After one and a half years of gradual consolidation, real estate in India has fathomed its own comfortable ground, and is poised at the right threshold to take a giant leap in years to come, according to the forecast of the Jones Lang LaSalle, the global real estate services firm. It says while a differential pace of strengthening is evident across sectors, geographies and segments, several property market indicators point to the fact that the industry has indeed bottomed out in the current cycle. The fears of a possible double dip recovery have given way to beliefs in the sustained healthy levels, if not a rapid growth.
The experience thus gained in this slowdown is invaluable and will serve real estate strategists for years to come. The various stakeholders in the entire supply chain – the material manufacturers, developers, property consultants, occupiers, investors and policy makers, have all emerged stronger and primed than yesteryears. And, if we have taken our lessons right, ‘caution’ and ‘diligence’ would be the keywords for the industry in the medium term.
On one hand, the stakeholders can’t afford to sway on the riding waves of healthy demand, and lose the ground advantage that they have so painfully regained by adapting to the rapidly changing business environment. And on the other, the emerging opportunities should be targeted with an unmatched fervor of potential and pragmatism.
The year 2011 would usher a new decade of opportunities for Indian real estate, which will be a test of sorts for its stakeholders between these two fringes of the fulcrum. And the winners would be the ones who balance caution with diligence evaluating all the potential opportunities with pragmatism.
Outlook for Commercial Real Estate
Office rents are expected to start appreciating after mid-2011, and more outright purchases by occupiers as well as private equity players will take place. IT/ITES and BFSI would continue to account for 60-70% of office demand.
Outlook: Residential Real Estate
Launch of premium products will continue, albeit at a slower pace, the report says. Launch of Ultra Low Cost (ULC) Housing by private developers – ‘Housing for all’ would be the buzz word. Large number of launches would continue to be in the range of INR 2,000-3,000 per sq ft at the leapfrogged suburban locations. Impact on affordability will influence the price and absorption dynamics. Sustainability will gain focus as the industry looks forward towards IGBC Green Homes standards.
Outlook: Retail Real Estate
More collaborative models such as revenue sharing to emerge in the sector, and the rents would remain stable except select prime locations. Large number of malls is slated to become operational, and retailers would continue to expand beyond Tier I into Tier II and III cities. The report forecasts more international retailers to venture into India.
