Realty sets new benchmarks in 2022: report

Office, residential and warehousing segments have performed extremely well in 2022 and they are expected to continue their upward trajectory in 2023, says JLL’s year-ender report, titled ‘The 2022 story: Indian real estate’s rise from the lows.

“The year 2022 has been the year of a sustained turnaround for the Indian real estate sector, after two COVID-impacted years. The Indian office markets are on track to record net absorption levels like the pre-COVID 5-year average with a potential upside next year clearly outlining the resilience amid India’s dominance as the outsourcing/offshoring hub of the world and its innovation ecosystem creating new office demand. The turnaround in the residential sector has been nothing short of remarkable, with the sector poised to surpass decadal highs in apartment sales numbers. India’s warehousing & light manufacturing sector is expected to cross 40 million sqft in space demand in 2022, the highest ever with further growth anticipated driven by 3PL and the growth in the urban logistics landscape. ESG and rising input costs have also been key themes defining the in real estate this past year,” said Samantak Das, chief economist and head of research and REIS, India, JLL.

“We will keep our eyes on the evolving headwinds, with inflationary pressures and global growth in our rear-view mirror. The office, residential and warehousing segments are all on track to improve further on their 2022 performance and we will watch the next year unfold with anticipation. For real estate, concrete ESG actions and asset pricing will also be key defining elements in the next year,” he added.

Annual performance: Segment-wise report card

Office space: Net absorption in office space for 2022 is likely to be up over 50% Y-o-Y, says the report. While net absorption for the first nine months of 2022 is at a 3-year high of 30.3 million sqft and on track to match the 5-year average (2015-2019) for the full year, it is expected to be at 37-40 million sqft in 2023.

There is a slight decline in space take-up by tech firms, but manufacturing, healthcare, and flex are major movers in 2022 and are also expected to remain big drivers of office demand in 2023. The tech, as well as the GCC story, will continue to support the office market momentum in 2023.

Flex space: The 9-month flex seat take-up is already at an all-time peak of over 95,000 seats, with the year likely to end more than 120,000 seats. Similar growth momentum is expected in 2023, with flex integral to workplace strategy.

Residential segment: The residential segment has witnessed the fastest recovery, with annual sales in 2022 expected to surpass 200,000 units, the highest in over a decade and near next to the 2010 sales of 216,762 units. Quarterly residential sales were over 50,000 units in each of the first three quarters of 2022. As incomes get adversely impacted by inflationary pressures and global headwinds, the affordability synergy prevailing in the last six months has been challenged. While affordability is likely to be impacted, the slowing momentum looks to be temporary with the country’s focus on economic growth along with the likely easing of inflationary pressures.

The trend of launching plotted developments and independent floors is expected to grow with buyer preferences more toward such products.

Apart from the affordable and mid-segment, the traction is expected to take place in the premium segment as well backed by launches by established developers in prime locations. Moreover, there is rising demand for bigger homes with good amenities. It is expected that the market share of established and credible developers will increase further with buyers preferring developers with a proven track record, robust financial strength, and execution capability. The sector is expected to witness consolidation at a faster clip with more joint ventures and development management contracts likely to be seen.

Warehousing & Light manufacturing: The warehousing & light manufacturing demand in 2022 is estimated to cross 40 million sqft by 2022-end, surpassing the levels of 2021. The momentum of the market is expected to continue in the next year with the net absorption projected to reach Over 44 million sqft in 2023. The demand in Grade-A space has increased contributing more than 65% of the total demand in the market.

Also, the year 2022 has witnessed upward rent corrections after being stable for the last three years with rental appreciation observed. The rents are expected to grow at over 4-5% y-o-y growth rate with the increasing demand from specialised manufacturing sectors, 3PL, and retail companies that require technically specialised facilities.

Source: housing.com

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