The last year was a vibrant one for the real estate sector in India.
Despite a high interest rate regime, geopolitical unrest and inflation worries, some key trends seem to have emerged in the sector.
While the sector’s growth was primarily led by the residential segment, some industry experts believe some of these themes are likely to catch pace, others may shift on the back of changing maстовсопотіс conditions. Here are some trends that will likely be central to India real estate industry in 2024:
Warehousing leading the growth race
India’s warehousing sector, with promising growth prospects especially from the demand side, will likely see an accelerated pace of growth in the upcoming year, according to industry experts.
The sector is already seeing strong demand on the back of the expansion of India’s manufacturing sector, push from third-party logistics players and foreign multinational corporations setting up global capability centers (GCCS) in India. However, traditional sectors like industrial and logistics will likely drive this growth instead of e-commerce, which boomed post Covid, but has been subdued now.
“We are seeing a slowdown in e-commerce. So, the additional warehousing capacity that will come in will probably not be linked to e-commerce, but it will be more driven by the other more traditional warehousing needs of companies in India.” said Gaurav Sharma, head – India investments at Investcorp.
However, the sector is fraught with challenges including the lack of quality supply, which keeps the pace of deployment slow for most investors. Separately, the rental margin for such assets has been lower traditionally, as the market continues to be led by smaller, unorganized players.
“We are underpenetrated as a market when it comes to quality supply. Whatever quality supply has come into this market from a real estate perspective in the last 5-7 years is still a small fraction of the entire stock. It’s still led by smaller players or individual landlords where quality could be a concern,” said Abhinav Joshi, head of research India, Middle East and North Africa, CBRE India.
According to another industry expert requesting anonymity, investors are looking for opportunities to invest, but are unable to find quality supply to make new bets. The sector could be redeemed with the entry of large developers with capitalised balance sheets.
Resonating with this view, Joshi further said, “with larger, institutional investors-backed developers coming in, the quantum and share of such assets in overall supply will continue to go up.”
He added that this shift could also result in increased leasing of warehousing assets, which may have a positive impact on the rentals.
