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The ongoing lull in Indian commercial real estate will likely continue for at least two more years, though it was not clear when the sector would see a full recovery, the chairman of property consulting company ANAROCK said on Tuesday.

Commercial real estate lags behind its residential counterpart across the country. While residential sales have hit an all-time high in the first quarter of 2023, mainly due to home buying, commercial real estate continues to struggle to match pre-pandemic levels. 

    "It's still too early to predict when the lull will recede. In fiscal 2022, absorptions were 36 msf (thousand square feet) while the highest absorption was recorded in 2019 at 39 msf," Anuj Puri said in an interview on the Reuters Trading India forum.

    Puri said U.S. multinational companies and Indian startups were not renting new spaces, and the hybrid working model changing real estate requirements for companies were among various factors hitting demand.

    However, residential rentals in metropolitan cities are not expected to rise further on the back of excess supply this year, he added. 

     "We are expecting approximately 0.3 million homes getting completed this year (for metropolitan cities) which ultimately will ease some pressure on the rental market."

    For Bengaluru and the Mumbai metropolitan region, Puri estimated about 60,000 and 0.13 million new houses coming up this year. 

    According to a recent report by ANAROCK, Bengaluru, the tech capital of the country saw rents rise by 20% YoY for the first-quarter of 2023.

    Puri also did not see any evidence of rising interest rates pressuring real estate demand but felt some deferment could happen in the short term if rates breached the 10% mark. 

    India's Monetary Policy Committee kept interest rates unchanged in a surprise move in April and is expected to keep its policy interest rate on hold for the remainder of the year.

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