Leasing activity is expected to remain strong in 2022 and touch 35-37 million sq. ft.; a growth of more than 20% on an annual basis. The continued expansion of e-commerce and 3PL firms against the backdrop of macro-economic recovery and growing online retail penetration is expected to drive the sector. Further, next-gen logistics facilities are likely to dominate upcoming supply pipeline as warehouses grow taller.
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- Warehousing space take-up expected to rise further in 2022: Continued upgradation / expansion opportunities in tier-I cities, new market penetration in lower tier cities and the extension of local distribution networks in emerging logistics hubs will aid this growth.
- Supply pipeline to keep up with absorption: CBRE expects about 32-34 million sq. ft. of new warehouse space to become operational in 2022. The regionalisation of supply chains across APAC is expected to benefit alternative manufacturing hubs including India.
- Rental growth set to continue: Hyderabad, Mumbai, Ahmedabad, Chennai and Pune registered rental growth in the range of 10-20% and cities such as Kolkata, Bangalore and Delhi-NCR recorded a 2-7% y-o-y increase. We expect rental growth to continue across cities in 2022, especially in investment-grade, tech-enhanced and strategically located assets.
Top trends expected to shape 2022
- Rise of Cold Storage (CS) facilities: CBRE Research expects CS capacity and stock in India to double over 2019-23 to touch 70-75 million tonnes and 1.4-1.5 billion sq. ft. respectively. E-grocery, food manufacturing and delivery sectors and life sciences to catalyse the growth
Retail – On a slow but steady recovery path
Although retail recovery was hampered by Omicron, we expect pent-up demand would spur activity across all consumption categories. - Expansionary demand is expected to strengthen this year: Demand from categories such as QSRs, supermarkets, electronics and consumer durables is expected to sustain.
- Stores to be multi-functional, to move beyond “pure retail”: Omnichannel retail and hybrids between digital and bricks and mortar will become more visible. Stores may actually serve as a solution for supply chain issues by covering the ‘final 50 feet’ which is the most expensive leg of the logistics process.
Top trends expected to shape 2022 - Sharper focus on experience: It would become imperative for retailers and shopping centres to offer shoppers an experiential incentive to visit brick-and-mortar stores. Innovations such as thematic stores, promotional events, expanded display areas, novel F&B concepts will be key drivers.
Residential Sector: On firm ground
- Continued policy push, a revival in economic activity coupled with a low mortgage rate regime are some of the key factors driving residential growth. The strong sales momentum witnessed post Q3 2020 has provided developers an incentive to launch new projects / new phases in existing projects.
- Capital values anticipated to rise: Capital values across both the mid-end and high-end segments are expected to witness an uptick in 2022 due to factors such as robust sales momentum and rising input material cost that could force developers to pass on the increase to homebuyers. However, asset pricing trends are expected to remain divergent across sub-segment types and within cities as the level of unsold inventory and growth in sales are expected to dictate capital value movement.
- Mid-end and affordable segments to drive momentum: Traction expected in premium / luxury housing categories while a steady demand for housing units priced between INR 45 lakh to INR 1.0 crore is likely to push up the demand for affordable and mid-end segments in 2022.
- Focus on larger unit sizes and plotted developments: With the elongated period of remote working and home-schooling is likely to continue, factors such as larger homes, plotted developments with flexibility on configurations and ancillary amenities are likely to remain key focus areas for developers.
Top trends expected to shape 2022
- Product planning and alignment with changing consumer demands post COVID-19 to become crucial: Greater emphasis on quality property management as well as access to facilities such as healthcare and daycare centers.
- Rental housing to present opportunities: The passage of the Model Tenancy Act (MTA) can be a gamechanger for the Indian rental housing segment.
