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Effect of COVID-19 on the Realestate market

Gross absorption of office spaces up 4% in Q1 2020: Report The effect of COVID-19 on the market was seen from March, and hence has not impacted the market largely in the first quarter.

NEW DELHI: During Q1 2020, office gross absorption across the top seven ci es rose marginally by 4 per cent to 12.2 million sq , according to a recent report by Colliers International India.

The effect of COVID-19 on the market was seen from March, and hence has not impacted the market largely in the first quarter.

Bengaluru accounted for about 30% of the total gross absorption, followed by Pune with a 18% share and Delhi-NCR with a 15% share.
Bengaluru saw leasing of 3.7 m illion sq while in Delhi-NCR, the gross absorption rose 21% year-on-year to 1.8 million sqft.

Pune’s gross absorption zoomed 90% to 2.2 million sqft during Q1 2020. The leasing ac vity was driven by absorption of pre-committed spaces by technology occupiers garnering a 77% share in overall leasing, and majorly expanding their footprint into IT developments in the micromarket of SBD West (Baner).

Total supply rose 1% year-on-year to 13.2 million sq with developers focusing on completing projects especially with existing pre- commitments and attiaining the occupancy certificates.

“Going ahead, demand from resilient sectors such as technology should be stable, with pharmaceuticals, ecommerce and logistics sectors also increasing,” said Sankey Prasad, managing director and chairman of the company said.

Across the seven major cities, the IT-BPM sector continued to dominate the leasing activity in Q1 2020 accounting for 55% share in leasing. Flexible workspace operators accounted for about 15% of the gross leasing in Q1 2020.

“While the first quarter of the year has started on a positive streak, we expect overall leasing in upcoming couple of quarters to be slow, led by delayed decision making by occupiers. Hence, we are projecting gross absorption of 45-50 million sq this year, lower than 2019.” said Megha Maan, senior associate director (Research), Colliers.

The company foresee occupancy levels in flexible workspaces to stay muted in March and April as the risk exposure is higher than in traditional offices.

commercial realestate: The best reason to invest in commercial over residential rentals is the earning potential. Commercial proper es generally have an annual return off the purchase price between 6% and 12%, depending on the area, which is a much higher range than typically exists for single family home proper es (1% to 4% at best).

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