The high inflation rate has resulted in a 10%-12% increase in building costs, affecting developers’ expected cashflows and project completions.
As The Era of WFH Draws To a Close, Commercial Real Estate is Making a Strong Comeback
As per analysts, the resurgence in commercial office space markets will persist, with most employees projected to operate in a hybrid model. Thus, it entails significant time devoted to the office.
According to analysts, the resurgence in commercial space markets will continue, with most employees projected to operate in a hybrid model. Thus, it entails significant time devoted to the office.
According to one poll, 70% of the workforce are considering a remote or a hybrid model of work. It means 70% of the remaining workforce will be present on-site at the office one, three, or five days a week.
Not unexpectedly, the increase in commercial space purchases reflects this return to the workplace. Per Knight Frank, around 25 mill. sq ft were rented from January to June of this year, a 107% increase YOY. NCR and Bengaluru have paved the charge, representing 7.7 mill. sq . ft and 4.1 mill. sq. ft. of these purchases.
Rentals have also increased significantly. Office rates in Bengaluru have increased by 13% yearly. Also, the rentals in Hyderabad and Pune have increased by 3% and 8%, respectively. According to experts, the data indicate tenants want to sign bargains before rates rise higher.
There is an increase in renting and booking of premises. Clients have begun to state unequivocally that they want a space since they do not want another surge in rental rates and want to secure the space before the market recover.
Co-working accounts for a sizable portion of the Return-To-Work movement. According to data, co-working space contributed 17% of all commercial-space purchases from January 2022 till June 2022, up from 10% the previous year. During the first half of 2022, sales totaled 4.3 mill. sq. ft. But, the big-ticket tenants are wary about renting out co-working facility spaces.
Cities outside metros are making a resurgence in India’s commercial office spaces. Also, the Tier-2 markets are thriving, with corporations establishing satellite offices in Coimbatore, Mohali, Ahmedabad, and Bhopal for staff who relocated to these areas during the outbreak.
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