There are many expectations about the road ahead in 2022. by Srinivasa Rao
2021 saw a fair amount of traction across most asset classes except in the second quarter of the year. There is cautious optimism to take control of the real estate market as we step into 2022, with the Omicron version looming large over the threat looming on the horizon. Nonetheless, there are some key expectations for the period.
new perspective at work
The pandemic triggered a change in many traditional modes of operation, elevating the workplace from being merely functional to being more experiential and meaningful. In the new year, with the expected containment of the pandemic and the imminent return of employees to offices, it will be important to understand the role and purpose of office space.
Factors associated with office design and density will have to be actively re-evaluated.
While most organizations are still trying to find out the optimum density for workspaces and suitable proportions, workplaces will have to undergo considerable adjustments in the times to come in the type of services they design, operate and provide.
increase flexible workspace
Office space is expected to be rearranged into a hub-and-spoke model which will eventually lead to the demand for managed/flexible office spaces.
As part of agile but cost-effective strategies of occupiers, such workspaces are increasingly being viewed as a viable business continuity plan measure.
A major advantage is that they give organizations access to fully furnished premises without having to invest in the commitment of a long-term lease.
It also allows greater flexibility as market conditions change, allowing organizations to easily increase or decrease headcount.
storage area
The warehousing sector, with ongoing modernization and infrastructure development efforts, is expected to play a more prominent role in the revival of the economy.
With investors, today, looking for an alternative asset class beyond commercial offices and shopping malls, there is potential for substantial interest in the sector, one of the primary reasons being the rapid growth of e-commerce in the country.
This, coupled with factors such as rising digital penetration, rising consumerism and rising aspiration levels of the people, translates into a growing demand for the warehousing space – making it a viable investment option in 2022.
Positive momentum in the residential market
The residential market saw positive traction in 2021, buoyed largely by demand and favorable government initiatives. In the new year, taking cues from the work-life constraints brought on by the pandemic, modern home buyers will be more attracted towards residential projects that offer a well-balanced lifestyle.
The sales momentum is expected to continue into 2022, with a trend towards larger unit sizes, provision of open space and improved facilities.
data center development
The data center industry is set to continue its growth momentum in 2022 as well.
Given their increasing importance, data centers hold huge potential as an alternative real estate asset, especially when it comes to large infrastructure investors who are looking to yield income over the long term.
The imminent surge in demand for data centers, with the influx of major construction players in this growing sector, will see further significant growth in India in 2022.
government aid
While the government has taken proactive steps to support the sector during these challenging times, such as implementing a stress fund and stimulus package, further reforms are needed to help the sector expand. Without adequate government support, it would be difficult to sustain the demand in real estate, thus the sector should be as required by the state of the industry.
continuous development
Climate change is now being recognized as a relevant factor that has a significant social impact. With India committed to net zero carbon emissions by 2070, we expect an increase in green financing in the real estate sector in the new year. The fact that the built environment accounts for a significant 40% of all energy-related CO2 emissions requires the real estate community to invest more capital in the climate tech ecosystem.
With the country’s economy coming out of the pandemic-induced de-growth, the real estate industry will continue to strive towards its journey of achieving normalcy, adopting several innovative avenues of progress. Thus, overall, the year 2022 is expected to see a steady recovery, provided the Omicron variant does not cause any further major disruption.
(The author is CEO-APAC, Vestion)
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