byREVIEW MY PROP
MAY 27, 2020
BENGALURU: A prolonged impact of the corona virus could finally put some brakes on India’s commercial real estate market, which has been on a running red hot for the last few years. A CBRE report says that if the impact of the epidemic slows down the economy of the US and India, then it could result into delayed decision-making, curtailed capital expenditures, thereby slowing down portfolio decisions.
“While India’s commercial real estate market has very limited exposure to mainland China, it could get impacted if the US and Indian economies suffer a growth slowdown on account of the COVID-19 spread,” the independent property consultancy said. US and Indian firms accounted for 80% of the total absorption of 60 million sqft last year.
The commercial market has been the lone star in India’s real estate segment, growing at a break-neck speed as more firms looked to have a big presence in the business parks of Bengaluru, Gurugram, Chennai and Hyderabad. Bengaluru is the biggest market, accounting for about 15 million sqft, or 25% of the total leases, followed by Delhi NCR.
“Decision making is already getting deferred as people stop travelling. Only the companies who have pre-committed will be going ahead while for the others, deals may be held up by a quarter or two,” said Ram Chandnani, managing director of advisory and transaction services at CBRE India, said.
A senior executive of a Grade A office space developer that the situation looks grim as of now. “The number of enquiries and inspections have started slowing as all visits are put on hold. There will be immediate delays in deal signings.”
Executive say that many companies may not be looking to expand at this stage as the global economy remains uncertain due to being battered by the diseases that has spread to more than 100 countries. While these are very days, extended restrictions on travel will make companies defer their leases for next year, rather than in the third and fourth quarter of 2020 when usually they are inked.
The report also added that completion timelines of retail mall projects are expected to be delayed as sourcing for fit outs is done mostly from mainland China, resulting in lag in projects in finishing stages and stores at fit-out stages.
But Shishir Baijal, chairman and managing director of Knight Frank India, says it is still unclear how deep the impact will be. “These are still early days and the demand still remains strong. We will have to see how long it takes to get things under control.”
Source : Times of India