How Corona Virus Could Impact Real estate In India?

 

Colliers International expects Corona Virus to impact various segments of real estate as follows:

Co-working Spaces: Occupancy levels in flexible workspaces are foreseen to stay muted in March, especially in Delhi‐NCR, as several start‐ups encourage employees to work from home.

Office Sector: In 2020, Colliers Research had forecast 54.3 million square feet of gross absorption and no major impact is foreseen on office demand due to COVID‐19. However, it expects some delayed decision making by occupiers who depend on clearances from overseas, especially Asia. 

Investments: In 2019, institutional investments from Singapore, Hong Kong and mainland China together accounted for 28 percent of total real estate investment in India. At a time when funds from Asia are increasingly looking towards India’s Grade A office assets, Colliers expect investors will remain bullish over the next five years. However, it foresees slower decision‐making in H1 2020 due to Corona Virus, which could constrain capital deployment in India.

Manufacturing: India is among the top 15 most affected economies as China is its second‐largest trading partner, accounting for about 13.7 percent of imports in 2018. Precision instruments, machinery, automotive and communication equipment are the sectors most likely to be affected. This will likely have a moderate effect on office leasing demand in Q1. If the outbreak is contained in H2 2020, Colliers expects see some recovery over Q3 2020. As demand for e‐commerce increases as people avoid shopping centers, we recommend manufacturers prioritize efficient inventory management and last‐mile delivery for warehouses.

Travel & Tourism: We expect the travel and tourism industry to see significant effects from the COVID‐19 outbreak, not only due to the probable decline in inbound tourism, but to declining domestic travel too. Since India has a high population density, Colliers believes this will also adversely impact upcoming holiday plans reducing occupancy levels in hotels, as well as retail footfall and sales, particularly in malls.

Workplace: Colliers believes that the current scenario in India warrants greater stress on wellness and hygiene in the workplace and advise companies to review business continuity plans in preparation for further spread of the virus. Colliers believes this is a good opportunity for occupiers in India to prepare and implement remote working policies. Colliers recommend occupiers to accelerate the adoption of technology and clarify their cloud strategy to lessen the shocks from the abrupt switch to remote working.

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