Realty players remain bullish on commercial space despite COVID crisis

Despite the coronavirus pandemic hitting demand for office spaces significantly, realty players are bullish about the segment and expect at least 28-30 million sq ft commercial space absorption this year. According to the industry experts, the COVID-19 pandemic has impacted the overall business sentiment but the demand for office space will revive as the country slowly comes out of the lockdown.

They estimated a 28-30 million sq ft of absorption in 2020, which is nearly 40 per cent lower than the record absorption of over 49 million sq ft in 2019. "There will be a demand bounce back Currently, things are moving slow but may be next year, we will see the momentum picking up," Mindspace Business Parks REIT CEO Vinod Rohira said during a virtual real estate summit organised by CII.

RMZ Corporate Chairman Raj Menda said the demand will come back once the government opens up international travel as the capital intensive decisions of investing in commercial space come from the headoffice. JLL Country Head and CEO Ramesh Nair said data privacy continues to be a big worry while working from home. Echoing similar views, Embassy Office Parks CEO Mike Holland said issue of business continuity, safety, security and governance will drive the demand for office space. The industry experts, however, noted that only 10-15 per cent of the workforce in offices have returned so far.

Credai National President Satish Magar noted that once the COVID-19 curve flattens, people will want to come back to offices to work. Lodha Group MD and CEO Abhishek Lodha said that supported by government policy and low interest rates, India's housing, office and logistics markets will see significant growth in the years to go.

The experts are also expecting consolidation in the commercial space as financing will continue to be a challenge with banks still being reluctant to fund. "In such a situation, private equity will play a major role in providing funds. Also, we will see a lot of consolidation in the sector," Prestige Office Ventures CEO Juggy Marwaha said.