Investment property transactions increased by 26% in H1 2018 compared to H1 2017

RICS India, in association with its knowledge partner Colliers International India released a report “Opportunities in a changing world: Making the most of an uncertain environment” at its Corporate Real Estate Conference, 2018 in Bengaluru. The report highlights the key changes in the business environment that are likely to impact CRE requirements and suggests strategies for occupiers and developers to harness the full potential of the opportunities derived from this change. The report also highlights the increased role of investors in changing business environment. Colliers Research forecasts that commercial real estate is likely to dominate the real estate investment in coming years. The report mentioned that India witnessed investment transactions totalling to INR156 billion (USD2.4billion) in H1 2018, up 26% compared to H1 2017 (USD1.9billion). The commercial segment dominating with global players such as Blackstone, Brookfield, Xander, etc. remained bullish on investment in commercial real estate in H1 2018. With increasing investment, the CRE market has also started witnessing profound structural changes in the way commercial real estate is built, financed and managed. According to Colliers research the change in ownership from local developers to institutional investors and advent of REITs should lead to the institutionalisation of the CRE in the next three years. According to Colliers Research about 120 million sq ft (11.2 million sq m) of gross o­ffice absorption in the next three years. The demand is likely to be well supported by robust supply pipeline of about 124 million sq ft (11.5 million sq m) of offi­ce stock in major Indian cities. “In 2018 and beyond, we believe the demand for office space will be led by technology, engineering, manufacturing, e-commerce, logistics and finance sectors, along with co-working operators. The growth in corporate real estate will however not be without its challenges. Change in global policies, protectionist trading positions taken by some countries and a resultant fluctuation in global growth are already affecting the way occupiers lease or buy office space. We have seen the emergence of co-working spaces in a big way. It represented about 8% of office space absorption in 2017 compared to the previous year's share of 3%. Technologies such as automation/artificial intelligence could replace traditional job roles in industries such as IT and BFSI. A loss in jobs and a change in the work culture are likely to have an impact on the way companies lease or buy office space,” said Nimish Gupta, Managing Director, RICS South Asia. Despite the recent strong demand for office space, macroeconomic factors such as government policies, automation and AI have started signi­ficantly disrupting the Indian CRE market. CRE heads are increasingly focused on workspace efficiency and cost-effectiveness while keeping flexibility, collaboration, adaptive designs and employee retention in mind.