Is it safe to invest in commercial property in 2021?
by Sandeep Pandey BloggerThe realty estate sector is one of the highest
employers after agriculture and it accounts for about 6% of the economy. This
sector projects and forecasts to contribute 13% to the economy by the end of
2025 provided all the norms and reforms perform well. This sector is
intertwined with other sectors. After the financial crisis faced by the sector
in 2008 followed by the RERA and GST reforms, the liquidity in the banks was
improving with buyer's confidence restoring gradually. Things were normalizing
for this sector until the pandemic started its wrath in India. The blitz of
COVID in India had a very devastating effect across the whole economy, however, it will not thwart the appeal of its commercial property. There has been a
short-term blip across the whole economy. Bearing the blow, the realty market
takes the toll, maturing at the same time becoming resilient than ever with new
strategies and reforms in its operational activity. However, with the
introduction of vaccines, there has been hoping and positivity with regards to
normalcy. The room for growth for Asia’s third-largest economy with a huge
inventory of properties is positive. Everyone must evolve and adapt, preparing
for the new normal.
A study by Cushman and Wakefield shows that
the net absorption of commercial spaces in the main Indian cities had reduced
by 54% in the year 2020. However, this year presents an optimistic growth rate
which is expected to rise by 29% this year.
The Indian real estate is now more ready for the new normal being more
resilient and adapting to the change. The change was much needed in the Indian
corporate landscape because it lacked transparency and had poor governance
especially with the advent of Reit (Real-estate Investment Trust) which has set
new standards, boosting the market liquidity.
The Indian market is mostly unpenetrated when
it comes to the relentless rise of online shopping which has caused damage to
the retail sector in other countries like the US and the UK. The tax overhaul
levied in the year 2017 had scrapped the patchwork of state, turning India into
a single market. This reform turned out to be a boon for Indian logistics where
the warehouses emerged as the most popular asset. Additionally, the advent of
e-commerce has skyrocketed the investment in logistics assets across the globe.
However, the Indian market has greatly benefited evermore with the
implementation of the national tax.
The pandemic has affected the buyers buying
patterns and preferences in terms of real estate. Customers are now looking for
larger layouts with higher safety in the Residential
flats in Chandigarh and other places across India. The real estate company in Chandigarh that is offering such a
requirement is VRS Group who has now come up with its upcoming commercial projects in Mohali and other residential projects in Mohali. The new commercial project in Mohali by the
VRS Group is a satellite office that has larger layouts with captive amenities
and safety.
Satellite offices will be absorbed must faster
in the non-conventional micro-markets in the commercial real estate
market. With the advent and widespread
implementation of work from home across various sectors, the office spaces will
have a better absorption once in the Q2 and the other half of the year if the
number of infections is minimized. The
increased FDI other government reforms give a positive indication of the
recovery of commercial real estate. Ignoring the short-term disruptions the
commercial real estate has garnered quite a good traction with occupiers and
investors seeking the long-term goal. One can expect the influx of investment
in the commercial realty sector which will offer lucrative returns in contrast
to other investment options.
The Indian commercial
market has performed well even on the brink of the virus outbreak considering
the damage it had taken post covid. With the current vaccination program,
the economy will be on the track in near quarters. In conclusion, with the blip in economy and
reform policies stimulus, this sector will have a positive outlook this year.
It is safe to assume investing in commercial real estate because of the better
customer sentiments after the vaccination. This will promote the shift to a new
normal.
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Created on May 24th 2021 03:26. Viewed 205 times.