Indian real estate sector to get a $7 billion boost in 2017

The real estate sector in India is expected to attract an investment of around $7 billion in 2017, while the figure is expected to touch $10 billion by 2020, according to CBRE South Asia.

Anshuman Magazine, Chairman, India and South East Asia, CBRE said, “With 2016 being the year of landmark decisions for the Indian real estate industry, the sector saw concerted efforts by the Government to bring in transparency as well as boost consumer sentiment in the sector, especially in the residential market. The outlook for the year 2017 is positive with an expectancy of steady growth, stability and revival in the market.”

According to the report, core assets will continue to witness strong interest but there will be enhanced development interest in office, warehousing and retail sectors too with several players expected to launch ‘affordable housing’ platforms.

“Office and residential market is expected to be main drivers for fund; alternate sectors such as retail, warehousing and hospitality will gain prominence. A secure and favorable regulatory environment expected to generate more interest from offshore investors,” said the report.

The year 2017 is expected to witness a significant increase in investments from family offices and HNIs into real estate.

According to the report, 2016 was a landmark year for the sector, with record absorption levels of over 43 million sq. ft. reflecting a 9% y-o-y growth. Bangalore and NCR dominated leasing activity; however, Hyderabad, in particular, witnessed a steep rise in occupier demand, with absorption more than doubling from 2015 to cross 6 million sq. ft. in 2016.

The year 2017, will see high absorption levels and global investor interest will continue to bring life into India’s office sector. In 2017, the office sector is likely to maintain its momentum with an anticipated absorption of 40 million sq. ft. “A strong trend of ‘pre-commitment’ in under constructed buildings. IT/ ITES to continue to be the key demand driver for space across the country,” mentioned the report.

Office space supply across the seven cities is expected to marginally rise in 2017. Completion delays likely to abate supply pipeline dominated by the top three cities, followed by smaller cities such as Hyderabad and Pune.

Affordable housing, which is witnessing increased interest from private developers, will emerge as a key driver of housing sales. The residential market has jumped up by 70% q-o-q in Q1 2017. Compared to only 18,000 units launched in Q4 2016, we have seen more than 30,000 units launched in Q1 17. Biggest jump was in Chennai, Hyderabad, Kolkata and Bangalore.

“India housing sales have also jumped up by 70% q-o-q in Q1 2017. Compared to only 14,000 units sold in Q4 2016, we have seen more than 23,000 units sold in Q1 17. Biggest jump was again in Chennai, Hyderabad, Bangalore and Pune,” said the report

The Indian retail real estate market witnessed continuous foray of international brands, completion of retail developments and robust demand during 2016. The year 2017 is likely to be positive for the retail sector which is likely to witness an increased quality supply

“Around 7 million sq. ft. of additional Grade A supply is expected to hit the market; to be led by Southern cities. Hyderabad and Bangalore are expected to lead the fresh supply addition in the retail sector for 2017,” said the report.

WRITTEN BY – SOBIA KHAN & KAILASH BABAR

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