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The India focussed exhibitions may not have taken place this year, but developers were still able to put out their messages and offers. And by and large, they got heard by buyers. Image Credit: Gulf News Archive

This has been one of the most challenging years for all industries, including real estate, in India. The main theme has been about being accommodative, collaborative and understanding, not just in real estate but across sectors.

India's real estate came to a screeching halt during the lockdown period but within a couple of weeks, developers geared up to change their business strategy and adapt to new realities. The overall trends in various asset classes across the top cities are as follows:

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Residential

Contrary to initial predictions, the residential segment was quick to see an uptick on the back of growing demand for home ownership amidst pandemic-like exigencies. At the industry level, Anarock data reveals that the Top 7 cities saw housing sales of nearly 87,500 units in the first three quarters of the year.

Further, despite the unusual pressures on the housing market, residential real estate has been on a high this festive season (October through December) due to multiple offers and discounts doled out by developers, all-time low interest rates and limited-period stamp duty cuts in states such as Maharashtra.

What we are seeing is organic demand driven by the desire to own homes. If and when the various discounts and offers are rolled back, demand remains even though sales velocity may decrease. Therefore, we expect housing demand to continue in 2021 as home ownership has gained top priority for even millennials who previously shied away from it.

Commercial

Interestingly, commercial, which saw significant momentum year-on-year over the last two to three years, took a pause due to COVID-19. The main efforts of developers have been to retain their tenants rather than getting new ones.

Rentals in office spaces are more or less stable, because developers wouldn’t want the market benchmark to change. Instead, they are offering discounts such as deferrals, camp discounts or rental waivers (for two to three months as the case may be) so that the overall rental outgo of their tenants is reduced, and they get some relief.

As for 2021, the leasing activity is likely to fare better as continued work-from-home culture will get compensated by the de-densification of office space, and thus we may see lease renewals happening. However, it may still not reach its peak levels.

Retail

The segment was severely hit due to the pandemic with several malls’ completion being pushed to 2021 or later. Before COVID-19-infused lockdown in March, our research indicated that Indian cities were to see new supply of around 54 new malls in 2020 spread over nearly 22.2 million square feet.

However, as of date, we have seen supply of just five new malls , including those that were launched just before the lockdown announcement.

The ongoing festive season is definitely seeing increased footfalls in malls. While they are yet to reach pre-COVID-19 levels, sales have definitely resumed, resulting in high conversion ratio. All customers walking in are mostly serious buyers who have come with the purpose of purchase.

Offline retailers are witnessing a conversion rate of more than 90 per cent now versus 20-40 per cent in the pre-COVID-19 period.

Warehousing

Amidst the growing clamour for making India a global manufacturing hub, warehousing clusters are seen to be expanding rapidly beyond the top cities to Tier 2 and 3 cities. Demand for Grade A warehousing properties is rising across the country.

Notably, there is more than 110 million square feet of Grade A warehousing stock available, with the majority in the Top 8 cities. Third-party logistics and e-commerce are the largest occupiers of warehousing space. Thus, there is high opportunity for Grade A warehousing development in smaller cities amidst rising demand.

Data centres

The government’s data localization policy has paved the way for building of hyperscale data centres. Latest data points that India will see at least 28 large hyperscale data centres constructed over the next three years. These will span over 16+ million square feet with at least 1,400+ MW of IT power capacity.

- Anuj Puri is Chairman of Anarock Property Consultants.