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India’s industrial, warehousing leasing to touch 20 mn sq ft in 2018: Report

Updated: Oct 4, 2018

Leasing activity in the industrial and warehousing segment is expected to touch 20 million sq ft in 2018, up 17% from 2017. The segment has gained significant momentum over the past few years, with leasing touching 10 million sq ft in 2016 and 17 million sq ft in 2017, signaling that the short-term disruptions caused by the implementation of the Goods and Services Tax (GST) have abated, said a CBRE South Asia report.

India’s office market too has recorded robust activity over the past two years. In 2016, total office stock crossed 500 million sq ft and is expected to cross 600 million sq ft by end-2018, a 20% jump in two years.

The property consultant predicts that over the next two years, occupiers are expected to spend almost $48 million on leasing office space in India while new commercial assets worth around $6 billion would be completed.

From an investment perspective, increasing transparency and successful implementation of several regulatory reforms is giving an impetus to the sector. In the year ahead, CBRE expects capital inflows into real estate to witness an uptick, with office, retail, industrials and land parcels leading the activity.

“We expect 2018 to be the turnaround year for the real estate ecosystem in India. Significant infrastructure development across key cities, improvement in ease of doing business, renewed focus on attracting investments in the sector and enhanced transparency are changing the market dynamics,” said Anshuman Magazine, Chairman, India and South East Asia, CBRE.

Signalling sustained growth of the office segment, leasing activity is expected to remain strong during the year. In line with 2017, office space absorption is expected to touch 40 million sq ft during the year. These properties are likely to remain high on investor radar, with private equity and institutional firms increasingly acquiring and expanding realty portfolios to hold quality office assets.

In residential segment, ready-to-move-in properties will lead the demand. Owing to the government’s sustained focus, affordable housing is likely to set the tone for the country’s residential market in 2018. In retail space, around 6 million sq ft of new supply to enter the market in 2018 and key cities that will witness this supply addition include Bangalore and Hyderabad, the report added.

Regulatory initiatives have infused positivity in the sector as RERA, GST and easing of FDI norms have improved transparency, resulting in the return of investor confidence to the market. The market is witnessing increased interest from offshore equity investors, large Indian corporates and high networth individuals and core assets are expected to remain in focus.

While debt has remained the preferred form of investments over the past few years, the market now has incremental appetite for equity.



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