Indian commercial real estate lull to last at least two more years, says Anarock chairman
Add BT as a preferred source
DeeperDive is a beta AI feature. Refer to full articles for the facts.
THE ongoing lull in Indian commercial real estate will likely continue for at least two more years, though it was not clear when the sector would see a full recovery, the chairman of property consulting company Anarock said on Tuesday (May 16).
Across the country, commercial real estate lags its residential counterpart. While residential sales hit an all-time high in the first quarter of 2023 mainly due to home buying, commercial real estate continues to struggle to match pre-pandemic levels.
“It’s still too early to predict when the lull will recede. In fiscal 2022, absorptions were 36 msf (thousand square feet), while the highest absorption was recorded in 2019 at 39 msf,” Anarock chairman Anuj Puri said in an interview on the Reuters Trading India forum.
Puri said that US multinational companies and Indian startups were not renting new spaces.
He added that the hybrid working model has changed real estate requirements for companies, and that this was among various factors hitting demand.
However, residential rentals in metropolitan cities are not expected to rise further on the back of excess supply this year, he noted.
Navigate Asia in
a new global order
Get the insights delivered to your inbox.
“We are expecting approximately 0.3 million homes getting completed this year (in metropolitan cities) which ultimately will ease some pressure on the rental market.”
For Bengaluru and the Mumbai metropolitan region, Puri estimated that there are about 60,000 and 130,000 new houses coming up this year, respectively.
According to a recent report by Anarock, rents in Bengaluru, the tech capital of the country, rose by 20 per cent year on year for the first quarter of 2023.
Puri said he did not see any evidence of rising interest rates pressuring real estate demand, but he felt some deferment could happen in the short term if rates breached the 10 per cent mark.
India’s Monetary Policy Committee kept interest rates unchanged in a surprise move in April.
It is expected to keep its policy interest rate on hold for the remainder of the year.
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
