The number of GCCs in the country has increased from 81 to 125.
2023 Real Estate Sector Roundup
Last year, the real estate sector ended the month of December on a strong note. And will the trend continue in the new year as well? Let’s see how last year’s figures are going to impact this article:
The financial indicators of the current year, which has just ended, are very useful to predict how the new year is going to be in real estate. The RBI has forecast growth of 6.5 to 7 percent for the period 2023–24, as GDP for the September quarter came in above market expectations. Steady growth in India’s GST collections coupled with steady consumption growth is found as per monthly PMI surveys.
Real estate investments
Due to geopolitical uncertainties and high interest rates, Western countries, mainly Canada and America, have stopped their investments in Indian real estate. At the same time, private equity investments from Singapore increased. A report by Knight Frank India has revealed that the Indian real estate market has achieved private equity investment of Rs 3 billion in 2023 from January to December 12 last year. Of this, the office sector is at the top with 58 percent, followed by warehousing with 23 percent, and the residential sector at 18 percent. It is noteworthy that no transactions took place in the retail sector. In terms of total investments, Mumbai is in the first position with USD 1685 million. Delhi is at USD 835 million, and Bangalore is in the next position with USD 347 million. Although IT growth has slowed down, Global Capability Centres (GCCs) and Capability and Innovation Hubs (CIHs) have been able to bridge the gap. By the end of the third quarter of last year, the number of GCCs in the country had increased from 81 to 125, the Cushman and Wakefield report revealed. According to market estimates, 150 to 200 new GCCs are likely to come in 2024. However, innovation hubs are more advanced than GCCs. By 2027, there is a possibility of reaching 117 billion dollars with 1600 centres.
Residential segment…
It is estimated that the residential segment of the country is sure to create new records. JLL said in its report that sales of 2,23,905 units were recorded in the first nine months of last year, a growth of 21.5 percent, and that sales will reach 2.6 lakh units by the end of 2023, with new launches at 2.8 lakh units. This is the highest since 2008. In 2024, house sales are expected to reach 2.9 lakh to 3 lakh. Also, as many prominent developers are announcing new launches in many cities, it is said that new projects will flood this year as well. In the first nine months of last year, sales of mid-segment category houses (valued at Rs. 50 lakh to Rs. 75 lakh) dominated. A similar situation was seen in the first nine months of 2022. At the same time, sales of units in the premium segment category (above Rs 1.5 crore) increased. While their share was 18 percent in the first nine months of 2022, it increased to 22 percent last year. In this segment, Delhi and Mumbai are at the top with the highest sales. Sales of luxury segment houses (priced above Rs. 3 crore) have also increased significantly. As many as 8,013 units were sold in the first nine months of 2022, compared to 14,627 houses sold in the first nine months of last year, a growth of 83 percent.
Office sector…
In the first nine months of last year, office leasing activity in six major cities in the country was good. Although the share of technology in total office leasing has declined from 35 percent to 25 percent compared to 2022, domestic companies in flex spaces, engineering and manufacturing, and BFSIs are ahead by taking additional space. It is expected to continue in 2024 as well. Flex space operators will lease 5.4 million square feet of space in 2023 in total in eight major cities across the country. It is noteworthy that this is 11 percent of the total lease gross. It is expected that the trend of rents will continue in 2023, and the same will continue in the current year as well.
Nil PE deals in the retail sector…
Global economic concerns and rising interest costs have left the retail sector without any private equity deals. The reason for this is that investors are cautious about their investments. At the same time, rents in the retail sector have increased by 10 percent. As the supply of malls is limited, demand has increased, and healthy leasing activity has followed. Also, 40 million square feet of transactions were recorded in industrial and logistics. In the warehousing segment, 3PL is at the top with a share of 41 percent, while engineering and manufacturing have a share of 28 percent. In industrial leasing, electronics and automobile leasing activities are at the top, with 45 percent. Industrial and logistics leasing activity is expected to cross 50 million square feet in the new year. Rents are also expected to increase by up to 30 percent.
