Realty sector to see robust growth on back of tech, ESG, govt reforms: CBRE

Hyderabad:The total investments in Indian real estate sector are expected to rise by 5-10 per cent in 2022 to reach near the pre-pandemic level, as per real estate consulting firm CBRE South Asia's latest report 'Real Estate Market Outlook 2022 – India' released at the CII Annual Real Estate Conference – 'Reinvigorating the Real Estate Industry in 2022 and Beyond'.

Despite the continued cyclical upswings and downswings of the Covid-19, the real estate sector has remained largely resilient. It is now showing signs of revival, on the back of India's strong position as a driver of the global economy as well as promising growth projections across segments such as office, industrial and logistics (I&L), residential and alternative real estate segments.

In 2022, the report anticipates that the realty sector will leverage the government's continued focus on infrastructure development and industrial growth. It also expect environmental, social and governance (ESG) to become central to business interests as investors, developers and occupiers imbibe health and wellness into their strategies while improving energy efficiencies and reducing their carbon footprint. Anshuman Magazine, Chairman and CEO, India, South East Asia, Middle East and Africa, CBRE, said, "The second wave of the pandemic was a blip on the Indian economy and by extension to the real estate sector. We have come a long way since then. Leasing activity across all sectors and segments has witnessed an uptick in the past six months and we expect this growth to continue into 2022."

"A few sunrise sectors such as I&L are expected to surpass pre-pandemic levels as well in terms of leasing as well as supply addition. We also expect the India market for alternate segments such as data centres and life sciences to mature further, enabling investors to diversify their portfolios as well as provide more investment opportunities," he added.

He also expects post-pandemic structural changes to accelerate further. The focus on ESG is expected to accentuate across all sectors, even as technology finds more takers in the sector. Business resilience and future investments are likely to see a positive impact on the segment overall with real estate decisions becoming a strategic consideration in the boardroom. Capital values across the segments are expected to witness an uptick in 2022 due to factors such as robust sales momentum and rising input material cost that could force developers to pass on the increase to homebuyers. However, asset pricing trends are expected to remain divergent as the level of unsold inventory and growth in sales are expected to dictate capital value movement.

Continued policy push and a revival in economic activity coupled with a low mortgage rate regime are some of the key factors driving growth in residential segment. The strong sales momentum witnessed post third quarter of 2020 has provided developers an incentive to launch new projects / new phases in existing projects.

According to the report, traction is expected in premium/ luxury housing categories while a steady demand for housing units priced between Rs 45 lakh to Rs 1 crore is likely to push up the demand for affordable and mid-end segments in 2022. The focus is on larger unit sizes and plotted developments: With the elongated period of remote working and home-schooling is likely to continue.

Gross absorption in office space is expected to touch 45-47 million sft in 2022, a growth of about 13-14 per cent from 2021. Technology firms would continue to dominate leasing in 2022 while flexible space operators, banking, financial services and insurance (BFSI), engineering and manufacturing and life sciences segment are expected to contribute to the growth in office space take-up significantly.