January 29, 2019
With the rapid increase in leasing and investments for office spaces, the segment remained buoyant with optimistic prospects. As per JLL’s latest report, the office market exhibited healthy growth of 16% in 2018 with net absorption estimated to cross 33 mn sq. ft. during the year. This trend is likely to continue, with net absorption expected to surpass 37 mn sq. ft. by the end of 2019. The industry is upbeat with the change and hopes to make the most of this trend. Industry experts have been talking about the impetus brought about in the various divisions of the segment.
Experts believe that the rental market will gain and there will be capital appreciation.
“Commercial realty is strengthened by the sustained ascent of absorption rate in the last few quarters. The incremental leasing, as well as rental demands, are continuously reducing the unused inventory. This has been one of the major positive highlights of 2018. Further, fueled with economic growth, the corporates are expanding their reach as well as their employee strength; this has rapidly increased demand for office spaces. Considering the trend, we are expecting to see a large amount of such space being launched across the country. Overall, the fraternity is quite optimistic towards the liquidity situation in 2019. Capital appreciation is also expected to be in a positive swing especially in commercial property,” said Ashish Arora, Director, Viridian Red.
Retail real estate has always been an important part of the commercial segment, which will witness a tremendous change.
“The Indian retail segment is one of the fastest growing industries in the country with the sector going through the seismic shifts to become more vibrant and organized. Retailing is witnessing conceptual transition and is now more experiential than transactional. Modern shoppers look for a one-stop solution that offers products of needs and desires along with gourmet meals and entertainment options. The desire for such experience has given birth to Retailtainment. Going by the name, retailtainment wraps in itself the perfect blend of retail and entertainment intended to offer an experience that leaves you craving for more,” said Pankaj Bansal, Director, M3M Group.
Another big gainer would be the Business centers and co-working spaces segment.
“Technology has transformed the definition of security in business centers. Access cards replaced keys and now app-based door locks are going to replace access cards, adding convenience and security to workspaces. In a nutshell, technology in business centers & co-working spaces have eased out human efforts at many levels and are enabling such flexible offices to become workplaces of the future,” said Gaurav Bhalla, Managing Director, Vatika Group. (Vatika Business Centre is part of the group and into business centers and co-working spaces)
The NCR office market bounced back in 2018 after a lackluster performance in 2017. As per Knight Frank report, the market clocked a total of 0.68 mn sqm (7.4 mn sq. ft.) registering a growth of 14% compared to 2017.
Explaining the market condition of Gurgaon Pankaj Rathi, Head – Office and Retail Leasing, Vatika Limited said, “In Gurgaon, the overall market is well balanced with respect to Demand and Supply. Locations like golf course road / MG Road etc. where vacancy is in single digit, rents are growing, that is further driving demand for Southern Peripheral Road/ golf course extension road where good supply is available at 50% of the occupancy cost of GCR. The national highway traversing through Gurgaon will be the most sought after office location in 2019 due to excellent connectivity, new supply and proximity to residential sectors.”
Riding high on all the above-discussed points, the commercial real estate sector is poised to witness a key transformation in 2019.