CBRE Report: Bright Outlook for Indian Real Estate

     

With an upbeat forecast for the Indian property market, CBRE has added to the groundswell of expert opinion affirming the solid foundation of the sector’s health. Its recent report, Asia Pacific Real Estate Market Outlook 2017–India, projects that new investments in Indian property this year will rise to $7 billion (compared to $6 billion last year) and will cross the $10 billion mark in 2020.

India stands tall in the report as the fastest growing G-20 economy, a position which bodes well for all segments of the real estate market—residential, commercial, retail, and logistics. The level of office absorption, itself a leading economic indicator, hit a record high of 43 million square feet in 2016 and is expected to stay robust. As the IT/ITES industry is the key driver of demand, Bangalore stands out as the leader in grade A office rental growth, with Hyderabad making impressive gains.

In a compelling indication that the jolt of November’s demonetization move is wearing off, residential sales are noted to have jumped by 70% in the first three months of the year. This increase—from 14,000 units in Q4 2016 to 23,000 in Q1 2017—was strongest in southern cities, namely Bangalore, Chennai, Hyderabad, and Pune.

Related to this finding, CBRE anticipates that residential project launches may be somewhat reduced in the very near term, as the market completes its adjustment to demonetization and developers adapt to new regulations. In terms of policy initiatives, the report highlights potential benefits for the real estate sector; for example, the rollout of the nationwide goods and services tax is expected to boost operational efficiency, which should be especially positive for the retail and logistics segments.

The CBRE report corroborates other research that examines the underpinnings of the Indian property market. With the economy on an upward curve and demographic trends that favor long-term urban growth, Indian real estate makes for a compelling bet.

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