Here’s Why 2022 Will Be the Year of The Home Buyer

As we enter 2022, the industry expects to witness further upward momentum and benefit the home buyers

File photo
File photo

The residential estate sector recorded a recovery despite the pandemic exigencies in 2021. The disruption caused by the pandemic is slowly settling and the real estate market is expected to gain back its rhythm in the next two to three quarters, albeit, the threats of the new variant is adequately contained with minimum disruption in the early part of the New Year. The residential segment is thus expected to witness around five per cent capital value growth in 2022

- Shishir Baijal, chairman and managing director, Knight Frank India

The residential real estate market is witnessing green shoots of recovery and is expected to gain further momentum in 2022. The Reserve Bank of India’s (RBIs) policy stands with soft interest rates, along with the incentives offered by the developers has given a further boost to the residential market. Sales of more than 77,000 residential units were recorded in the first three quarters of 2021 (January to September 2021), an increase of 47 per cent compared to the same period last year. Similarly, new launches of around 93,000 units were recorded, indicating an increase of 38 per cent compared to the same period last year. Improving market sentiments on the back of a recovery in the economy have instilled confidence amongst developers as they strategically launch projects across cities to tap into the demand recovery underway. In 2022, with strong end-user demand and conductive market conditions, the average sales volume is expected to reach the average quarterly sale of 35,926 units. The increased demand momentum, limited inventory in select segments, and rising input costs are expected to result in a slight price increase in select residential micro-markets

- Ritesh Mehta, senior director and head (West and North) residential services and developer initiatives, JLL India

Going forward, the key trends that are likely to shape the residential sector in 2022 are:

Grade A developers will continue to dominate the residential market and gain more market share in 2022;

Further, if the present momentum continues in the coming year and there are no disruptions due to Covid-19 or any other, housing sales and residential launches in 2022 will either be only a little less than the pre-Covid-19 levels (the peak year of 2019) or even come back to the pre-pandemic levels of 2019. As per our research, 2019 attained a new peak in residential activity after the last peak (of 2014) with more than 2.61 lakh units sold and nearly 2.37 lakh units launched in the year;

Input cost pressure and supply chain issues could lead to an upward revision of prices between five-eight per cent;

The market will continue to be driven by the end-users and peripheral areas of the cities will continue to remain active in terms of residential activity – both supply and demand - Anuj Puri, chairman, Anarock Group

Although leasing activity remains below peak levels in 2019, transaction volumes in Q3 2021 were noted at 10.3 mn sq ft across the top six cities, the highest since the start of the pandemic. This trend is likely to continue in 2022 backed by several large block deals, which are likely to be closed in the next few quarters. The office sector is likely to see an uptick in 2022, with transaction volumes expected to rise by 15-20 per cent from 2021 levels. A successful hybrid model will find its relevance even in 2022. As occupiers lay increased emphasis on health and safety protocols in the workplace, developers have an opportunity to provide workspaces with better indoor air quality and environment, well-spaced-out workstations and spaces equipped with smart technology to cater to the evolving needs of occupiers. With increased environmental awareness, occupiers are and will increasingly prefer ESG compliant/LEED-certified/green buildings. Flexible workspaces are likely to remain an important component of real estate strategies as occupiers formulate hybrid work plans and look to add flexibility and outsource workplace delivery. During the first nine months of 2021, flex operators leased about 3.9 msf. In 2022, flex operators will focus on value-added services and customization in line with the needs of the occupiers

- Bhupindra Singh, managing director, regional tenant representation, India and office services, North India, Colliers

From an office perspective, as occupiers recognised the significance of the physical office as a centre for collaboration, a shift in workplace design is likely going forward, with more allocation to ‘we’ space over ‘me’ space. They are also expected to incorporate more flexible spaces while re-optimizing their portfolios with the realignment of ‘core + flex’ themes. However, despite an increased appetite for hybrid work, the frequency of remote working is anticipated to be low (such as once a month); occupiers are also likely to determine their remote working eligibility post ‘return-to-office’ strategies. As for the industrial and logistics segment, occupiers are expected to display a strong inclination towards high-quality warehouses located near consumption hubs. Increased focus on automation/modern logistics facilities and speedy project completions will be key for developers to accommodate surging demand. The retail segment is also on a steady path to recovery. As we move forward, lease structures between landlords and retailers are expected to evolve with a greater emphasis on partnerships. Retailers are expected to go beyond malls and expand their footprint in high streets along with mixed-use and standalone buildings. We can expect retailers to give greater emphasis on digital strategies to ensure business continuity, including enhanced e-commerce offering, technology adoption, and omnipresent customer experiences.

- Anshuman Magazine, chairman and CEO, India, South-East Asia, Middle East & Africa, CBRE

While it is a little early to predict what the implications of the new evolving variant of Covid-19 will be, 2022 will likely be similar to 2021, for the real estate sector. The commercial real estate sector may sail through the possible third wave with the demand for managed office spaces remaining strong in 2022 as well. As corporates continue optimising their real estate capital and operating costs, they will either re-negotiate in their existing spaces or relocate to comparable alternatives. Based on our internal surveys and employee feedback, many organisations have adopted flexible work models. Most employees have opted for a three-day workweek from the office with an option to continue working from home. This flexibility and a possible decentralisation of the tech industry will lead to the development of smaller cities as satellites for bigger companies. The changes in the way businesses operate will drive the growth in demand for commercial spaces in many Tier-II cities.

- Naveen Nandwani, MD, commercial advisory and transactions, Savills India