Commercial real estate to see promising growth in the second half of 2021
Update: 04 Aug 2021 17:20 STI
New Delhi [India], Aug. 4 (ANI / NewsView): The second wave of coronavirus has caused a setback to the real estate industry, including the residential and commercial segments.
However, the developers were in a better position this time around compared to last year, and thanks to better preparation, the impact of COVID has been limited.
Cases are decreasing with the gradual rise in economic activity and commercial real estate is now recovering rapidly. The developers are confident that the segment will see promising growth in the second half of 2021.
“The lifting of travel restrictions, the increase in the opening hours of commercial establishments and the resumption of demand for catering establishments as part of the reopening of workspaces have given real estate a boost. From an investment perspective, commercial real estate will continue to be on investors’ radar due to the potential for lucrative and stable income. The REIT’s recent listing will further strengthen sentiment and increase liquidity in the segment. Driven by the recovery in the pace of business activity and the outlook for economic stability, real estate is poised to embark on a higher growth trajectory during H2 2021, âsaid Ravish Kapoor, Managing Director of Elan Group.
Driven by the IT / ITES sectors, the demand for commercial space is skyrocketing in large cities. A recent report from JLL says net absorption of office space in India was 4.39 million square feet in the second quarter, showing 32% year-over-year growth. âWith rapid improvement driven by the efficacy and availability of a vaccine, the deep outlook for commercial real estate looks positive in many ways.
This is largely due to the growing number of IT / ITES, BFSI, startups and stores. Plus, big companies are recalibrating their plans to bring their workforce back to offices. This will drive the demand for Class A office space, flexible / hybrid office space and others. The increase in economic activities will gradually determine the pace of the growth of retail trade and an increase in demand will be observed for retail destinations including stores, malls, etc. Â», Said Pankaj Bansal, director of M3M.
Companies are hiring more and more, which further drives the overall rental demand for large, quality office space in major cities. According to a recent report from Anarock, 7,400 90 million square foot office leases are due for renewal in the top 6 cities in 2021. Companies are now ramping up their business operations and the demand for office space will increase in 2022 and 2023.
âInvestors with a deep understanding and knowledge of market behavior find the commercial real estate segment to be a better option than the others. The segment has performed much better than residential real estate in terms of return on investment in recent years. The gross rental volume increased to 14.7. million square feet in the third quarter of 2020, with a whopping 138 percent quarter-over-quarter increase. Popular locations like Noida due to the proximity to the nation’s capital and the presence of modern commercial spaces are gaining ground. economic activities will gradually dictate the pace of retail growth, âsaid Abhishek Pandey, vice president, customer engagement and distribution, Viridian RED.
The shopping centers were opened and the increase in footfall led to an increase in demand in the F&B sector and the increase in spending led to a rapid recovery. âThe second half looks promising for the office and retail segments. PEs have shown keen interest in the office and retail segment, signaling stability for this asset class in the future. levels are expected to decline over the next few quarters as physical offices pick up and visitors flock to malls. Recent reports have suggested consumers’ intention to increase discretionary spending, âsaid Siddharth Katyal, Director (Planning and Strategy), Omaxe Ltd.
In addition, commercial real estate has also become a safe investment choice in these times of volatility, attracting investors looking for higher guaranteed returns. âCommercial properties typically have an annual return on the purchase price of between 6% and 12%, depending on the region, the current economy and external factors (such as the pandemic).
This is a much higher range than what usually exists for single family home properties (1% to 3% at best). The segment is inherently the best bet for investors looking for secure growth in places like Gurgaon, home to global corporations and IT firms; Rather, pandemic has accelerated the need to adopt innovative tools and applications to ensure the continued livelihood of the industry, âsaid Navdeep JP Sardana, Founder and Chairman of WhiteLand Corporation.
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