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COVID-19 and Indian Real Estate: What Does the Future Hold - A Report by Cushman & Wakefield

Awantika Mohanty • 18/06/2020

Cushman & Wakefield today released a report on “COVID-19 and Indian Real Estate: What does the future hold”. This report presents forecasts for the Indian real estate sector, based on the current economic landscape. These forecasts are linked to economic recovery forecasts and vaccine development and present a high-level outlook for the different asset classes. 

The report also shows key trends to watch out for across all the real estate service lines, which will drive future conversations between various real estate participants, in an environment that will inevitably be shaped by the COVID pandemic. Please find below the key highlights across all the markets. 

Office Market

  • Demand from large scale consolidation, expansion and setting up of GCCs is likely to come back in 2021 and strongly in 2022. 
  • Growth in deep tech, healthcare, pharma and India’s continued strength of talent, experience, favourable real estate costs to drive the tech story
  • Demand to return strongly in hot markets, momentum in 2022 could signal a full recovery
    • Demand recovery by 25-30% y-o-y
    • Supply up by 20-25% y-o-y

Key trends to watch out for

  • Return to workplace, Protocols, Employee Sentiment will be New Normal
  • Rental growth to cease; minor flexibility in negotiations for deal re-pricing to cause a 5-10% rent reduction across corridors, but local demand-supply dynamics will rule
  • Flex space demand in 2019 (~7.0 msf), to drop by 50-60% y-o-y in 2020
  • Markets like Bengaluru and Hyderabad where pre-leasing levels are high will continue to dominate upcoming supply over the rest of 2020 and 2021 (>50% share)

Retail Market

  • Mutually acceptable commercial terms have to be agreed upon with warranties/caveats to counter COVID-like events in the future
  • Omni-channel strategy a key element going forward
  • More stores to be experience-driven rather than POS 
  • Waiting for festive season to mitigate business loss for the year 
  • Mall completions to be pushed further by 9-18 months.
  • Rental reduction of 15-20% likely, superior grade malls to engage with retailers for rent discounts

Residential Market

  • Home loans at lowest ever in over two decades but construction loans still expensive
  • Established developer brands have access to capital-debt & structured equity, rest struggling for working capital amid sluggish sales

Warehousing Market

  • New construction to restart now, completions in 2021 aligned to demand.
  • Slowdown in demand due to lack of adequate space options, more new supply likely in 2021
  • India’s push to grow the share of manufacturing from 16% to 25% of GDP
  • Demand in short-term to face a supply crunch with projects impacted by the lockdown and shortage of materials and labour.


  • PE Inflows in 2020 to be 45-50% lower y-o-y; short-term blip as PE funds realign their capital allocation stack
  • Office REITs to be listed; commercial asset yields main advantage for institutional investors
  • Focus on defensive assets – warehousing, logistics, data centres

Alternative Asset classes

  • Hospitality: With inbound tourism likely to be impacted severely due to shut down in international travel and even local travel for leisure and business curtailed to a large extent, recovery is long and hard in terms of occupancies and revenues
  • Student Housing/co-living: Private rooms would increase in terms of % share of operational and planned beds as users will evaluate social distancing against higher price more favourably.
  • Data centre: India’s data centre market to nearly double to USD 5 billion over the next 5 years

Commenting on the release of the report, Anshul Jain, Managing Director –India and South East Asia, Cushman & Wakefield said, “Through this paper, we bring to you potential scenarios and forecasts as we head in to a state of – Recovery Readiness, Restart and Reimagine the path ahead. A revival will come, but many factors not in the least a successful vaccine development will be crucial to the shape of the recovery curve and improvement in India’s economic fortunes and the real estate sector. Economic recovery in the US and Europe will drive growth of Indian real estate, especially the office market. We know as we move forward, we will keep evolving and updating the same.” 


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