In India, at the dawn of 2020, we were warming up to a stupendous year with commercial real estate segments of office, warehousing, and retail on a healthy growth trajectory. The residential market was also attempting to stand again on its feet after a spate of structural readjustments of previous 2-3 years. Then came the COVID-19 pandemic and associated lockdown – amongst the most stringent in India – which brought business activity to a complete standstill.
In the second half of 2020, as we saw gradual lifting of the lockdowns and increased awareness about responsible handling of the coronavirus threat, consumers, particularly in the housing segment, did come back with renewed vigour. Time-bound and focused government interventions also served as a catalyst to rekindle market sentiment.
In 2021, as consumers and businesses move ahead - responsibly managing life and livelihoods amidst this pandemic uncertainty - market trajectory will meaningfully improve compared to 2020. The housing sector, with its latent demand potential and much better demand dynamics, is expected to lead the way. Commercial office and warehousing sector, on the back of their strong fundamentals, will retain their past glory. Within the commercial segment, data centres, will emerge as a shining star as strong demand dynamics will enjoy the tailwinds of right policy attention. Overall, we expect 2021 to be a year of reckoning for the the real estate sector. India’s long-term economic fundamentals remain strong, despite the interruptions caused by the COVID- 19 induced lockdown. We expect the growth momentum to return and are witnessing new avenues develop that will be propelling India's economy and commerce, in turn, impacting the real estate fabric of the country. Some of the high potential sectors that Knight Frank India will look at making early headways are data centres, pharmaceuticals, warehousing and logistics, and e-commerce.
Bengaluru's transit infra-projects will help unlock RE development potential (B/caps)
Another Knight Frank India report said that key transit infra projects, including metro and roadways, will unlock possibilities for heightened real estate development across 24 key locations. In its latest city report: ‘Bengaluru Urban Infrastructure Report 2020 –A Comprehensive Take on Major Transit Oriented Infrastructure Projects with Key Impact Markets’ the consultancy assesses the impact of the current transport infrastructure projects on the real estate sector and thereby understands that the identified locations across the city are expected to benefit due to ease of travel.
It is estimated that 127 km of metro and 270 km of road projects are under various stages of construction in the city. Bengaluru Metro Phase 2, extensions and new lines are expected to be completed between 2021-2025. The major road projects - Peripheral Ring Road (PRR), Satellite Town Ring Road (STRR) and Suburban Rail Network - are likely to be completed beyond 2025. All these projects are being implemented under various models at an estimated cost of more than $11.4 billion. These projects will bring new locations to the forefront and will also be instrumental in driving incremental real estate development across some of the well-established office hubs as also isolated locations which needed public transport connectivity. According to Knight Frank Research’s analysis, 24 locations have been identified to benefit from the transit-oriented infrastructural development in the city.
Shantanu Mazumder, Senior Branch Director – Bengaluru, Knight Frank India, said “The transit infrastructure projects will bring about an evolutionary change in the city’s real estate landscape. These projects are expected to not only bring inclusive growth with an incremental inventory supply in established locations but also mark the inception of real estate development and for realty investment flow in Asia. There will be an emergence of new micro-markets in the peripheral parts of the city. Bengaluru has been a major hotspot of the global fund investments into commercial real estate in India.”
Rajani Sinha, Chief Economist & National Director – Research, Knight Frank India, said, “Bengaluru in recent times has emerged as the start-up hub of the nation, bringing innovation and employment opportunities, while making a significant contribution to India’s GDP. Sectors such as aerospace, IT, biotechnology, manufacturing, e-commerce, and logistics are expected to drive the city’s economy in the future. Enhancement of transit infrastructure in the city through projects including Metro Rail Phase 2, Peripheral Ring Road and Satellite Town Ring Road will improve connectivity and result in significant reduction in travel time to prominent employment hubs. These massive upcoming infrastructure projects will result in huge development potential for the real estate market.”
(The author is Chairman and Managing Director, Knight Frank India)
