How will India’s real estate market perform next year? Colliers has some answers

Colliers India, the local arm of leading Canadian property consultancy Colliers, foresees India’s real estate market to record similar activity next year as it has recorded in the current calendar year.

A new report by Colliers says investors have a positive outlook on the property market fundamentals despite the headwinds and challenges posed by the coronavirus pandemic. It sees the residential, industrial and warehousing segments emerging as major beneficiaries in coming years.

Colliers pegged real estate investments for the nine months of 2021 at $3.5 billion, almost 75% of the quantum seen in 2020. The consulting firm noted a rapid acceleration in the number of transactions in the third quarter, and it anticipates the activity to continue in 2022.

It found industrial and logistics assets as the most coveted segment, and found that 60% of the investors preferred to buy or invest in core and core-plus office spaces.

“While the office [segment] will continue to remain a dominant sector, investments in residential and industrial and warehousing are likely to strengthen in 2022 aided by strong business fundamentals,” said Ramesh Nair, Colliers’ India CEO and managing director for Asian market development.

Nair attributed the investment projections to greater income visibility and stability, and attractive valuations as the investment ethos in 2022.

Colliers also highlighted that the rising cost of construction could further boost investments as higher costs may hinder the growth of new construction, renovations, and retrofit projects, diverting investments for existing assets.

However, four in five investors see the rising cost of construction as a pain point, Colliers noted.

The trend in India is expected to play out similar to the wider Asia-Pacific region as cross-border capital flows are also likely to return, prompting an increasing number of investors to put their ambitious plans into action that were delayed by the pandemic.

The report also shows ESG (environmental, social, governance) considerations remain prominent, with nearly three in four investors surveyed globally integrating environmental factors into their strategies.

This desire to invest with intent is both a means of future-proofing their assets and responding to the stakeholder and societal pressures requiring them to respond to the climate crisis, Colliers said.