India office real estate to experience heightened demand in 2022

India’s office real estate markets, led by tech-cities such as Bengaluru and Hyderabad are expected to experience heightened demand in 2022 as the country leads the Asia-Pacific regional growth.

In terms of real Gross Domestic Product (GDP) growth by market, India is set to surpass Japan, South Korea, Singapore and Australia in 2022, said Cushman & Wakefield’s Asia Pacific commercial real estate outlook for 2022.

“We expect 2022 to be the year of growth and resurgence that will be led by the high office demand across Asia Pacific. Momentum around ecommerce, logistics, data centers and sustainability will add tailwinds to this growth,” said Anshul Jain, Managing Director, India & South East Asia.

The Asia Pacific office market showed remarkable resilience by recording consecutive quarters of positive net absorption since the onset of the pandemic. Office demand, as measured through net absorption, is expected to pick up across all markets in 2022, as occupiers increasingly make decisions around their corporate footprints. India’s largest cities especially are forecast to experience increased demand as a result of delayed decision making by occupiers in 2021.

As economies reopen and employees start their return to the office, it is important to note that while there is generally a universal desire to work with greater flexibility post-pandemic, significant variations exist across the Asia Pacific region. Employees in India and China show a desire to work frequently in office (more than two days per week). India at 72% is 12% points above Asia Pacific average and 45% points above the United States.

“In 2022, India is bound to get the front seat in APAC real estate growth, ahead of China & Australia, driven by strong office demand. The same is reflected in the report where the net absorption forecast for 2022 for Bengaluru is estimated to be equal to that of Beijing at 8Mn SF and Hyderabad won’t be far behind at 7 million sqft,” said Badal Yagnik, Managing Director, Tenant Representation, Cushman & Wakefield India.

While the investment market has not been immune to the negative impacts of the pandemic, it has also been comparatively quick to rebound. Given the outlook, and trends to date, total regional investment volume in 2022 is expected to remain at the 2019 peak of around $180 billion. The investment market in India continues to grow and mature with the REIT market now owning 10% of Grade A stock. These growth trajectories are expected to continue into 2022. The retail and leisure/tourism sectors have been hardest hit during the pandemic but there are few signs of distress. The strength of rebound in domestic consumption and tourism flows will determine the outlook for discretionary expenditure and the likelihood for further repricing or the onset of distress.

However, according to Cushman & Wakefield, this should not be the sole indicator for investment as several markets across the region, including China, India and South East Asia, remain under-served by physical retail space and so longer-term opportunities in these markets should not be ignored.



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