New leasing of office, retail spaces may take hit in short-term due to lockdown

India's commercial real estate, which has been performing well for last few years despite slowdown in the property market, is likely to be impacted due to nationwide lockdown as market experts see short-term affect on demand-supply of office and retail spaces, besides pressure on rentals values.

Corporates and retailers, both global and domestic, are expected to delay their decisions on fresh leasing of commercial spaces by at least a quarter.

The commercial real estate market is already witnessing re-negotiations of existing rentals and rent waivers from landlords as businesses have been affected due to the ongoing nationwide lockdown to check spread of coronavirus disease, according to property consultants and developers.

"The impact of COVID-19 in India is likely to be short-lived providing the virus remains relatively contained," said Anshuman Magazine, Chairman & CEO - India, South East Asia, Middle East & Africa, CBRE.

"Office leasing demand as of now has been unaffected due to a sustained appetite amongst US and EU based corporates for India as an outsourcing destination. The evolving global situation could only potentially result into delayed decision-making in the short term," he told PTI.

Office space leasing was at an all time high during 2019 at around 50-60 million sq ft in seven major cities.

JLL India MD (Retail Services) Shubhranshu Pani said leasing of retail space in shopping malls is at a standstill because of the lockdown.

"Retailers have already started communicating to mall developers about their inability to pay rentals," he said.

Samantak Das, Executive Director and Head of Research, REIS, JLL India, said, "In the current lockdown scenario, occupiers have suspended decision making on lease acquisitions. However, it is temporary in nature."
Embassy group COO Aditya Virwani said, "Leasing decisions are on hold or will be re-evaluated and supply will take a big hit as construction is not happening. The cost of labour remobilisation, interest etc will all build up."
Anurag Mathur, CEO, Savills India, said, "Fresh office supply could see significant delay as construction gets impacted due to the nationwide lockdown."
Arpit Mehrotra, MD, Office Services (South India) at Colliers International, said: "We believe that leasing principles do not fluctuate customarily, however, at some point it will exhibit the sum of the accumulated market trends as a new benchmark price which in current scenario looks on the downward side."
Abhishek Bansal, ED, Pacific Group, said: "Malls offer safe and hygienic ambience and hence, the pandemic may end up boosting it at the end of the crisis, but there will be some temporary pain for the time being."