from home-grown direct-to-consumer brands that are taking up spaces across cities to build their physical store network.
An ‘unprecedented sales and launch momentum’ is witnessed in the residential sector in H1 2022. The inventory overhang at a pan-India level is at a six year low due to robus sales despite steady new launches.
Furthermore, per the CII-CBRE report, REITs may emerge as a stronger investment medium with the launch of new REITs across office, I&L and retail assets. Anshuman Magazine also stated that more REITs would get listed on the stock exchange to monetise rent-yielding office, retail and also warehousing assets.