Indian economy set for an angular recovery what it means for the CRE sector

The year 2020 had impressions of both COVID-19 pandemic related aggravations toward the start just as the resurgence of repressed interest in the last quarter of the year. India's economy was critically impacted by the COVID 19 pandemic but now it is recuperating. India's economy is now on a road to recovery and the revival has been quicker than anticipated.  

A great deal occurred during the year, which was until now extraordinary and that changed the normal course of business particularly affecting how commercial real estate moved in 2020. The principal half of the year saw a total halt of exercises because of the constrained lockdown beginning March 2020, trailed by empowering government and national bank mediations at fast stretches and tryst of the immunization advancement, which holds the possibility to bring steadiness.

As we leave upon 2021, market advancements over the most recent couple of months have enthused solid expectation among market partners. With the progressive opening of urban communities in Q3 2020, office and retail occupiers and warehousing and modern portions, the same reactivated their property utilization plans.

Further, in Q4 2020, as request returned indisputably, the period recorded execution that far surpassed those accomplished in the past quarter of the year. Resumption of business exercises an improvement in estimations with information on potential immunizations guaranteed that office leasing volume will increase in the metropolitans.

Economic recovery sets the tone for a rebound in the CRE market:

As per Assocham, the most complete of the information is the record assortment of Rs 1.15 lakh crore in the Goods and Services Tax (GST) during December.

India's economy is giving definitive indications of V-shaped recovery in 2021 with the arrival of purchaser certainty, powerful monetary business sectors, an uptick in assembling and exporters overcoming it. Gigantic accruals of financial advantages from the COVID-19 immunization program that is scheduled to be rolled out soon.

With India going to reveal its inoculation program with endorsements of the two immunizations, the accruals of the financial advantages would be huge, particularly to sub-sectors of commercial real estate, such as hospitality, office leasing, retail & entertainment, which were hit hard during the pandemic.  

Tread with Caution:

The commercial leasing activity could be motivated by renewals and consolidations in this & coming quarters with economic recovery in tow, but some deals that were in advanced phases and were pulled back could be transformed in the coming quarter. However, investors should be careful with their decisions in the coming quarters and should evaluate secure investment options in the sector.

Commercial space suppliers should not underestimate their assets during this period by strongly discounting the rentals unless their financial equation is closely connected and inability to make something would lead to foreclosure. Strategies must be prepared accordingly.

Way Ahead:

CRE is one of the best-performing asset classes available and in the post COVID times, it has successfully delivered competitive returns, based on long-term capital appreciation. Owing to better yields and rentals as compared to other real estate properties, CRE is a considerable investment option. However, the objective to get the sector back on the growth trajectory cannot be achieved alone. It requires favourable reforms from the government. Backed with the strong growth record in the last couple of years, commercial real estate has emerged out to be the most secure and great options for a fixed return on investment, CRE as an asset class will lead to strengthening the market sentiments in the post-COVID era.

CRE is one of the best-performing asset classes available and overseas they have been successfully delivering competitive returns, based on high, steady dividend income and long-term capital appreciation. Owing to better rentals as compared to other real estate properties, CRE is a considerable investment option. However, the objective to get the sector back on the growth trajectory cannot be achieved alone. Apart from the company’s aggressive strategies, the sector requires favourable reforms from the government.