Commercial Space to Rebound Post Covid

A Colliers International Report highlights that the commercial segment is expected to be on investors’ radar in the post-COVID scenario due to its resilience, good track record and lucrative return potential against the backdrop of a depreciating rupee and falling crude oil prices. Commercial real estate in fact has been a preferred asset class with a comparatively higher average rental yield of 6%-8% against the residential sector. Moreover, it has been largely resilient to the overall economic slowdown in the recent past and has managed to woo investors due to its attractive return potential. The report highlights that the office spaces are expected to lead the growth on the back of the robust growth of Business Process Outsourcing (BPO) and IT/ITes sectors. COVID-19 is expected to shift the occupiers’ preferences towards ready to move-in properties; larger offices will be given precedence over the need to be in city centres. As occupiers reassess offerings from a realistic angle, integrated office spaces with facilities for wellness, collaboration, community-building and retail needs will gain currency. Remote working, extensive use of technology to enhance customer experience and digitization were among the dominant trends witnessed in real estate amid the lockdown. The REITs landscape in India is expected to undergo further evolution with diversification of underlying assets. Due to the long-term nature of office space leasing, tenants in REIT-backed properties are better equipped to avert the default in payments. Office spaces will also benefit in case of the relocation of manufacturing firms to India amid the disruption of global supply chains. The triple advantages of affordable and skilled labour, demographic dividend, and lower land costs will play a pivotal role in portraying India as the next manufacturing hub.