2022 to be more stable year for realty sector

Hyderabad: While this year was mostly impacted by the volatility due to the pandemic, the coming year may prove to be a more stable for the real estate sector both for commercial as well as the residential sector. The residential sales momentum is expected to continue in 2022 as prospective homebuyers' preferences for bigger homes, better amenities and attractive pricing will keep them interested to seal the deals.

According to international property consultant Knight Frank India's 2022 Outlook Report, the residential segment will witness around 5 per cent capital value growth in 2022. After facing a series of structural reforms during the last decade, the pandemic arrived as another blow for the sector. Many of the supply and demand-side factors, assessed over last decade, have started putting upward pressure on prices.

Shishir Baijal, CMD at Knight Frank India, said: "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."

He adds, "The threat of the new variant is adequately contained with minimum disruption in the early part of the new year. If we are able to continue at this pace, the real estate sector will see adequate recovery to match or indeed cross the pre- pandemic levels. The revival is expected with strong end-user interest aided by government impetus and incentives by developers ensuring buoyancy."

With the office segment's recovery riding on the resurgence of the nation's economy, the segment is witnessing a steady take up, especially from international and domestic IT companies. Knight Frank India estimates the top 5 IT companies' incremental demand for office spaces, based on strong hiring in the last eighteen months, would be nearly 11.67 million sft over the next one to two years.

The flexible working/co-working segment of office spaces has become an attractive proposition for enterprises to manage their real estate portfolios, post pandemic. The emphasis of co-working segment on employee health and wellbeing will continue to bode well as the dynamics of business environments have witnessed major transition paired with an evolving workforce.

Due to the pandemic, average transacted rents in Mumbai, National Capital Region, Pune, Ahmedabad and Kolkata had declined 4-7 per cent year-on-year. With improvement in demand for office space in 2021, rents have stabilised in Q3 2021, markets such as Bengaluru and NCR witnessed strength in rent levels.