May 2020 - APTP Group

Will commercial real estate bounce back post the COVID-19 crisis?

The magnitude of the pandemic has sparked concerns on whether the economy will revive and if the commercial real estate sector can bounce back or not.

It is to be noted that COVID-19 is but a passing phase. The government is already taking a series of proactive measures to arrest the spread of the pandemic through a nationwide lockdown and social distancing. These measures have met with great success till now as evident through a linear rather than exponential pattern of growth in COVID-19 cases. In fact, the entire world is amazed at the way India has managed to contain the spread of this deadly virus so far.

One of the report highlights that the post-COVID-19 scenario will give a fresh start to the realty sector with greater intensity and vigour than it was in the pre-COVID stage. It is noteworthy that the commercial real estate segment has been insulated from the slowdown in the past. Riding the wave of absorptions, relocations, expansions in the past 18 months, it has been on the investors’ radar. With increased marginalisation of China by almost all the countries of the world, India can become a favourite destination for manufacturing companies.

Furthermore, with the current prices being at a record low level, these are henceforth expected to rise owing to a huge pent-up demand once the lockdown is lifted.

According to a report by ICRA, the office space segment will be somewhat resilient to the slowdown with rents likely to be paid on time as they comprise a miniscule portion of firms’ overheads. Going forward, the Business Process Outsourcing (BPO) and IT/ITes segments are expected to propel the demand for office spaces. It is also expected that industrial, frontier segments like co-living will thrive due to their good return potential.

Architectural changes in office buildings such as better ventilation, social distancing etc. will cater for recurrence of Covid 19 like situations. Also, there will be a renewed focus on co-working spaces as consumers will increasingly seek flexible working models. Until then, it can be concluded that COVID-19 is an inflection point for commercial real estate with developers struggling to strike a balance between ensuring compliance to policy regulations, financing, market demand and labour shortage.

in Uncategorized Posted by administrator

Is Neemrana an investment opportunity?

NEEMRANA is an emerging destination near the National Capital Region (NCR). Gurgaon in the Delhi-NCR space has always been on a real estate investment destination map. However, lately with the rising real estate prices and recessionary environment it may no longer be an ideal investment option available or even qualify for being in the first three choices for real estate investments. Amid such a scenario, a real estate investor has to take an objective and long term view of the real estate investment. From an investment perspective, it is better to identify satellite towns or cities that are coming up around Delhi-NCR with promising prospects. We have heard about the Gurgaon-Manesar-Bhiwadi-Neemrana-Jaipur belt being developed. These satellite cities/towns can be seen as the Dwarka-Gurgaon Expressway of yesteryears, providing an ideal price point of entry.

Here, Neemrana, the least heard about as an investment destination is the place where you could find best of the Japanese business along with Indian business. There is a 1,200 acre Japanese Business Zone that has multinational companies such as Nissan, Nippon, Tiayo and Daikin etc.. associated with it. Rajasthan government has taken various proactive steps to develop several industrial zones in and around Neemrana. Thus, Japan External Trade Organisation (JETRO) in Majarakath, the Japanese Zone in Neemrana and the Export Promotion Industrial Park (EPIP), developed by the Rajasthan State Industrial Development and Investment Corporation (RIICO) are some of the zones that have led to the emergence of this fast-growing industrial hub.

It is advisable that before investing, a real estate investor should get in touch with real estate industry experts from various domains. This includes portfolio managers, fund managers, financial advisors, chartered accountants, taxation and legal experts as well. “An investor doesn’t make returns on the property, but the timely and actionable information that provides an investor an opportunity to reap returns.”