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High vaccination coverage, improved business environment enhance outlook towards Indian office market: Knight Frank-NAREDCO Real Estate Sentiment Index Q1 Survey

Following higher prospects in commercial space recently Rohan Lifescapes’ also closed a lucrative deal worth Rs 202 crore with Polycab India Ltd, for a commercial space nestled in The Ruby, the tallest commercial tower located in prime Dadar, which is already occupied by renowned MNCs.

Sweety Adimulam | Updated on: Wednesday, April 20, 2022, 10:41 PM IST

High vaccination coverage, improved business environment enhance outlook towards Indian office market: Knight Frank-NAREDCO Real Estate Sentiment Index Q1 Survey  | Pexel
High vaccination coverage, improved business environment enhance outlook towards Indian office market: Knight Frank-NAREDCO Real Estate Sentiment Index Q1 Survey | Pexel
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The Knight Frank-Naredco Real Estate Sentiment Index Q1 2022 survey findings reveal that with high vaccination coverage and an improving the business environment, the outlook towards the Indian office market has enhanced considerably. As COVID-19 restrictions have been scaled back nationally in March 2022, 72% of respondents feel that office leasing will maintain a healthy growth curve in the next six months. In fact, in Q1 2022 stakeholders’ outlook for office rents also improved as compared to Q4 2021. While 55% of respondents opined that office rentals should increase in the next six months, backed by strong demand trends. In terms of new office supply, 67% of the survey respondents are of the opinion that new office supply will increase over the next six months.

Following higher prospects in commercial space recently Rohan Lifescapes’ also closed a lucrative deal worth Rs 202 crore with Polycab India Ltd, for a commercial space nestled in The Ruby, the tallest commercial tower located in prime Dadar, which is already occupied by renowned MNCs.

According to Rohan lifescapes as the economy unlocks and offices resuming to working offline, there is a lot of buzz in the commercial real estate market. This deal alone fetched over Rs 202 crore, incurring a stamp duty of Rs 10 crores to the state exchequer. The space in question is a 55,383.65 sq ft expanse, sprawling across the 23rd and 24th floors, on Tulsi Pipe Road. The office showcases envious sea views and cityscapes along with spacious parking slots. Harresh Mehta, CMD of Rohan Lifescapes is very bullish on commercial real estate. He believes that the real estate sector in the south and central Mumbai is picking up. This is directly leading to the prompt revival of commercial real estate space post covid. Further, as employees are back in offices after a long virtual stint, the real estate segment is expecting a positive impact across all the spears.

Whereas the Knight Frank and Naredco flagship survey conducted quarterly noted that Current Sentiment soared to a new high of 68 – indicating that most stakeholders experienced positive developments in their businesses in the last 6 months including the period of the survey. Importantly, the Future Sentiment score recorded at 75 was at a historical best. This score indicates the expectations of the developers/investors for the next six months from the time of the survey. The flagship survey is in its 32nd edition. The Current Sentiment score increased from 65 in Q4 2021 to 68 in Q1 2022 as the last six months remained positive for growth for most real estate stakeholders.

The reason for the positive trend is because the Indian economy navigated the third wave whilst being faced with the uncertainty of war in Europe, the real estate sector momentum remained unabated, especially in the residential segment. Commercial real estate segments also showed growth after the hiatus of the pandemic. While the sentiments have been positive for the two previous quarters, this score is one of the best reached in the history of the survey. Shishir Baijal, Chairman and Managing Director, Knight Frank India said, “The growth in the residential market has been impressive, elevating the sentiments of the entire sector. As most companies start calling their staff back to work, office space demand has also been growing steadily. The buoyancy in stakeholders’ take on the sector reflects positively in both the Current and Future Sentiment Scores. However, geopolitical tensions impacting crude oil prices, are leading to a rise in inflation in the Indian market, which can impact the demand from end-users. The scenario is further complicated with supply chain disruptions, rise in input cost and an impending interest rate hike, all of which need to be watched carefully in the near future." Whereas Rajan Bandelkar, President, NAREDCO India and Director of Raunak Group said, “Amidst the geopolitical tensions and a slow economy witnessed over the past few months, the real estate sector in India remained impacted during the first quarter of the year. A result of the global uncertainties - a rise in the cost of raw materials such as steel, cement etc - is a concern for the sector. However, these concerns will likely get mitigated in the next few quarters. The gradual rise in sales across regions and the opening of offices all over the country, along with current occupier interest in office leasing, will contribute significantly to the expected strong recovery and boost consumer sentiments. As seen in the current survey, the sentiment score has increased during the first three months. However, the situation with respect to the supply chains of raw materials may prolong in the near term. Hence, the development strategy should focus on establishing uninterrupted supply chains and faster project deliveries. Such a strategy will help the sector in achieving growth. There is already a positive outlook for Indian real estate in the next six months as the country's evolving urban landscape will continue to fuel the housing and office space demand.”Interestingly, the Q1 2022’s survey findings present a very optimistic stakeholder outlook for the residential market in the next six months on the back of strong homebuying demand. 80 per cent of the survey respondents expect residential sales to increase in the next six months.

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Published on: Wednesday, April 20, 2022, 10:41 PM IST