The year 2022 has been significantly better for the commercial real estate sector. However, the fate of the Indian commercial real estate sector hangs in a fine balance in 2023 amid the forecast of the global recession. Though the Indian CRE sector is slated to witness some new launches, will that be enough to support fundamental growth? Anuj Puri, Chairman of ANAROCK Group, said that the forecast for the Indian CRE sector is cloudy with chances of sunshine.


COMMERCIAL BREAK
SCROLL TO CONTINUE READING

"A global recession would have several direct and considerable repercussions on the Indian commercial office market. This sector depends heavily on expansion by domestic and international corporates. Currently, 70% of offices in this country are occupied by foreign companies who focus on cost advantages like sub-dollar rentals for good quality Grade A offices. However, from H2'22 onwards, the pall of a threatening recession in the US caused many RFPs (Request for Proposals) to be deferred as the large global corporates wanted a better perspective on the future before leasing new offices," said Puri.


Harsh Vardhan Patodia, President, CREDAI, said that despite the macroeconomic challenges, the outlook for commercial real estate in 2023 is still positive.
 
“In India, 16 new malls are expected to open in Tier 1 and 2 cities in 2023, with a similar number expected in 2024, and participants expect E-Commerce and Physical Shopping to coexist. From the standpoint of rental growth, the markets in Bangalore, NCR, Mumbai, and Pune continue to appear strong. The Indian economy is expected to grow at a better rate than most other economies of the world and thus, the demand across segments is expected to rise," opined Patodia.


Nikhil Rathi, CEO & Founder Web Werks Data Center, said that the demand for data centre real estate is expected to rise by 15-18 million square feet by 2025. "The country's data centres are expected to exceed 2,500 megawatts between 2021 and 2025, fueling the emergence of new smaller edge data centres around the world. Investments in data centres, with a prominent presence in cities such as Mumbai, Chennai, Bangalore, and Noida, are encouraging India's commercial real estate sector," he said.


Manoj Gaur, President CREDAI-NCR, said that even though large-format segments like malls would continue to thrive in 2023, medium and small-format spaces such as high streets and SCOs (shopping-cum-office complexes) will see unprecedented traction. 


Developers are also upbeat about the performance of CRE in 2023. Aman Trehan, Executive Director, Trehan Iris, said that the phenomenal boost in the demand and supply of Grade A quality retail space is driven by the increased investment inflow, economic growth, rapid urbanization, changing consumer preferences, and positive market sentiments. He said if the current pace continues, one can expect a record year for retail leasing ahead.


While the IMF and World Bank have said that recession will hit the world towards the second half of 2023, they have also maintained that it will only have some spillover impact on India. Till then, the commercial real estate sector has every right to look towards the silver lining in the cloud.