Source: The Times Of India —
The Indian real estate industry in 2022 has been a story of resilience and growth against the odds of rising construction costs, skyrocketing inflation, and successive RBI rate hikes amid the unprecedented global upswing. The sector saw regaining the lost sheen induced by the pandemic and periodic challenges in 2022. The industry not just reclaimed the lost ground last year but has set the direction for the future of real estate with traits like remote and hybrid working, homebuyers exploring large spaces with ESG compliance, and Omni channel retail approach, which are likely to dominate the sector.
Following last year’s trail, the momentum in 2023 is expected to continue. India’s cost-effectiveness and abundance of talent are expected to lead to the normalization of leasing activity over the year with the growth and expansion of existing centers. Despite some moderation in growth, strong domestic demand is expected to drive economic activities and coupled with expected sizeable capital spending on infrastructure and asset-building projects, will boost growth multipliers in the real estate ecosystem. The overall demand and supply dynamics are expected to remain stable in 2023.
Let’s deep dive into all segments of RE to decode each for 2023.
Return to office propels office space demand
We witnessed a sustained recovery in leasing, moderating vacancy levels, and persistent demand for investment-grade assets, and the rental recovery for office continued across cities throughout 2022. With the relaxation of Covid-19 restrictions, the release of pent-up demand, and a gradual acceleration of return-to-office (RTO) plans by occupiers propelled leasing momentum. In line with this trend, a strong supply pipeline and continued occupier interest in investment-grade buildings by leading developers and institutional owners in core locations are likely to lead to an increase in development completions in 2023. Global corporates would remain committed to India, attracted by its cost and scale advantages and diversity of talent pool. In line with the trends witnessed in 2022, domestic firms’ share of leasing would also become a critical determinant of the overall office market performance in 2023.
