Residential realty poised for strong growth in 2022

Hyderabad: India's residential real estate is poised for a strong year in 2022, with both supply and new launches expected to post a robust performance, a report by realty consultancy firm CBRE revealed.

According to the report titled 'India Market Monitor - Q2 2022' brought by the consultancy firm, there will be significant uptick in new launches expected especially in Pune, Mumbai, Hyderabad, Bangalore, and Delhi-NCR.

"Asset prices are likely to witness an uptick on account of strong momentum in sales as well as developers' decision to pass on the rising input and labour costs to buyers.High-end, and premium segments are anticipated to gain traction, fueled by the anticipated appreciation in capital values and increased activity by HNIs and NRIs," the report said.

Robust sales led to a fall in unsold inventory across most cities on a year-on-year basis despite steady new launches, inflationary trends and monetary tightening measures. "We expect this trend to sustain in the near term," it added.

According to the report, housing sales jumped 121 per centyear-on-year to about 76,000 units during April-June 2022 period, recording a 9 per centquarter-on-quarter growth.Number of units sold touched 146,000 in H1 2022 (January-June), up by 72 per centfrom the same period year ago.

"The mid-end and affordable / budget segments cumulatively drove 76 per cent of the sales in Q2 2022 (April-June)," the firm said.

On office space front, the report expects leasing to pick up momentum going forward.

"Space take-up would be attributable to the release of pent-up demand and expansion & consolidation requirements of occupiers.As the recovery momentum remains upbeat, differentiated and high-quality institutional supply in core markets would continue to draw flight-to-quality absorption," it maintained.

Flexible work patterns have increased in prevalence, but several occupiers are yet to formally define hybrid working and formulate relevant policies and guidelines. This is likely to take place over the next few quarters, it added.

Office leasing activity was recorded at 18.2 millionsq ft during April-June 2022 per cent, a rise of 220 per cent from the same period a year ago. Small- to medium-sized deals (up to 50,000 sq ft) dominated space take-up with a share of almost 84 per cent during the three months under review. Bangalore, Delhi-NCR and Hyderabad dominated space absorption, with a combined share of 67 per cent in the last three months.

Supply addition of 16.7 millionsq ft was seen during April-june, up by around 64 per cent from a year ago. Hyderabad, Delhi-NCR and Bangalore together accounted for 76 per cent of the supply addition during the three months.

"Large institutional players to continue with greenfield investments via JVs / partnerships / platforms or brownfield investments via REITs, which would boost upcoming supply in the coming years," the report said.

Furthermore, real estate sector witnesseda strong capital inflowof $3.4 billion in the first half of 2022, a rise of 42 per centfrom the second half of 2021. The capital inflows in April-June 2022 stood at $2 billion, an increase of 47 per cent over January-March 2022.The office sector showed dominancein investment activity, with a share of about 57 per centduring April-June 2022 period. Anshuman Magazine, Chairman and CEO (India, South-East Asia, Middle East & Africa), CBRE, said: "In 2022, real estate investments are expected to grow further on the back of a strong rebound across asset classes. With total capital inflows reaching $3.4 billion in H12022, we expect these investments to rise by over 10 per cent versus the 2021 benchmark. Greenfield assets are likely to witness a strong investment uptick. However, we might feel the impact of volatility in the global investments market."

With improved financials and stronger residential sales in 2022, we foresee leading developers being in a much better position to negotiate with institutional investors for funds at a comparatively lower cost, said Gaurav Kumar and Nikhil Bhatia, MDs' (Capital Markets and Residential Business), CBRE India.

Investments in alternate assets, data centres, could gain further traction amidst rising digitalisation and strong policy push towards a digital economy, they added.