Colliers International India released a report titled ‘Translating Challenges into Opportunities’ covering the current landscape in corporate real estate and facilities management, and factors that influence the real estate sector.

The report outlines the current situation and challenges in the real estate market and highlights how the concerns can be turned into opportunities, paving the way for future success. Some of the pressing points and key recommendations, which were discussed by the stakeholders at the RICS leadership conference are:

Regulatory Reforms

The Indian economy has witnessed strong growth over the last five years, marked by a revival in business confidence, along with FDI friendly government initiatives. As the sector moves towards transparency brought about by professional management, necessary disclosure and reporting norms need to be adopted across the sector. Project sanctions through single-window clearances and regulations must go hand-in-hand, in a view to promote the sector. There is an urgent need to make policies and regulations in the industry more accessible to the public as well as industry professionals, as they are often convoluted.

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Investments

Investment in real estate has been increasing over the last few years, as a result of improved investor confidence led by the aforementioned reforms. As per Colliers Research, the capital in­flows into Indian real estate have surpassedUSD53 billion since 2008. Interestingly, investment during 2014-Q1 2019 accounted for 59% of the total infl­ows into the real estate sector since 2008. At a time when India’s first REIT has been successful, with more listings on the way, professional management and international standards-based valuation of properties (International Valuation Standards (IVS) / RICS Red Book) need to be adopted, along with necessary disclosure and reporting norms.

Office Market

The strong macro-economic environment, and FDI-friendly government initiatives have propelled the commercial office sector. As per Colliers Research, from 2019 to 2021, it is expected that the commercial demand to remain healthy, with average annual gross absorption of 49 mn sq ft till 2021.Upcoming annual average supply of 66 mn sq ft till 2021, competitive rent levels, and developing infrastructure in cities are likely to work in India’s favour.

“The strong macro-economic environment, and FDI-friendly government initiatives have propelled the commercial office sector. We noted 2018 to be the best year for office demand, with gross leasing activity of 50 mn sq ft. The market is recording high preleasing activity as occupiers plan ahead, suggesting robust absorption and therefore continued market growth over the next couple of years“, said Sangram Tanwar, Managing Director, Mid-India, Colliers International India.

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Flexible workplace use is likely to continue to be a large demand driver. On the other hand, global in-house centres are likely to take up large tracts of office space in top cities, with increased focus on innovation through technology. The government must consider extending the direct tax benefit provided by Special Economic Zones (SEZs) beyond the sunset clause in 2020.

Talent in CRE

The commercial real estate (CRE) market in India is growing at a rapid pace and it is increasingly important to have the right people for the right role. Established companies need to give priority to develop and nurture talent, thereby emerge as brand ambassadors of the sector. As the sector matures, there needs to be an impetus on reskilling and upskilling of professionals.

Tech in CRE

Technology is becoming an important facet in CRE, as developers and occupiers understand the importance of technology in operations. Developers are beginning to consider investing in smart buildings that use automated processes to control building operations. Data analytics is likely to be critical for energy savings, reduction of total lifecycle costs, business efficiency and sustainability. The importance of the Internet of Things (IoT) and Artificial Intelligence (AI) needs to be well-understood among stakeholders. Developers and occupiers need to analyse and understand the benefits (better efficiency, lower operating expenses) from technology, and sustainable buildings.

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“Overall, the commercial real estate is on the cusp of change with greater corporate governance, and higher degree of institutionalization. With this, we also urge the government to facilitate single-window clearances that will go a long way in further improving the ease of doing business. On the office front, we are witnessing technology becoming centric to not only occupiers, but also developers. Occupiers and developers are studying how AI and IoT can maximize efficiencies in workplaces. AI can help make predictions and automate routine activates in offices, thereby enhancing occupier experience. Developers too can use IoT for better intra-systems communication, in order to respond to building requirements”, said Megha Maan, Sr. Associate Director, Research at Colliers International India.

SOURCE Colliers International India