Opportunities for Commercial Realty investors amidst a pandemic

The world seems to have come to a standstill with the COVID-19 pandemic disrupting life and businesses globally. With over a million infected and the death toll rising every minute, it is an unprecedented tragedy of global proportions. Economies have plunged, trade and businesses have taken a severe hit as consumers continue to evade them and safeguard themselves in isolation.

The impact of Covid-19 in India:
In an already slow economy, the struggle has been further intensified by the pandemic. India’s slower GDP reflects on numerous factors that have contributed to its stunted growth such as the slowing down of discretionary spending, low consumption rate, deceleration in credit growth, supply-side disruptions impacting domestic production, and thus eventually leading to delay in manufacturing recovery. One of the worst global business adversities whose effects can be witnessed in over 200 countries across sectors, and Real Estate is no different.

In India, all major metros and business districts have been completely locked down. This has resulted in numerous commercial realty projects and plans being stalled. With most companies opting to embrace the remote working model coupled with the restrictions on transport and logistics, the sector has come to a month-long pause.

Glass still half full for Indian realty investors:
India has been proactive in preparing and combating the pandemic and has benefited from a late-onset. India can expect a stronger economic growth compared to other major economies despite the outbreak of COVID-19, as projected by Colliers’ COVID-19 Indian realty report. It further states that despite being predicted to be weak till H1 2020, consumer spending is estimated to grow at 5.7% in 2020, quite similar to its story in 2019 and is slated to improve further in 2021. Another crucial factor that would contribute in India staying competitive is the unit labour costs, which is among the lowest of the BRIC economies.

Commercial Realty assets could see challenges due to uncertainty in continuation/renewal of existing leases, decision making on new absorption, but will also benefit from likely fall in interest rates and its impact on cap rates. Investors can also benefit from attractive valuations from hospitality, retail and residential assets that have been severely impacted with the current restrictions. Other recommended segments that offer strong future potential are data centres and warehousing & logistics, amidst growing cloud infrastructure and robust domestic demand.

Related video:Covid-19:Opportunities and Recommendations for Real Estate Stake Holders


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Piyush Gupta

Managing Director

Mumbai

Piyush is responsible for developing Capital Markets Business in India.

Piyush is leading the Client acquisition, developing institutional relationships with Indian and Global Funds, Sovereign Funds, Banks, NBFCs, AIFs for Capital Markets Business   

With close to 19 years of experience, Piyush is an industry veteran with proven expertise in real estate investments, asset management and exit strategy, deployment and business development. With experience of investing of US$ 2 billion, Piyush is leading Colliers’ Capital Markets business in India and strengthen the market position of the organization with a clear focus on servicing our clients across the spectrum.

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