Real Estate: Housing, Office, I&L Segments Expected To Maintain Growth Trajectory In New Year, Says CBRE

The Indian real estate sector is expected to maintain its growth trajectory in the next year as the country has risen in global business environment ranking and continues to be an attractive, resilient, and cost-effective investment destination, according to a report by real estate consultant CBRE. It added that all segments of the realty sector, including office spaces, residential and industrial & logistics, are expected to do well in the new year.

The country’s real estate sector bounced back strongly in 2022, with the resumption of economic activities.

Office Segment

CBRE said that Global headwinds and the possibility of an economic slowdown in developed economies are expected to slightly weigh on occupier sentiments and leasing activity in 2023. High-quality and well-located office buildings with amenities that enhance employee well-being and engagement are poised to attract occupier interest.

“Several occupiers are also likely to give credence to initiatives such as enhancing indoor air quality, integrating touchless technologies, fitness facilities, etc. to improve employee health and well-being. As businesses adapt to an increasingly distributed workforce, flexible spaces are likely to remain an attractive option,” it said.

Residential Segment

Positive homebuyer sentiments are expected to drive housing sales and new launches in 2023. However, a lagged impact of the ongoing monetary tightening on sales could be a key risk, CBRE said adding that capital value rise could slow and remain selective in the likelihood of a moderating sales momentum.

“Decline in unsold inventory levels to continue in the short term. Increased traction is expected in premium and luxury segments; however, mid-end and budget segments will still garner a dominant share of sales,” it said.

Retail Segment

“Although inflation might weigh on the Indian economy going forward, the rebound in brick-and-mortar retail sales this past year is expected to continue in 2023. Brands would continue to resize and recalibrate their physical store strategies to diversify their portfolio and expand footprint, with ‘experience’ becoming an important frontier to bridge the retailer-consumer gap,” CBRE said.

Industrial and Logistics Segment

The realty consultant said, “Going forward, we expect to see improvement in leasing activity, backed by sustained policy pushed from the government. The need for occupiers and developers to strengthen their ESG performance is anticipated to rise; new-age warehouse specifications would now include features such as green certifications, along with energy-saving & green operations.”

It added that the focus on operational efficiencies would also lead to growth in ‘flight-to-quality’ leasing. With more organised players entering the market coupled with rising awareness about wellness and sustainability, developers would consider initiatives such as smart warehouses, touchless technologies and air quality enhancements in their warehouses.

Investments In Realty Sector

CBRE said that the investment activity is expected to remain strong primarily in the land acquisition space for greenfield developments across office and residential sectors. The region could see a couple of big-ticket deals in the retail and hospitality sector, considering the assets that have been put on the block for sale.

Alternate/ emerging sectors, specifically data centers could continue to see interest across investor categories.

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