C&W perspective on office, residential and retail sectors in 2016 with projections for 2017

NET ABSORPTION OF 30 MSF OF GRADE A OFFICE IN 2016: CUSHMAN & WAKEFIELD 

RETAIL MAKES A COMEBACK WITH 5 MSF NEW MALL SPACES

Mumbai, December 21, 2016: Cushman & Wakefield assesses that while the year of 2016 saw a great deal of changes from the Economic Environment perspective, the market remained broadly positive for the real estate sector, albeit the residential sector that continued to see lower end user activities. The year saw the highest levels of Private Equity investments since 2008 while retail saw some early signs of activities in 2017 attracting nearly INR 42 billion in Private Equity.

Office and investments

The year 2016 ushered a new high since 2008 in private equity investments into the realty sector. Hinging on certain larger-ticket deals closing in December, the total private equity investments in real estate (PERE) for 2016 are expected to touch INR 483 billion (USD 7.2 billion) notinga 53% annual increase. Of the total inflows into the realty sector, nearly half (INR 243 bn) of the total inflows are expected to be made in the commercial office sector, unlike previous years that saw majority share in the residential sector. This increase in PERE in the commercial office sector is spurred by the stable growth prospects of the asset class, which is expected to witness net absorption of at least 30 msf during 2016, similar to 2015 levels. At the same time, supply has been controlled, vacancies in key business districts are decreasing and rentals for prime properties and locations have been increasing.

While the IT-BPM sector continues to be the prominent demand driver in majority of the cities, other sectors such as consulting, pharmaceuticals, e-Commerce, engineering and manufacturing are also increasing their presence in office demand. Though Bengaluru remains the undisputed leader in office demand, Hyderabad will show the highest growth in office sector demand owing to heightened demand from the IT-BPM sector.

“As we step into 2017, we expect some of the macroeconomic concerns (domestic and global) to stabilize and occupiers would gain greater confidence to take investment and expansion decisions. We anticipate net absorption to increase from this year’s 30 msf to around 32-33 msf in 2017 and possibly touch 35 msf in 2018. The market sare also likely to witness continued momentum of investments into the commercial office sector in 2017 as new investment-grade projects come into supply” said Anshul Jain, Managing Director, India, Cushman & Wakefield said.