Housing sales as well as leasing of office and retail spaces are all set to cross the pre-pandemic level this year. In fact, in many parts of the country, demand for residential properties has already surpassed pre-Covid levels. Office space leasing in Grade A buildings too has improved across major cities with gradual reopening of offices after the second wave of the pandemic, says Pankaj Pal, Group Executive Director, AIPL.
In an exclusive interview with Sanjeev Sinha, Mr Pal talks about how real estate is shaping up in the post-pandemic world, and shares his business outlook. Excerpts:
In the post-pandemic world, how is the overall real estate market shaping up?
India’s real estate market has always been very resilient. After braving the onslaught of disruption caused by demonetisation, RERA and GST, the sector dealt well with the adverse impact of the COVID-19 pandemic.
Housing sales as well as leasing of office and retail spaces bounced back and are all set to cross the pre-pandemic level this year. In fact, in many parts of the country, demand for residential properties has already surpassed pre-Covid levels.
AIPL is a well-known name in the office & retail segment. How are these two segments shaping up? Are footfalls in malls and shopping centres back to pre-Covid levels?
Office space leasing in Grade A buildings has improved across major cities with gradual reopening of offices after the second wave of the pandemic. The demand from the IT and BFSI sector has remained strong.
In shopping malls also, the leasing has improved significantly with business returning to normalcy. As far as footfalls are concerned, malls with a good mix of high-street retail outlets, cafes, food courts, multiplexes and play zones are attracting visitors and shoppers. Malls with modern look and feels, architecture, ample parking space are preferred places for hangout or eating out by youngsters as well as family, over crowded markets with lack of organised shops and parking areas. Cinema is still lagging behind, but we hope that it will soon catch up.
What about rentals? Is that back to pre-Covid levels or still operating at a discounted rate?
Most mall operators or owners of commercial space either reduced or waved rental during the Covid period in order to provide respite to tenants, considering the loss of business. In most cases, there was no annual increment in rentals during the last couple of years. However, with business coming back on track, rentals are getting restored, new leases are happening at better rates. So, there is no more pressure on rentals and going forward we expect it to go up.
Are you planning any expansion in the office or retail segment?
We already have significant scale of high-end commercial spaces under construction, which are set to get completed over the next couple of years. Having said that, we are always looking to expand in commercial real estate, which has been attracting huge investments from both domestic and foreign funds.
The returns in leased rental assets are handsome. The introduction of REIT has made it possible to monetise commercial assets.
How is the residential segment doing? Do you have any plan for expansion in the residential segment?
Like commercial real estate, we have huge exposure in the housing segment. We are already developing a huge township in Punjab. We also have plans to invest more than Rs 500 crore in Punjab over the next few years. The company keeps evaluating opportunities in the residential segment as well.
Housing demand, which fell sharply in 2020, bounced back sharply last year. Market reports suggest that sales would cross the 2019 level this year. Those companies which have impeccable track record of executing projects on time are performing exceedingly well. So, both sales and launches are getting consolidated. Owning a home has always been a priority for Indians and the COVID-19 pandemic has further fuelled this need.