While residential property sales saw a decline in Q3 of 2024, office leasing is going strong in top cities of the country. Anshul Jain, chief executive, India, Southeast Asia and APAC tenant representation, Cushman & Wakefield, shares his outlook for different property segments in an interaction with Raghavendra Kamath.
What is the outlook on office leasing and rents in 2025?
India has solidified its position as the ‘Office of the World’, interestingly, with office demand here among the highest in Asia, and even globally. In 2024, the pan-India gross leasing volume for the office sector is on track to surpass 80 million square feet (msf), marking a record-breaking year and the third consecutive year with over 70 msf of office leasing activity. This momentum is driving up rental rates nationwide, propelled by strong demand across major cities, large deals by multinational companies, and steady leasing from domestic firms. Limited supply in key cities has only intensified this trend, keeping vacancies low and pushing rents higher. Looking ahead to 2025, office leasing activity is expected to remain robust at around 74-75 msf. Both global and domestic occupiers are projected to expand further, especially in top cities. Although supply will increase, with Bengaluru and Hyderabad together contributing nearly half of the new completions, rentals are likely to continue their upward trend.
How do you look at the spurt in GCC leasing? Do you think it will continue?
India’s global capability centres (GCCs) are rapidly reshaping the country’s office market, driven by an unparalleled talent pool, cost-effective real estate, a rapidly advancing digital infrastructure, and world-class office spaces. By Q3 2024, GCCs accounted for 30% of total office leasing—a return to pre-Covid levels, with an upward trend expected as MNCs increasingly view India as a strategic R&D and innovation hub. In recent years, India has seen a number of mid-sized MNCs establishing greenfield GCCs, alongside expansion from larger players, reinforcing the country’s leadership in high-end tech offshoring, especially in engineering R&D services.
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Why did residential sales decline in Q3?
The slight slowdown in residential sales in Q3 reflects a temporary adjustment, largely due to rising home prices. In the luxury sector, sales of larger homes (4BHK) have also seen some moderation, as higher rates and prices have made these properties less attractive to investors, who make up a significant portion of the market. However, with people’s preferences for space and refinded living environments, demand for high-end and luxury homes is expected to remain steady in the coming quarters. Additionally, mid-segment demand is likely to regain momentum as the RBI is anticipated to reduce interest rates in the near future. This would make home ownership more affordable and further support the residential market’s growth. Overall, residential sales are expected to stay strong in the upcoming quarters, driven by resilient demand across segments.
What kind of residential properties are seeing good sales? Which cities are seeing highest sales?
The demand for high-end and luxury residential properties in India has surged post-Covid, reflecting a remarkable shift in buyer preferences. Over the past few years, high-end and luxury units accounted for ~35-40% of total pan-India launches compared to less than 20% in the pre-Covid period. Sales of high-end and luxury units have also increased at a proportionate rate in the last 2-3 years, driven by a rising preference for spacious, amenity-rich homes that align with the evolving lifestyle needs of buyers. Leading this trend are markets like Mumbai and Delhi-NCR, with Gurgaon standing out as a hotspot for luxury launches, strong sales, and significant capital appreciation. Bengaluru and Hyderabad, traditionally mid-segment markets, have also seen an uptick in high-end and luxury property demand recently, signalling a shift in these cities’ residential landscapes.
Will capital market activity continue in real estate next year?
Yes, capital market activity in real estate is set to remain strong next year, with both developers and investors actively seeking prime assets. Demand for strategic land parcels across residential, office, industrial, warehousing, and data centres is expected to stay high, as developers work to expand their land banks. Global and local institutional investors will continue to target premium office assets, drawn by their potential to deliver stable, long-term returns. In recent years, large-scale office acquisitions have been a consistent trend in cities like Mumbai, Bengaluru, and Hyderabad, and this momentum is likely to continue next year and beyond.
Do you expect any REIT listing next year?
India’s REIT landscape is evolving with four REITs currently listed- three focused on office spaces and one in retail. The maturity of the office and retail markets, availability of grade A investible quality stock has driven institutions to buy such assets and eventually list them as REIT. The robust office market, India’s leading real estate asset class, is likely to drive further REIT listings beyond 2025. Additionally, in March 2024 the Securities and Exchange Board of India (SEBI) published regulations governing investment by small and medium real estate investment trusts (SM-REITs) in income-generating and completed properties, including commercial assets, rental housing, warehousing, and hotels. This is set to expand the scope of real estate investing in India as SM-REITs become a further instrument by which investors may take fractional ownership in real estate assets.
From: financialexpress
Financial News
