India's office market will remain resilient in 2021, property consultancy Knight Frank said on Monday. In its latest report on 'Asia-Pacific Real Estate Outlook 2021: Navigating the Post-Pandemic Recovery', the consultancy said that Bengaluru market is expected to experience a rise in rental values in the next year while Mumbai and NCR are expected to remain stable in rental values.
"These trends indicate that despite a bleak period between April and June 2020, the overall demand for office space could remain strong in the new year. For the main office markets of India, the positive trends are a draw out of the encouragement received in the subsequent part of 2020 (July-Sept) which saw office space demand making a comeback, albeit still short of pre-Covid periods," the report said.
In particular, it pointed out that Bengaluru has the benefit of existing low vacancies that will enable absorption of much of the upcoming supply.
"The city also has the advantage of relatively lower rentals compared to global markets and large talent pool that should help in quicker revival of this market as global economies move towards normalcy," it said.
Meanwhile, the report also states that the demand for warehousing remained relatively resilient this year, correcting only by 11% Y-O-Y, as compared to the 44% CAGR recorded from FY17 to FY20. Despite the ongoing pandemic, the Indian warehousing sector is expected to remain comparatively less impacted due to rising e-commerce demand which is expected to grow from $70 billion in FY19 to an estimated US$160 billion by 2022.
With such a strong demand driver, India will be a region that data centre investors, occupiers, and solution providers will find hard to ignore, which will in turn further boost demand for the prime industrial sector, Knight Frank said.
With an increase in demand from e-commerce, India’s online retail growth is estimated at 13% Y-o-Y in 2020. In October 2020, the asking industrial rents for Mumbai, Delhi, and Bengaluru warehousing remained stable and are expected to remain unchanged for the year 2021.