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The commercial real estate market in India has been hit by the COVID-19 pandemic. The pandemic has caused a number of trends to grow, including a rise in the demand for digital comforts and facilities devoted to health. Demand for flexible workspaces and the office sector has risen in Tier 2 and Tier 3 cities.
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Covid Impact On Commercial Real Estate Industry The commercial real estate market in India has been hit by the COVID-19 pandemic. The pandemic has caused a number of trends to grow, including a rise in the demand for digital comforts and facilities devoted to health. Demand for flexible workspaces and the office sector has risen in Tier 2 and Tier 3 cities. The commercial real estate sector saw a massive decline following the enforcement of the nationwide lockdown in March 2020. Despite the odds, the industry has survived and shown resilience. The commercial real estate sector has seen a rise in demand due to a consistent vaccination rate across the nation, and the pattern is expected to continue. Companies from many sectors are expected to resume working from offices, which would result in a major increase in demand for commercial spaces.
Covid Impact On Commercial Real Estate Industry Since they have been one of the most active sectors in terms of employing workers during the epidemic, the information technology (IT) industry will be the main source of growth for office spaces. Increasing Importance Of Grade A Tenants And Spaces The economy has been severely damaged by the pandemic. While the majority of businesses fought to stay afloat and turned to coworking & commercial leasing in Noida, others with strong cash flows and effective business strategies were able to escape problems more quickly and are now experiencing growth. In contrast to the majority of other businesses, who found themselves in total chaos, companies maintained open lines of communication with landlords and handled lease responsibilities honestly during the lockdown time. Due of their good experience, Grade A tenants are preferred by landlords.
Covid Impact On Commercial Real Estate Industry On the other hand, renters of Grade A properties found support from managers in commercial leasing in Noida as they attempted to carry on with business under unusual conditions. While Covid 19 caught everyone off guard, Grade A properties were able to easily construct the necessary facilities to reopen and assisted tenants in returning to business as usual. This was observed with regard to all types of commercial properties, but especially with regard to office and retail buildings. The current state of the commercial real estate sector The pandemic is creating problems in all industries. The commercial real estates sector has seen the most severe changes out of all the affected industries.
Covid Impact On Commercial Real Estate Industry The pandemic’s effects on social isolation, lockdowns, quarantines, layoffs, and remote work have changed the type of demand for commercial real estate spaces. The criteria of corporate occupiers have changed since the outbreak. Fair indoor air quality, touchless technology, and proper office cubicle separation are ever more in demand. The same is a significant shift from the times before the pandemic, when corporate tenants often looked out large lounges and meeting rooms with high occupancy. Businesses want to provide their workers with a healthy and secure work environment that promotes new social isolation and worker safety protocols. The rise in demand for flexible office spaces and commercial real estate A flexible workplace provides a setting where workers from various companies, cultures, and fields can work, building community ties and increasing capacity.
Covid Impact On Commercial Real Estate Industry By selecting flexible locations, businesses can save money on maintenance and utility expenditures. Many companies are adopting a hybrid work model where some employees do their business from homes and others do so in offices. This method of operation ensures the long-term need for office space and the commercial real estate market. Many enterprises have partnered with coworking players to fulfil their workspace needs. Commercial real estate demand increase in Tier 2 and Tier 3 cities Cities in Tiers 2 and 3 are seeing significant economic growth and a demand for commercial real estate due to rising population and governmental measures promoting digitalization.
Covid Impact On Commercial Real Estate Industry Since the majority of companies began providing their employees with remote work options in early 2020, many working experts relocated to their hometowns. As a result of the cost savings, occupiers find Tier 2 and Tier 3 markets to be appealing. Future market turns are looked after by traditional office space developers and flexible space providers. The digitalisation boom in commercial real estate sector To understand changing client behavioural patterns, adapt to them, and create safe spaces on their properties, developers have started to invest in prop-tech. In order to reduce employee-to-employee contact and improve safety, developers and coworking operators are rapidly structuring their commercial real estate spaces to include touchless entrance, automatic attendance, and voice-controlled features.
Covid Impact On Commercial Real Estate Industry Workspace operators can track tenant profiles, tenant applications, and inspection requests, among other things, to simplify the leasing process and other related tasks as artificial intelligence (AI) and cloud-based technologies become more common. As the workforce returns to work in the following months, prop-tech will address social isolation, air quality, and hygiene issues. Technology-based innovations like sensor-activated spray, retina-based entry scanners, and digital ventilators will be important to the future of commercial real estate. Client expectations of this type will rise as more CRE companies begin to provide such digital goods and services, driving more commercial developers and operators to adopt technology in the commercial real estate sector.
Covid Impact On Commercial Real Estate Industry Commercial real estate cost Optimisation by businesses Businesses who own or lease office premises are reconsidering how to use them as the economic environment changes. Many companies are choosing to reduce their real estate footprint in the commercial real estate sector. Such changes in commercial real estate strategy could have a negative effect on the demand for office space. However, the Indian commercial real estate market is expected to grow overall in the following decades. Impact of Covid on Commercial Real Estate Market in Delhi • Indian commercial real estate market will become more attractive to individual NRIs for investment purpose. •‘ Office spaces’ may become the most stable’ commercial real estate property investment in India. • Commercial real estate will become more preferable than residential real-estate owing to current demand and supply balance, and higher expected ROI available from commercial properties.
Covid Impact On Commercial Real Estate Industry ▪ To ensure ‘social distancing’, many start-ups and new companies will prefer small offices compared to co-working space in the medium term. • Pre-leased sale transactions might become difficult to conclude as many tenants will re- negotiate their rentals with the owners, negatively affecting the sale price of the property in the short term. • Investors will sell residential property investments to buy commercial properties in expectation of better returns. • Banks are expected to lose their reputation as ‘most stable’ tenant for commercial real estate properties. • Retail mall projects will be delayed as sourcing for fixtures and fittings is mostly imported from China, resulting in lag in final completion of projects. • Rentals for restaurant properties will fall, as they will lose revenues owing to social distancing measures.
Covid Impact On Commercial Real Estate Industry • Buyers will prefer to buy small offices near their residences, commercial real estate, office spaces available near residential areas like Nehru Place, Kidwai Nagar will attract investors. Conclusion Commercial real estate market has been the shining star in India’s commercial real estates market with Delhi being the second highest, after Bengaluru, in terms of leased office space absorption rate. However, post Covid, it is expected to slow down as any companies will postpone their expansion plans owing to uncertain global market. Indian commercial real estate sector needs to exhibit immense resilience to overcome the current situation imposed by the Covid-19. However, there surely lies an opportunity in every crisis and Add India Group believe that the commercial real estate sector might embark on a different growth trajectory in the year to come with the emergence of business with sustainable business models and strong foothold on technology. Add India Group, being a pioneer player in commercial real estate has adapted to current scenario and is now available over digital media, so that we can show you the property, or else discuss about best locations for your commercial real estate as well as residential properties in South Delhi maintaining social distancing code.
