Future for Residential and Commercial RE

#Residential – The Residential segment has witnessed steady recovery with external market conditions getting conducive. Housing has emerged as a top priority and safe bet option for the investors’ return on investments. As the value of other volatile assets has crumpled down due to global uncertainty and geo-political crisis. In such a scenario, real estate offers steady income with rental revenue and capital appreciation in the long run. Also, the housing as a commodity has gained traction with new normals encompassing the new work and study from home culture. The upcoming festive season will augur well for the housing demand with lucrative offers by developers. In nutshell, India being a consumption driven economy demand in the real estate sector needs to be rekindled as it has backward and forward linkages with multipliers effect on employment generation and significant GDP growth. 

#Commercial – The government has started opening up economic activities in phases under strict guidelines. Commercial real estate which was reeling under the impact of Covid-19 induced lockdown has now started to register increased footfalls. It is not the entire labour force that migrated back to their villages; local labour is available. This coupled with increasing usage of technology has reduced the need for labour, so at construction sites, things are working at 40 to 55 per cent capacity. There are indications that migrant labour wants to return back, we might see a return to ‘full site operational and working’ scenario by the time the festive season starts – latest by the new year.  Indian real estate attracted private equity investments of $2.31 billion, across 11 deals in the first nine months of the year. While total investments are down 56.6% from a year ago, the drop was cushioned by investors’ unabated appetite for office properties. The office market has remained a preferred segment for investors due to the strong fundamentals of the Indian office market. Since 2011, the segment has garnered $15.4 billion of equity investments, and during the first nine months of 2020, the segment has seen four deals amounting to $1.87 billion. Around 18.1 mn sq ft of the office was transacted in these three quarters of 2020. We have witnessed healthy investor interest in the office segment despite the slowdown this year. While the investors are currently cautious due to the disruptions in the real estate sector and the sharp economic slowdown across global economies, we feel that the investor interest in Indian real estate will remain strong in the long term.