As per Colliers Research, in India, the residential market is in attempts to regain momentum, commercial and warehousing sectors are likely to flourish as the key sectors to watch for over 2018.
As per Colliers Research, in India, the residential market is in attempts to regain momentum, commercial and warehousing sectors are likely to flourish as the key sectors to watch for over 2018.
“With the after effects of RERA and GST settling in, we are starting to see the initial signs of a gradual revival in the residential sector. A gradual up tick is being witnessed even in the sales numbers of some of the developers, who have a good track record of delivery over the past few years. Demand is primarily being seen from end-users only. Grade A Commercial, Quality retail (Mall) space and Warehousing continues to evince strong interest,” said Gagan Randev, National Director, Capital Markets and Investment Services at Colliers International India.
The year 2017 had been a year of slowdown due to the after-effects of demonetisation, RERA and GST. However, 2018 is being seen as a year of recovery and stabilisation.
“Although, the release of fresh inventories has slowed, with only 30,000 units launched across major cities in the country, demand for homes, especially in the ready-to move segment for end-users has gained considerable pace. The demand upswing for ready-to-move-in projects is majorly due to benefits of GST and risk-free possession,” said Surabhi Arora, Senior Associate Director, Research at Colliers International India.
This year of recovery is primarily driven by affordable housing as it will gain momentum, while mid-range and luxury housing likely to remain lull.
As per Colliers Research's latest report, absorption of affordable housing projects should further gain momentum over 2018 as an impact of earlier announced policies by the government such as infrastructure status to the segment, establishment of Affordable Housing Fund (AHF) and reduced GST to 8% from 12% for under-construction, affordable and low-cost housing to ensure ‘Housing for all by 2022’.
Meanwhile, the office market in India is expected to see stronger demand with commercial real estate leasing segment recording 11 million sq ft of pan-Indian gross absorption in Q1 2018, representing an 18% YoY rise in demand.
“On the supply side, the office market segment is becoming more organised with developers being strategic in their developments plans and upgrading their office portfolios. About 9 million sq ft of new Grade A office space reached completions across major cities in Q12018. Consistent expansion of technology companies, supportive policy initiatives such as Make in India, Startup India, thrust for logistics industry and growing interests from various industry occupiers like manufacturing and coworking should upkeep demand for office spaces in medium-to-long term,” read the report.
The sustained demand in commercial office segment and the anticipation on Real Estate Investment Trust (REIT) in turn, should increase investor’s appetite for commercial assets over 2018.
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