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Strong fundamentals in place for long-term growth in commercial segment Real estate consulting firm CBRE released its Mid-year Outlook 2023 report titled ‘Indian Real Estate: Taking Giant Strides’ at a conference hosted by CII-CBRE on 27th Sep’23 in Delhi. The conference also involved interesting panel discussions with industry experts from across the asset classes. Key takeaways: (1) strong demand momentum in residential housing should continue for at least two to three years on the back of peaking mortgage rates, strong economic growth and rising prices; however, developers need to be cautious on pricing and financial closure; (2) commercial demand has a long way to go but growth recovery will be delayed in near term; (3) emerging asset classes like data centers, organized industrial warehouses and flexible spaces will continue to witness increasing penetration.

Residential outlook positive for next two-three years but scaling up will have its own challenges

Panelist: Kalyan Chakrabarti – CEO, Emaar India | Ashwinder Singh – CEO, Bhartiya Urban | Abhishek Kapoor – Group CEO, Puravankara | Rishi Raj – COO, Max Estates | Angad Bedi – MD, BCD Group | Shrivallabh Goyal – CEO Reliance MET City | Subhakar Rao – Chairman, Champion Infratech

* As per CBRE, residential sales grew 4% YoY (6% HoH) to over 150,000 units in 1HCY23 and are on track to exceed 300,000 units in CY23, which would be the highest in the last decade.

* Demand is buoyed by peaking interest rates, strong macro growth, rising enduser confidence post RERA and a gradual increase in prices due to low inventory. Property prices have remained in an upward trajectory for the last two years but are expected to be more calibrated from hereon, based on supply dynamics.

* Developers echoed their optimism about demand remaining strong for at least next two-three years. However, they remained cautious on supply-side challenges, led by (1) scarcity of land and land prices, (2) shortage of materials and labor due to industry wide scale-up, and (3) higher launches amid improved funding environment post the NPA clean-up.

* The panel emphasized the need to be realistic in price increases, as well as ensuring financial closure of projects so as to be immune to any downward trend.

Offices: Long-term growth drivers in place despite near-term headwinds

Panelist: Amit Grover – ED, Office Business, DLF | Thirumal Govindraj – Senior MD, RMZ | Aanchal Saraf Aggarwal – Director, ASF Group | Shesh Paplikar – Founder, BHive | Ankit Jain – Co-founder, Skootr

* Over the last decade India has emerged as one of the go-to destinations for global corporates, as the country’s office stock doubled to 850msf as of CY22, which is expected to increase to 1000msf by CY25. A decade ago tenants were attracted to India because of its cost arbitrage, but it has evolved as a key market for the execution of ideas conceptualized in the US due to the availability of skilled personnel.