The pandemic has brought widespread disruption, unprecedented challenges and significantly impacted business across sectors in 2020. However, as we turn the corner in 2021, the economy has bounced back in record time, thanks to the world’s largest vaccination drive and collective responsibility. The emergence of new variant could pose some short-term risks, but the overall impact could be minimal, and recovery will continue post this transient phase.
Despite the brief uncertainty during the second wave, the commercial office market in India has fared well this year. Looking ahead, all the right ingredients such as robust economic recovery, hiring boom, growth prospects, and business optimism (which is at its highest level since 2014) are in place for a strong rebound in office leasing.
The great return to office has started after a long pause and a significant return to physical occupancy at the workplace is likely in 2022, of course with continued flexibility. Active demand across the top 8 cities has crossed 35 MSF, even surpassing the pre-COVID peaks, an indication that prime indicators are roaring back to life.
Several large deals are on the anvil in 2022 are likely to witness a healthy rebound in demand. Currently, Bengaluru, Mumbai, Delhi-NCR, and Hyderabad dominate the active demand but a rebound in other cities is also likely in 2022 as occupiers ramp up their hiring plans and fine-tune business/space strategies. Supply will also recover in 2022 but tight conditions in core / most active markets could bring back rental growth. Expect flex’s unstoppable growth to continue, as flexibility becomes more important than ever before.
The Pandemic will have a long-lasting impact on the future of workplace and occupancy planning. It has accelerated the ESG issues, digital disruptions, workforce needs, employee experience, safety, and wellbeing challenges that may reshape the CRE industry as the pandemic recedes. Despite some concerns amid the new variant, optimism prevails, and the outlook remains bright on the back of robust fundamentals and investment attractiveness.
We estimate 2022 would set the foundation for continued growth over the next decade, as the CRE industry in India adjusts to new realities in workplace dynamics.