After three difficult years, India’s real estate industry is hopeful that 2022 will be the year of recovery. With Covid-19 being accepted as part of the new normal, 2022 should experience less volatility than in previous years.

Suppressed demand and low interest rates could push up residential sales – primarily sales of mid-range and luxury homes; in the immediate neighborhoods. Growth rates could slow due to base effects, some say.

Commercial real estate, mainly office space, could take at least 3-6 months, if not longer, to increase further; in particular, with the increase in Omicron cases delaying plans to return to the office. New asset classes in commercial real estate – warehouse and data center – would spark investor interest in 2022.

Residential sales

Data from the ANAROCK group shows that the supply of residential units between January and September 2021 was 1.63 lakh in the 7 main Indian cities (Delhi NCR, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad and Pune) – an increase by 27% compared to the full year 2020.

On the other hand, sales amounted to 1.45 lakh units, which is 5% more than for the whole of 2020.

The sequential analysis shows that the supply of units in July-September amounts to 64,500, an increase of 1.8 times compared to the period from April to June of the year; while sales increased 2.6 times to 2,800 units.

“The comeback of the Indian residential real estate sector is V-shaped,” said Anuj Puri, chairman of ANAROCK group. Activity area.

Pressure on costs

Price increases should be limited in the 5-15% segment (at the end-user level), as developers don’t want to scare away demand, which is currently mostly end-user driven. In 2021, there was a 3% increase in the September quarter ending with an increase in raw material costs.

According to Dhaval Ajmera, director of Ajmera Realty and Infra Ltd, NRI investments in the residential market will occur as it becomes resilient to the uncertainty caused by the pandemic and better currency conversion rates. “The share of ready-to-move-in homes has increased as people don’t want the uncertainties of projects being built,” he said.

Reports suggest private equity investments, which reached $ 420 million from January to September 2021, were higher than the whole of 2020.

The average home size has increased by 26%, as homework continues.

Real estate actions

The rally in real estate stocks was also pronounced.

The S&P BSE Realty Index (a broad indicator of the performance of real estate stocks) was at 1,423 on March 27, 2020 (during the foreclosure); and stood at 4,028 in mid-December 2021.

Listed developers like Brigade Enterprise saw sales bookings increase 59% to 1,310 crore in April-September; Godrej Properties’ sales bookings jumped 18% to 3,072 crore during the period; Lodha sold properties worth 3,000; (on track to meet ₹ 9000 cr for FY22 target); while Sobha Developers reported sales of over 1,700 crore for those six months.

Commercial real estate

Large office parks reported physical occupancy in the range of 10-15% in September 2021. But with the increase in Omicron cases, uptake will continue to be slower. Demand is expected mainly from IT / ITES and global multinationals.

The recovery of rental income is expected to represent up to 75% of pre-Covid rentals for FY 22 (April 2021 to March 2022), which was around 45 to 50% for FY 21. During fiscal year 23, rental income is likely to be “in line or higher” than the figures achieved during the pre-Covid year.

“While the risks of subsequent waves of pandemics impacting business operations will persist, strong recovery trends underscore the potential for long-term growth. Assets with a strong liquidity profile and financial flexibility are expected to do well, despite temporary disruptions, ”said Mathew Kurian Eranat, Vice President and Group Co-Head, ICRA Ltd.

Occupant confidence improved in the second half of 2021; and the gross absorption in 2022 (calendar year) is expected to be about 15-20% higher than in 2021.

“Office space will continue to remain a dominant sector, but residential, industrial and warehousing will strengthen in 2022 thanks to strong business fundamentals,” said Ramesh Nair, CEO, India and Managing Director, Market Development , Asia, Necklaces.

$ 1 billion in industrial investments

The industrial segment is expected to see investments approaching $ 1 billion in 2021, led by major global players purchasing ready-made and entirely new warehousing projects. In addition to data centers, there is also interest in the life sciences sector.

According to a recent Colliers survey, industrial and logistics assets will be the most sought-after assets in the APAC region, with over 20% of investors anticipating capital gains of 10-20% in value-added assets in 2022, supported by favorable winds and large-scale economic transformation.