REAL ESTATE: STEERING INDIA’S GROWTH

2022 saw the world getting back on its feet as the impact of COVID-19 receded and it was heartening to witness India emerge as one of the key drivers of the global economy. The quick recovery has been due to our strong macroeconomic fundamentals and steady domestic consumption which has ensured sustained growth. The focus has now shifted to supply chain improvements to control inflation as well as incentivizing the services sector to enable job creation.

The resilience witnessed post the resumption of economic activity in 2022 led to the release of pent-up demand and a gradual acceleration of return-to-office (RTO) plans by occupiers, which in turn propelled leasing momentum. India remains an attractive cost-effective destination and a source of abundant, high-skilled talent for leasing global corporations. This is because corporations prefer physically locating closer to their talent pool. We’re looking at more than 500 Global Capacity Centres (GCCs) to be added in 2023 to the standing 1500 GCCs due to India’s talent pool and advantages in cost and scale. This stands to benefit the overall office market performance in 2023. 

With the Return-to-office (RTO) policies setting in, occupiers are leaving no stone unturned to attract the employees back to office. On the other hand, occupiers are also working towards complying with ESG regulations to meet net-zero targets and to cater to the growing demand for efficient, green-certified buildings. This flight-to-quality leasing sentiment of occupiers would ensure continuing interest in investment-grade buildings by leading developers and institutional owners at core locations. As a result, post the pandemic, developers and occupiers have strived to improve both building and office amenities in order to boost occupancies. The key drivers for the upcoming years would be high-quality assets with a perfect blend of technology, wellness and sustainability features. 

As revealed by CBRE’s India Live-Work-Shop Report 2023, employees are more likely to strike a balance by preferring hybrid arrangements instead of fully remote working for better collaboration, connectedness, engagement, culture, compliance, innovation, learning and career development opportunities. We expect productivity and wellness to be on the rise in employees irrespective of the adopted work model. 

Demand for I&L spaces is anticipated to be resilient in 2023 on the back of occupiers adopting a ‘multipolar’ supply chain strategy and the continued government impetus to improve infrastructure and investments. Developers are also likely to consider emerging logistics hubs by investing in land banks closer to new infrastructure initiatives and tier-II and III cities. ESG is no longer an additional feature; instead, it has become a necessity, marking the competitiveness of a new project amongst potential tenants. Developers will look to work closely with occupiers who have net-zero targets as well as to ensure intertwined decarbonization strategies, moving forward. We expect further impetus on supply chain diversification and tech adoption to drive leasing in 2023. 

As I mentioned earlier, it was heartening to witness the Indian consumption story, the sustained growth despite inflationary measures. We expect stores to be at the heart of business operations and retailers to be more active in untapped markets. 

In the Indian residential sector, we expect apartment launches to remain robust this year as well, with Mumbai, Hyderabad, Pune and Delhi-NCR driving supply infusion in 2023. Factors to consider this year would be product alignment with changing consumer demands, the need to strengthen wellness & safety features and a focus on sustainability.

Overall, as the sustainability factor continues to gather momentum, investment inflows will remain steady and partnership models gain traction. Workplace technologies that integrate the built environment with work productivity tools would grow in prominence to create holistic work experiences, connect employees and enable hybrid working. Also, 2023 is an exciting opportunity for alternative segments like Life Sciences and Data Centres to grow, flourish and dominate the mindspace.