Realty investments in 2022 near pre-Covid, inflation a downside risk: CBRE

A few sunrise sectors such as industrial and logistics are expected to surpass pre-pandemic levels as well in terms of leasing and supply addition

Investments in the real estate sector in India are bound to grow by 5-10 per cent in 2022, with the sector poised to hit the pre-pandemic levels of 2019, real-estate firm CBRE said on Wednesday in its sector outlook report for the year.

“The second wave of the pandemic was a blip on the Indian economy and by extension to the real estate sector. We have come a long way since then. Leasing activity across all sectors and segments has witnessed an uptick in the past 6 months and we expect this growth to continue into 2022,” said Anshuman Magazine, Chairman & Chief Executive Officer, India, South East Asia, Middle East & Africa, CBRE.

He added that a few sunrise sectors such as industrial and logistics (I&L) are expected to surpass pre-pandemic levels as well in terms of leasing as well as supply addition.

The report also said that with pent-up demand likely to outpace supply, inflation could pose a downside risk for the global economy, even though the real estate sector has widely withstood the pandemic-induced economic crisis. This risk could be further exacerbated by rising commodity prices and supply chain disruptions.

CBRE said that rate hikes by the Federal Reserve, rising input costs, and geopolitical tensions in Europe could be the defining factors of 2022.

Highlighting the rise in I&L, Magazine said that warehousing space take-up is likely to increase by 22 per cent on account of higher penetration in lower tier cities and expansion prospects in tier-1 cities.

The agency also expects office space occupation to rise by 4-5 per cent this year, even as more and more companies shift to a hybrid mode of working. It estimates that the ‘work from office’ model will continue to be adopted strongly.

“Workplace strategies would evolve to suit the new role of the office, as it becomes a centre of collaboration and means to improve productivity levels,” the report said.

With higher investments in metro cities for offices, retail, and development sites, and higher I&L growth in lower tier cities, increased investor-demand led capital flows are likely in 2022, according to the report.