India Insights by Shishir Baijal

Despite facing headwinds, the growth of the Indian economy has remained strong. While India also faces challenges of inflation, domestic consumption has remained robust during the recent festive season. Therefore, we believe that the resilience of the Indian economy in the coming year will be something to watch.

Office market

India's office market is strategically important globally as its strong talent pool is one of the country’s advantages. In recent years, India's value proposition has increased significantly as higher-value services like engineering, research, and development are now being done in the country. Concurrently, the cost of real estate and human resources still offers a handsome arbitrage. India's office rentals have stayed below US$1 per square foot per month for over a decade, and the pedigree of ownership has improved with global funds investing in grade-A office spaces.

Warehousing and industrial sector

A new area of growth is the warehousing and industrial sector. This has been driven by factors such as the growth of consumerism, the rise of e-commerce, the implementation of a single taxation regime, and policy-level support for manufacturing. Tailwinds served by movement in global manufacturing and supply chain set-ups towards India will further accelerate growth in near future.

Offshore residential market

In recent years, we have observed that Indian nationals are increasingly buying residential property outside of India, particularly in countries like the UK and UAE. The momentum has got a boost with the rise in ultra wealthy population in India in recent years. This trend in oversease property demand is likely to continue, and we can expect to see even more of it in the future.

Advice

We believe there is a significant amount of pent-up demand for office space in India, as occupiers have not taken up enough space to accommodate their growing workforce. Our advice to clients is to approach the office market strategically, considering extrinsic and intrinsic factors. It's important to remember that quality space is limited, so occupiers must carefully plan and choose the right real estate to support their business growth. Similarly, for global investors foraying into the country, the run way for real estate growth is long and policy environment is supportive of development capital. Hence, long term strategies across the spectrum of asset classes in residential and commercial are expected to play out well.