The momentum in real estate sector is continuing, reveals the CBRE South Asia Pvt Ltd, a leading real estate consulting firm. It revealed several interesting facts in its report titled ‘Indian Realty-Charting the Growth Road Map for 2022’, released at the CII Realty-2022. The momentum is expected to increase further in the second half of 2022. Office space usage has increased more than previous estimates. It will reach 53 to 57 million sft by 2022-end. Private equity investments rose 4% to US $3.4 billion in the first half of 2022 and are expected to cross US $ 6 billion mark by 2022-end.
In 2022, the residential sector will reach a decade’s high. Sales and new launches together are likely to cross the 2,00,000- mark. The Industrial and Logistics (I&L) sector is expected to grow by 12% on an annual basis. Also, the leasing activity will be in the range of 28 to 32 million sft this year. Flexible space operators in India currently have over 6 million sft of office leasing activity. It will cross 80 million sft by the end of 2025.
Inquiries for office space have picked up pace as markets across India have fully reopened. It was particularly visible in the second quarter of 2022. During the period there was a record-level of leasing activity. In the second quarter, office space take-up increased by 220% to 18.2 million sft. On the whole, the leasing activity in the first half of 2022 reached 29.5 million sft. It is expected to cross 53- 57 million sft-mark soon. In terms of supply, an additional supply of 16.7 million sft has been recorded in the second quarter, registering 64% growth compared to corresponding period last year. The excess supply has crossed 26 million sft so far this year. The same momentum is expected to continue in the coming quarters as well. Overall, supply estimates for 2022 are expected to reach 54 to 58 million sft. Many micro markets in major cities have seen an increase in rent by 1 to 5 percent.
Leasing activity is expected to be in the range of 28 to 32 million sft in 2022, registering a growth of up to 12% annually. It is expected that this space takeover will take place in the context of continuous expansion of 3PL, FMCG and manufacturing players.
However, the annual supply is likely to decrease slightly. It is estimated that 25 to 28 million sft of new warehouses will be operational in the second half of 2022. It will increase by 12 percent on annual basis. Reopening of offline stores has increased the demand for new space from these commerce players. In this context, leasing activities are likely to increase in the coming quarters.
Because of continuous growth of commerce, the retail sector is witnessing a strong recovery. Leasing activity in the first half of 2022 is expected to reach 1.54 million sft. Annually, it registered a growth of 166%. Demand for space has increased on the back of many homegrown direct to consumer brands making efforts to open their physical stores in leading cities. This trend is expected to continue this year as well.
The first half of 2022 saw unprecedented sales and launches. Record sales coupled with developers’ decision to pass on increased construction costs to buyers have driven property prices higher in many micro markets. Unsold inventory is reduced in many major cities. It is remarkable that the entire country has the same trend, barring a few exceptions. This is attributed to strong sales despite new launches continuing steadily. As a result, pan-India inventory has reached a six-year low. While developers are focussing on houses worth more than Rs.1 crore to Rs.2 crore, the demand for units worth less than Rs.2 crore is high. While units of size 1500 sq ft and above have a higher share in new launches, sales of units between 500 sq ft and 1500 sq ft are at the top.
In the backdrop of booming real estate sector, investments in it are also increasing at the same rate. In the first half of 2022, these will increase by 4% to reach US $3.4 billion.
At the same time, the office sector is at the top in terms of investments with a share of 48%. The share of site development in these investments is 33%. The flow of investments also continued in the retail sector. This segment has captured 13% share.
In the first half of 2022, flexible space operators have more than 6 million sft of office leasing activity in the country. By the end of 2025, it is expected to cross 80 million sft-marks. In the first half, the real estate sector recovery excellently. Moreover, leasing activities in all spheres of activity will increase further in the context of economic recovery, opines CBRE Chairman Anshuman Magazine.
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