India’s Realty Sector to Witness Healthy Demand in 2022

According to Knight Frank India, an international property consultant stated in a report that upcoming year may prove to be fruitful for the pandemic –industry both for commercial and residential sector.

As per the ‘2022 Outlook Report’, residential sector is expected to witness 5 % rise in demand. Furthermore, it said, “With physical offices here to stay, portfolio optimization and hybrid working are expected to be the dominant themes going forward driven by incremental demand from IT/ITes firms and the rebond of flexible office operators. For the residential sector further demand revival is expected with strong end-user interest aided by government impetus and incentives by developers ensuring buoyancy. The warehousing segment that has been risk averse during the pandemic will maintain the growth run rate driven by demand from the ecommerce and 3PL players,”.

According to Shishir Baijal, the Chairman and Managing Director at Knight Frank India “The real estate sector recorded a smart recovery despite the pandemic exigencies in 2021 with segments like residential outperforming others. The disruption caused by the pandemic is slowing settling and the real estate market is expected to gain back its rhythm in the next two to three quarters, albeit, the threats of the new variant is adequately contained with minimum disruption in the early part of the new year. Should we be able to continue at this pace, the real estate sector will see adequate recovery to match or indeed cross the pre- pandemic levels”.

The important revelations of this report exhibits the 2022 trends and dynamics across several real estate segments in India.

Residential segment is expected to see approx 5% capital value growth in 2022.

Seeing the supply and demand parameters accessed in the last decade it is expected to put upward pressure on house prices. Hike in residential sales momentum will continue in 2022 as prospective homebuyers’ preferences for spacious homes, appealing amenities and attractive pricing will keep them interested to bag such deals.

• The demand of IT companies for office space depending on the their robust hiring in the last eighteen months is estimated at 11.67 mn sq ft, sprawled over the next one to two years.

• Co-working sector will also see benefits as the pandemic results in agility like never before. Agility, a keyword related with the co-working sector, will ignite the demand rebound for flexible office spaces instead of the return of normalcy.

• The upturn of office sector trend will keep the rents stable to increasing in 2022.

• Transactions for warehousing segment are expected to grow at a CAGR of 20% from 31.7 mn sq ft in FY 2021 to 45.9 mn sq ft in FY 2023. E-commerce share in total transactions is also expected to hike to 36% from 31% during this period.

• Elasticity of Indian REITs (witnessed during the pandemic) and the rising popularity with retail investors will make way for other commercial real estate REITs.