Tag: Ramesh Nair

Business

Colliers hires another industry leader to strengthen its office leasing capability in West India

May 17, 2022 by Rekha Nair 0 Comments #Asia, #Chief Executive Officer, #Colliers, #India and Managing Director, #Market Development, #Ramesh Nair, #Srikanth Nookala

MUMBAI, INDIA, MAY 17, 2022 – Leading diversified professional services and investment management firm Colliers (NASDAQ and TSX: CIGI) today announced the appointment of Srikanth Nookala as Senior Director for its Office Services teams based in Mumbai, effective immediately. Srikanth joins from JLL India to further strengthen Colliers’ capabilities in the region.

Bringing his diverse expertise across the real estate sector, Srikanth will collaborate with Office Services senior leaders in Mumbai to nurture new client opportunities and provide innovative services while expanding our existing client network.

An industry expert and trusted industry leader with more than a decade of experience, Srikanth has a track record of driving exceptional results for clients. Prior to this, Srikanth headed Strategic Consulting for West India and also was Head of India for the Centre of Excellence function at JLL. Earlier in his career, he has worked with firms like McKinsey & Company and Barclays.

With a track record of advising and servicing many large clients, Srikanth is also an expert in identifying strategies to drive business growth. He has spearheaded numerous growth initiatives for JLL India as a senior internal strategist in the CEO’s office. He has experience in business development, client relationship management, strategy, corporate development (M&A and partnerships) and business transformation.

Srikanth has been a frontrunner for driving innovative strategies leading to business transformation as a market leader. As part of the office services team in Mumbai, he will collaborate with Office Services senior leaders in Mumbai to nurture new client opportunities and provide innovative services while expanding Colliers’ existing client network. As a local market expert, he will drive exceptional results for clients and Colliers.

Ramesh Nair, Chief Executive Officer, India and Managing Director, Market Development, Asia, Colliers, commented: “I am delighted to welcome Srikanth to the Colliers team to drive the business growth of our office leasing business in Mumbai. Srikanth is a great collaborator and has been instrumental in building and driving customized client solutions enabling all stakeholders to make important business decisions. In our journey of building an exceptional talent pool of motivated high performers, I am excited to onboard experts like Srikanth who are goal-oriented with a client-focused approach to enhance our value proposition”. 

Srikanth Nookala added: “I am thrilled to join Colliers’ fast-growing Office Services business and be a part of the firm’s exciting growth journey. The office real estate segment is witnessing a strong bounce back post COVID-19. What makes it interesting is the shift in occupier expectations to support the ongoing revolution in Ways of Working. I hope I will be able to add value to clients by tapping on my years of experience in real estate, management consulting and investment banking. I am looking forward to begin working alongside some of the industry’s best and brightest”.

Business

In 2021, Indian real estate has gained significant amount of the lost ground: Colliers

Dec 27, 2021 by Gouri Achary 0 Comments #Asia, #Colliers, #Colliers India, #Indian Real Estate, #Ramesh Nair, #real estate, #Vimal Nadar

Occupier confidence has improved in the latter half of 2021 with occupiers closing large office deals, cementing the resilience of the sector and the underlying importance of offices. Occupiers remain focused on enhancing the well-being and experience of their employees as they plan to return to the office, chasing lucrative leases while realigning long-term plans. Developers are determined towards asset enhancement through requisite retrofit to remain relevant and retain tenants.

“The year 2021 was a watershed moment for India’s real estate sector. Even when the going was tough, the sector not only remained resilient but also emerged stronger than expected. India’s office sector is coming out of the woods, with demand back to pre-record levels. The year 2022 will even be better, even if marred by the new Covid-19 variant. We have now learned to live with uncertainty. Gross absorption in 2022 should be about 15-20% higher than this year as occupier confidence is back in the market. In terms of global capital chasing real estate, the office will continue to remain a dominant sector, but residential and industrial & warehousing will strengthen in 2022 aided by strong business fundamentals,” said Ramesh Nair, CEO, India and Managing Director, Market Development, Asia, Colliers.

From the second half of 2021, technology players and flex space operators have been taking large spaces. Occupiers who had earlier focused on renewing deals are now looking at new leases. As employees return to the workplace, next-generation offices replete with health and wellness features are a top draw for occupiers.

Segments that beat market expectations

During the year, some segments surpassed market expectations, led by a tectonic shift in preferences and behaviour of occupiers, homebuyers and investors. We look at some of the segments that have emerged strongly in 2021.

Flex space growing, but not just in top cities

Flex workspaces are leasing spaces backed by occupiers’ back-to-work plans and pre-commitments. Flex spaces have come to the fore after a gap of a year, to occupy a significant share in leasing at 16-18% in 2021. Total flex stock in metro cities is likely to rise to about 40 million sq feet in 2021. Tier-II cities are witnessing increased growth of flex spaces. Flex spaces stock in tier II cities is estimated to have grown more than two-fold this year to 5.5 million sq feet.

Investments in residential make a comeback

The residential segment saw strong recovery gains led by government stimulus, market-led price discovery, new demand. Investment volumes in the residential sector made a comeback in 2021. In the first nine months of the year, investments in the residential sector stood at USD420 million, surpassing the volumes seen in the whole last year. Investors are seeking a buy-in in the asset class, especially in the near-completion stage. Investments are spurred by renewed residential demand, led by a higher inclination to own homes, low home loan rates and steady prices.

Industrial investments inch towards USD1 bn

The industrial segment is likely to see investments inching towards USD1 billion in 2021, led by large global investors buying ready and greenfield warehousing projects. Since last year, investors have been exploring industrial space. While data centres gained traction this year from developers and investors, this year also saw the maiden investments deal in the life sciences sector.

“Despite a devastating second wave, investments into the real estate sector have been unwavering, especially from global investors. Interestingly, investors are also betting on new-age sectors like life sciences and data centres. As per a recent Colliers survey, industrial and logistics assets will be the most sought-after real estate assets in the APAC region, with more than 20% of investors anticipating capital value gains of 10%-20% in value-add assets in 2022, supported by tailwinds and large-scale economic transformation. This shows the immense potential. Moreover, the centre’s new warehousing policy has the potential to transform the warehousing sector to make it more competitive. Overall, the sector’s resilience and growth will give way to more innovation next year, in accordance with the changing times we live in, says Vimal Nadar, Senior Director and Head of Research, Colliers India.

Overall, the real estate sector will see stakeholders pivoting to different models, resetting to the new way we work, live and entertain. Developers, investors and buyers will work towards bringing in sustainability and cutting carbon emissions. The market will also see gains from sectors such as Electric vehicles, solar panel manufacturing, etc in the coming years.

Business

2022 will be an exceptional year for Asia Pacific real estate investments

Dec 13, 2021 by Gouri Achary 0 Comments #APAC, #Asia Pacific, #Asia Pacific real estate investments, #Piyush Gupta, #Ramesh Nair, #real estate investments, #Vimal Nadar

Leading diversified professional services and investment management company Colliers (NASDAQ and TSX: CIGI) has revealed that quality office assets in major metropolitan markets like London, New York, Tokyo, and Sydney, have retained their allure and will be in high demand next year. Core and core-plus office spaces are the top global strategy picks, with 60% of investors stating these assets as their investment preference, while industrial and logistics (I&L) assets will be the most coveted.

Their appeal not only stems from the realisation that office demand is here to stay, particularly in cities supported by strong transport infrastructure and high amenity values, but also the ease of large-scale capital deployment that office assets represent. The rising cost of construction, viewed by four in five (81%) investors as a pain point, could limit new builds, renovations, and retrofit projects, amplifying the demand for existing quality office assets.

“Investments in the Indian real estate sector have remained resilient despite the headwinds triggered by the pandemic, adversely impacting the economy and business climate. For the nine months ended September 2021, investments were recorded to the tune of USD3.5 billion, almost 75% of the quantum seen in 2020. Favourable one-time bulk deals have been keeping the investment momentum strong in the last past few quarters. Interestingly, residential and industrial & warehousing sectors have emerged as major beneficiaries this year garnering a combined 36% of the investments. While the office will continue to remain a dominant sector, investments in residential and industrial & warehousing are likely to strengthen in 2022 aided by strong business fundamentals. Income visibility & stability, attractive valuations and identifying the dark horses will underline the investment ethos in 2022”, said Ramesh Nair, CEO, India and Managing Director, Market Development, Asia, Colliers.

A standout year for Asia Pacific property investments

Across the Asia Pacific (APAC), more investors are prepared to put into action their ambitious plans that have been delayed by COVID-19. Cross-border capital flows are also likely to return, as travel and business activity progressively returns.

Piyush Gupta, Managing Director, Capital Markets and Investment Services, Colliers India, added, “The pandemic has accelerated a number of structural trends and will have lasting changes on the nature of real estate business in India. This presents several opportunities for investors looking to future-proof their portfolios or recalibrate their strategy towards growth sectors. This is already evident in the rapid investment being allocated towards the Residential, increasing development of data centres, Industrial, Office as well as the evolution of the life science sector. Further opportunities exist in identifying locational trends based on changing consumer and work patterns and may also provide investment strategies to new markets in India”.

Overall, I&L assets will be the most sought-after real estate assets in the region, with more than 20% of investors anticipating capital value gains of 10%-20% in value-add I&L assets in 2022, supported by tailwinds and large-scale economic transformation.

Significant interest continues to surround core-plus offices, which remain a popular asset class for regional investors in Tier 1 cities like Singapore, Sydney and Tokyo. 63% of the respondents indicated that they plan to invest in these assets, versus 54% last year.

Multifamily/built-to-rent (BTR) properties are also an increasingly sought-after asset class, with investors targeting both core and development projects. In Japan, this is a sector that is well established and has long attracted foreign core capital, whereas in Australia, it is an emerging asset class with development opportunities.

Retail is for the opportunistic while specialised assets gain favour

Our survey shows that investors see significant potential for the appreciation and repurposing of retail assets. Around a third of the investors mulling retail allocations are targeting opportunistic (including change of use) investments. In addition, hotels are also an opportunistic target, with 38% of investors looking at this sector. Both hotel and retail sectors offer good opportunities in cities with large domestic markets, like Japan, Australia and Korea.

Specialised assets, particularly data centres, life sciences and healthcare, are expected to help boost investment volumes in 2022, with student housing also poised for a comeback as Australia, the region’s main market, opens up to international visitors.

“2021 has seen a strong investor appetite for emerging asset classes such as data centres and life sciences. Global data management firms, developers and alternative asset managers formed strategic joint ventures /platforms to develop and operate data centres in India. Also, investments in retail and mixed-use assets showed up on investors’ radar and formed nearly one-fourth of the total investments during the nine months ended September 2021 as they continue to scout for profitable and stabilized retail assets. Taking cues from Global and Asia-Pacific, green financing is expected to gain steam in the coming years as developers, asset owners and investors sign up for sustainable-led development”, added Vimal Nadar, Senior Director & Head, Research, India at Colliers.

ESG considerations are growing in importance to investors

The report also shows ESG (environmental, social, governance) considerations remain prominent, with nearly three in four investors surveyed globally integrating environmental factors into their strategies. This desire to invest with intent is both a means of future-proofing their assets and responding to the stakeholder and societal pressures requiring them to respond to the climate crisis.

ESG has also become a strong focus in APAC, as it will soon be a priority in the office sector as government and corporate tenants pressure owners to get their ratings up.

Business

India’s flex space stock to cross 60 million sq ft by 2023

Nov 23, 2021 by Rekha Nair 0 Comments #CEO (India) and MD (Market Development-Asia), #Colliers, #Colliers India, #Founder & CEO, #Paras Arora, #Qdesq, #Ramesh Nair, #Senior Director and Head of Research, #Vimal Nadar

Gurugram– Colliers forecasts flex workspace stock to cross 60 million sq ft in metro and non-metro cities by 2023, as occupiers embrace agility and flexibility in their work models, mentioned in a recent release by Colliers and Qdesq.

The demand for flex space will be largely driven by Consulting, IT-BPM and E-commerce companies who are establishing multiple satellite offices in suburban locations in metro cities. Metro cities remain the stronghold of flex spaces, accounting for about 88% of the total flex stock as of Q3 2021, mentioned in the report.

“Reverse migration to Tier 2 cities, constant growth of new startups and increased occupier confidence driven by vaccination rates, have helped in overall improvement of the flex industry across the country. The flex market in India is evolving with many enterprises incorporating a flex space component in their portfolio. It is encouraging that flex spaces are currently operating at about 70%, with the trend moving towards pre-pandemic levels. Occupiers are looking at next-generation offices and the future workplaces will be unique to each occupier. Flex workspace operators must continue to focus on customization and providing on-demand workspaces,” said Ramesh Nair, CEO (India) and MD (Market Development-Asia), Colliers.

The flex market in India is evolving with many enterprises incorporating a flex space component in their portfolio. There are currently 3410 flexible centres across major cities, operating at about 70%, with the trend moving towards pre-pandemic levels.

“The next 12-18 months is expected to witness businesses of all sizes reassessing the use of their office. The importance of agility and decentralization has been underlined and highlighted by the pandemic and will become critical to businesses as they adapt to change, impelling the industry forward and that’s what the future looks like for India. Making Flex mainstream”, said Paras Arora, Founder CEO, Qdesq.

Flex space is also emerging in non-metro cities as large enterprises are moving to a decentralised structure focusing on the flexibility and convenience of their employees. The total flex stock in non-metro cities to reach 7.8 mn sq ft by 2023, a 50% increase from current levels.

Major non-metros like Ahmedabad, Coimbatore, Indore, Jaipur, Kochi and Lucknow are witnessing robust activity and are the top 6 emerging non-metro flex locations.

Occupancy levels inching towards pre pandemic levels:

After a dip in occupancy and prices during covid, flex space is reviving in the latter part of 2021 with an average occupancy of 71%. Prices per seat have also seen an improvement by 21% as of September 2021, after falling by about 30% during the pandemic.

“Metro cities are seeing renewed demand from occupiers across the spectrum in the latter part of 2021. Even in non-metro cities, occupiers are taking up seats for their sales and regional offices, leading to higher occupancy. Occupiers are evaluating the concept of ‘work from near-home’ through satellite and hub-and-spoke offices. We foresee that these offices will be an amalgamation of traditional leases and flex spaces,” says Vimal Nadar, Senior Director and Head of Research, Colliers India.

Colliers recommends flex space operators to focus on enhancing occupier experience by digitizing workspaces and providing add-on services, which shall receive more enquiries. As occupiers focus on health and wellness, demand for well managed Grade-A properties with superior infrastructure is ought to increase. Inclusion of digital infrastructure and smart facilities shall also contribute in achieving greater operational efficiency, reduce energy consumption and higher customer retention.

Business

Colliers hires India Research Head and Two Senior Industry Leaders to Strengthen India Capability

Nov 10, 2021 by Rekha Nair 0 Comments #Chief Executive Officer | India & Managing Director, #Colliers, #Market Development | Asia, #Ramesh Nair

MUMBAI, INDIA – Leading diversified professional services and investment management firm Colliers (NASDAQ and TSX: CIGI) today announced the appointment of three more Senior Directors for its Research and Office Services teams based in Mumbai, effective immediately. The three industry experts join from JLL India to further strengthen Colliers’ capabilities in the region and across the country.

An industry expert and trusted thought leader with more than 14 years of experience, Vimal Nadar joins Colliers from JLL as Senior Director & Head, Research | India. Prior to JLL, Nadar spent time with Cushman and Wakefield and CRISIL. In his career in the real estate industry, Nadar has led thought leadership initiatives for all real estate stakeholders including occupiers, developers and investors. He has also led bespoke research for prominent clients. A chartered accountant, Nadar will collaborate with leaders across India and APAC to make Colliers a market leader and innovation frontrunner in Real Estate Research.

Arshish Kavarana has been appointed as Senior Director & Head, Occupier Consulting and Digital Initiatives, Office Services | India. Previously with JLL for about 8 years, Arshish led the Occupier Consulting Group. In this capacity, he was responsible for portfolio strategy optimization, location advisory, employee engagement, and implementing the future of work for key global occupiers. He has advised CEOs / CXOs on integrating their real estate and business outcomes. He has also spearheaded numerous growth initiatives for JLL as an office expert, a senior internal strategist to the COO and CEO, operations specialist.

Neha Yadav re-joins Colliers from JLL as Senior Director, Office Services | Mumbai. Dynamic and enterprising, Yadav has built a reputation for nurturing strong client relationships. She will strategically focus on increasing market share for the firm through client acquisition and innovation. She will also add a hint of diversity to Colliers’ local leadership team at Mumbai. She will actively contribute towards client engagement and CRM initiatives across major tenants with her proactive approach. As a local market expert, she will drive exceptional results for clients and Colliers.

Ramesh Nair, Chief Executive Officer | India & Managing Director, Market Development | Asia, Colliers, commented: “I am really excited to welcome Vimal, Arshish, and Neha to Colliers. I am confident that as senior Industry experts, they will drive our business growth across the country. Together they will build an integrated client solutions platform that will enable all stakeholders to make important future-oriented business decisions. Colliers is building the best talent base and providing it with the freedom and autonomy to deliver the best outcomes. With Vimal, Arshish, and Neha on board, we are accelerating growth for our clients and ourselves in India.”

News

Budget Expectations – Ramesh Nair, CEO & Country Head (India), JLL.

Jan 8, 2021 by Rekha Nair 0 Comments #CEO & Country Head (India), #JLL, #Ramesh Nair

The government made necessary and timely interventions through liquidity infusion, fiscal support and reform driven investments in the initial leg of relief measures. Further, the Central Bank and the Central government rolled out other critical measures including loan moratorium, relaxation of NPA classification norms, one-time restructuring of corporate and personal loans (including home loans), etc. These measures and concessions have definitely helped in enhancing consumer sentiment, thus boosting consumption, resulting in increased traction in the real estate sector. While we have seen a continuance of recovery in the fourth quarter which started in Q3 2020, the actual market transaction volumes continue to be lower compared to pre-Covid levels.

 In this context, we believe that the following additional measures will aid in spurring consumption, investment; thus, resulting in a sustenance of a recovery led growth in the next few quarters.

  • Accord ‘Industry status’ to the real estate sector
  • Extension of benefit u/s 80EEA to avail additional INR 150,000 interest deduction on home loans to the following:
    • Existing homebuyers who have already availed home loans
    • First time homebuyers to include mid segment as well
  • Separate provision for deduction of ‘principal repayment’ on home loans
  • Restriction on setting off loss from house property against other heads of income at INR 2 lakh to be removed
  • Reduction in holding period of REITs for long-term capital gains
  • Allow 100% FDI in completed residential real estate projects through the automatic route
  • Allowing input tax credit on calculation of GST payable in real estate
Business World

Quotes By Various Industry Heads on Finance Minister announcement

Nov 16, 2020 by Gouri Achary 0 Comments #Aashit Shah, #Dr Niranjan Hiranandani, #Mr. Bhushan Nemlekar -, #Mr. Ram Naik, #Ramesh Nair

Ramesh NairWell thought Diwali gift for developers and buyers

The Finance Minister has announced no additional tax liability in the hands of both buyers and sellers where the differential in the actual transaction value of the property and circle rate is up to 20%. This will be effective immediately up to June 30th 2021 and applicable for residential sales in the primary segment for ticket size up to INR 2 crore. This comes as a significant benefit for both buyers and sellers as it will reduce and rationalise tax outgo to a great extent. Developers will now have the incentive in the form of this revised tax provision to pass on the benefit of lower market prices to buyers without incurring additional tax liability under the erstwhile provisions.

This announcement is timely given the following developments in the real estate sector:

Property values in a majority of India’s prime residential markets have largely remained stagnant in the past few years. Select developers in certain markets are providing price discounts to genuine homebuyers thereby leading to further rationalisation of prices. This is despite the fact that most of the developers are already operating on thin margins and have limited scope for a price reduction.
As of September end 2020, developers had a locked-in capital of nearly INR 3.7 trillion with unsold inventory to the tune of more than 450,000 units at various stages of construction across the top 7 cities.
This announcement will help in accelerating the pace of sales for developers, especially in the affordable and mid-priced segments. Ramesh Nair, CEO and Country Head, JLL India

Ram Naik“The FM’s announcement of an increase in the difference between the so-called circle rates and the agreement value will lead to a further rationalisation of prices in the sector, especially in the premium or mid-income housing segment. While the same is applicable only for units priced lesser than 2 crores it will help developers in the primary market get an upper hand vis-a-vis the secondary market. The move can be attributed to the concerns raised by developers about their inability to reduce or offer lucrative prices because of the tax liability that would accrue as a result of price reductions. But on the other hand, the major part of the unsold inventory in metro cities is upwards of Rs.2 crores in the Rs.4.75 to Rs.12 crore range. A blanket announcement without the capping would have lead to cheers for developers across the sector and the customers, this Diwali.”  Mr. Ram Naik, Executive Director, The Guardians Real Estate Advisory

“The reforms announced by the Finance Minister will bring cheer to many businesses this Diwali. Extension of the emergency credit line guarantee scheme to various sectors impacted by Covid up to March 2021 will help SME businesses tide over this turbulent patch. An increased infusion of 6k crore in the NIIF debt platform for funding the infrastructure sector is a welcome move and will boost project financing.” Aashit Shah (Partner) at J Sagar Associates

Mr. Bhushan Nemlekar“The Central Government has taken a step in the right direction. Looking at the current market condition, many developers with ready inventory will be able to sell as the prices have actually been corrected in large parts of urban areas in India. I hope we see an improvement in sales in the next year. This the income tax incentive will stimulate demand for buying homes. This is a welcome move and we are optimistic that the Government will introduce more proactive steps for giving additional relief  to boost the real estate industry.” Mr. Bhushan Nemlekar Director, Sumit Woods Limited 

“Differential above 10 per cent between circle rates and agreement value translates into tax penalties under Section 43CA of the Income Tax Act. This has been a major stumbling block for price rationalization,” said Dr. Niranjan Hiranandani, President, NAREDCO and Assocham. “This pinches, especially when it comes to liquidating unsold inventory. Industry bodies like NAREDCO have been pointing out the urgency with which this needs to be sorted out, and the Hon’ble Finance Minister, in a limited-period offer (up to 30 June 2021), has enhanced this differential from 10 to 20 per cent. This is welcome. The FM also mentioned a cap on the flat value to be eligible for this – Rs. 2 crore. This will result in most projects in Metro Cities not being able to take advantage of this, it has consistently been pointed out by industry bodies that price points in Metro Cities need to be kept in mind while offering any such relaxation,” he pointed out. He went on to add that the ideal situation would have been one where this relaxation would be applicable to commercial real estate transactions as well. “Real estate as an industry and end-users, both would benefit if these two suggestions can be incorporated,” he concluded.

“Funding issues have been a major challenge for real estate,” said Dr. Niranjan Hiranandani, President, NAREDCO and Assocham. “Finance Minister Nirmala Sitharaman’s announcement, about additional funding of Rs. 18,000 crore for PM Awaas Yojana-Urban will add to the sparkle this festive season. This is over and above the Rs 8,000 already allotted this year, and will translate into more homes for home seekers, more employment opportunities as also good business for suppliers and industries peripheral to real estate and construction,” he concluded.

 

 

Business World

India’s flexible space market to cross 50 million sq. ft. by 2023: JLL

Nov 10, 2020 by Gouri Achary 0 Comments #Dr. Samantak Das, #JLL, #Ramesh Nair

JLL today launched a report titled JLL’s “Reimagine Flexspaces A 360⁰ view” which highlights that the current market penetration of flex spaces into India’s total office stock stands at 3.0%. The country is expected to witness deeper penetration, throughout 2021 and beyond, the flex space market is forecast to grow at a slower pace and more organically. Irrespective of several short-term disruptions and challenges, increased demand from large enterprises, will support the growth of the flex space market to more than 50 mn sq. ft. by 2023. It is anticipated that flexible space will grow by an average of around 15-20% per annum over the next three-to-four years, although this trajectory will not be linear.

Previously expected levels of new investment are unlikely to be seen, as operators look to solidify their existing operations and it is likely that certain operators will not be able to weather the storm.

“Flex space operators have changed the face of commercial real estate with their innovative offerings. This market is projected to grow at a steady pace throughout 2021 and beyond. Resultantly, the market penetration of flex spaces into total office space is likely to see a gradual increase from the current 3.0% to 4.2% by 2023. We expect this growth to continue, driven by demand, profitability and return-profile for investors, albeit at a slower pace resulting from the impact of COVID-19.” said Ramesh Nair, CEO & Country Head (India), JLL. “Technology is advancing at an exponential pace and will play a major role in the future of workplaces. In this era, operators that utilize technology to enable the creation of a safer and better work experience will have a competitive edge” he further added

As corporates return to the workplace, they are likely to further leverage flexible space to reduce capital expenditure and create cost savings, while allowing for split teams and de-densification requirements. Developments that initially drove the growth of the flex market, like the focus on utilizing workplaces to boost productivity and drive dynamic work cultures, enhance emphasis on employee health etc., will continue to influence the next phase in India.

“While the flex-space market more than tripled in the last 3 years, the momentum going ahead will be relatively slower. Players are likely to tread cautiously, and the overall market is expected to expand 1.5 times from the current size. At the same time, demand for flexible space is likely to remain resilient and we expect the size of the flex space market to cross 50 mn sq. ft. by 2023 led by increased demand from larger enterprises,” Dr Samantak Das, Chief Economist and Head of Research & REIS, JLL India.

At present, Bengaluru and Delhi NCR together account for more than 50% of the flex space stock in India, with Bengaluru housing around 10.6 mn sq. ft. of such spaces. Hyderabad with 4.5 mn sq. ft. and Mumbai with 4.3 mn sq. ft. of flex office stock follow. According to JLL, Hyderabad and Pune are currently among the fastest-growing markets in the country.

In the commercial real estate space, flex spaces have become synonymous with adaptability. As preferences evolve, a range of flexible space options have taken shape to suit changing business needs, including remote working. To respond to the current disruption, and to lay the groundwork to deal with what may be permanent changes for the industry, flex space operators have been agile and are recalibrating their business strategies. They are now laying a greater emphasis on profitability and evolving strategies to ensure stable occupancy levels in their flex space centres.

Large enterprises to drive demand

The densification trend that had emerged over the last decade will likely reverse with enterprises leaning on flexible office space to relax space density. Large enterprises might also look at splitting up their offices to reduce commute times and dependence on public transport. However, with expected economic uncertainty, companies will be hesitant to commit large capital to real estate.

In terms of strategy, leasing directly to a third-party flexible space operator is the most widely adopted model. A partnership model allows both landlords and operators to leverage each other’s strengths. There are several ways to implement a partnership, with revenue shares and management contracts being the most common. Under the revenue share option, both parties split the upside. In the case of a management contract, the operator gets a fixed payment, while the landlord assumes all the leasing risk and enjoys the upside. Despite the benefits of this approach, partnerships are relatively less common in India for now.

What the future holds

The entry of more than 300 flex space operators into the country helped commoditize the market. Prior to the pandemic, most of these operators were focused on attaining scale and capturing market share. However, the availability of capital, in the current scenario, will be a challenge. Players who have embarked on aggressive growth so far will find themselves strapped for capital. In such a scenario, the market is likely to witness consolidation activity driven by larger operators with financial wherewithal acquiring smaller ones.

Flexible workplaces will continue to be a major influence on the future direction of the Indian office market. There will be an even greater focus on providing customized office space solutions and demand for flexible space will not only return but increase, as occupiers embrace the core plus flex model more widely. Despite the massive disruption from the impact of COVID-19, the future of flexible workspaces will remain optimistic.

Business World

Indian real estate sector likely to register USD 4.8 bn institutional flow of funds in 2020: JLL

Nov 4, 2020 by Gouri Achary 0 Comments #Capital Markets Update | Q3 2020, #Dr. Samantak Das, #Indian real estate sector, #investors, #JLL, #Ramesh Nair, #real estate, #REIT

India’s real estate market attracted USD 235 mn in the capital in the third quarter of 2020 (Q3,2020), growing by 52% quarter-on-quarter (QOQ), according to JLL’s ‘Capital Markets Update | Q3 2020’ report released today. The India real estate sector is expected to draw USD 4.8 bn of capital in 2020, representing an 8% decline on 2019’s total transactional volume of USD 5.3 bn.

According to JLL, investors are most attracted to the country’s office sector, with interest remaining strong throughout the pandemic and the partial relaxation of the lockdown with USD 200 mn invested during Q3 2020. Concurrently, global investors actively sought asset portfolio opportunities, with two landmark portfolio transactions amounting to a total of USD 3.6 bn in investment value likely to be concluded in Q4 2020. In the primary markets, Mindspace Business Parks REIT- India’s second REIT issue of USD 600 mn was oversubscribed by 13 times in August 2020. The strong response to this REIT indicates a preference for cash flow opportunities in private and public markets.

“We’re expecting a broad-based ‘V-shape’ recovery in the Indian real estate market, but depending on the economic recovery and pandemic response, our estimates have substantial scope for an upward revision. We have already witnessed very positive signs of recovery in the office segment in Q3 with gross leasing at 13.8 mn sq. ft. The REITs market has done exceedingly well with the combined market cap of the India REITs at USD 6 bn accounting for 33% of the market cap of listed real estate companies,” said Ramesh Nair, CEO and Country Head (India), JLL.

Office assets remain the preferred choice

USD mn
Asset Class Q1 Q2 Q3 Q3/ Q2 growth rate Total
Residential 102 48 35 -28% 185
Office 505 66 200 202% 771
Warehousing 54 41        – -100% 93
Hotels 130             –        –                     –             –
Grand Total 791 155 235 52% 1180

Source: JLL Research

The review of investments in the first nine months of 2020 reveals that out of the USD 1.2 bn investments, Bengaluru, Chennai and Mumbai together accounted for 71% share. Bengaluru led the pack with 33% share of real estate investments.

“The impact of COVID-19 on the India real estate market has been unprecedented, but investors have remained bullish on the long-term prospects and voted with their deployments in the third quarter. Though we expect 2020 investments level to be marginally lower than 2019, the recovery will not be broad-based given that two large transactions slated to be concluded this year would account for 76% of the total investments estimated for 2020,” said Dr Samantak Das, Chief Economist and Head of Research & REIS (India), JLL.

Lessons from past and looking ahead

Post the Global Financial Crisis (GFC), investments in Indian real estate declined by 71% during Q1-Q3 2009 as compared to the same period in 2008. However, investors after the brief wait came back with lessons learnt. Investments during Q1-Q3 2010 saw a recovery of 92%. This year, a similar pattern has panned from Q1-Q3 2020 wherein investments declined by 73% although on a higher base.

Green shoots of recovery like a strong response to REITs, large office and retail asset portfolio deals in progress and robust office sector fundamentals indicate that a similar pattern which was witnessed in 2010 could unfold shortly. Indian real estate has come a long way, post the global financial crisis due to structural transformation as well as regulatory reforms introduced in the last decade.

REITs: Redefining investments in Indian real estate

According to JLL, increased awareness of REITs will ensure acceptability and lead to a gradual increase in retail interest and deeper institutional involvement in this segment. Brookfield Asset Management has filed for India’s third REIT with an expected issue size of USD 600 mn. As the market matures, JLL expects global funds are looking for an established track record, an ability to remain transparent and deliver predictable returns, which were demonstrated by India’s two listed REITs.

Business World

Office absorption up 64% in Q3 vs Q2 2020, new completions increase 59%: JLL

Oct 6, 2020 by Gouri Achary 0 Comments #Dr. Samantak Das, #JLL Research., #Ramesh Nair

Mumbai, October 2020: India’s office market witnessed a net absorption of 5.4 million sq. ft. in the quarter ending September 2020 (Q3), an increase of 64% versus quarter ending June 2020 (Q2). This is an encouraging trend especially after net absorption dipped almost at a similar rate in the second quarter, according to JLL Research.

The third-quarter office rebound growth was led by Bengaluru and Hyderabad, which together accounted for nearly 80% of the net absorption in Q3 2020. The heightened activity in Bengaluru indicates a gradual resurgence in take-up of spaces coupled with the translation of pent up demand from Q2 this year.

Net absorption1 gaining pace

  Q2 2020 (mn sq ft) Q3 2020 (mn sq ft) Growth (%) – Q3 2020 over Q2 2020
Bengaluru 0.45 2.72 504%
Chennai 0.10 0.21 110%
Delhi NCR 0.50 0.20 -60%
Hyderabad 1.18 1.54 31%
Kolkata Negligible 0.02 –
Mumbai 0.45 0.28 -38%
Pune 0.64 0.46 -28%
Total 3.32 5.43 64%

Source: Real Estate Intelligence Service (REIS), JLL Research

“While we continue to see the impact of the pandemic on various businesses, there is a significant surge in activity across most office markets under consideration. This is seen in gross leasing which more than doubled from the previous quarter at 13.8 million sq ft. At the same time, it is important to note that large and mid-sized occupiers across major markets continue to review their real estate portfolios in a bid to optimise cost, higher emphasis is being given to sustainability and employee well-being as well as the adoption of flexible working practices.” said Ramesh Nair, CEO and Country Head, India, JLL.

While the share of IT/ITeS occupiers in gross leasing2 dipped to 43% in Q3 2020 from 61% in Q2 2020, e-commerce and manufacturing sectors gained significant shares during the third quarter forming 16% (negligible in Q2 2020) and 17% (5% in Q2 2020) respectively, owing to the surging demand of e-commerce during COVID19.

Confidence in new completions

New completions during Q3 2020 increased by 59% quarter-on-quarter with 9.2 million sq ft of new stock coming to market. “With lockdown restrictions being relaxed in the third quarter in most of the markets under review, office projects

1 Net absorption refers to net office space take-up during the quarter.

2 Gross leasing refers to total office space take-up and includes precommitment in upcoming office buildings and excludes renewals

in the final stages of construction or pending receipt of occupancy certificates came onboard. This resulted in an increase in the supply of office space, even surpassing 8.6 million sq. ft. witnessed in Q1 2020,” said Dr. Samantak Das, Chief Economist and Head of Research & REIS, India, JLL.

New completions rebound

  Q2 2020 (mn sq ft) Q3 2020 (mn sq ft) Growth (%) – Q3 2020 over Q2 2020
Bengaluru 0.0 4.70 –
Chennai 0.0 0.0 –
Delhi NCR 1.94 0.22 -89%
Hyderabad 2.38 3.33 40%
Kolkata 0.0 0.0 –
Mumbai 1.45 0.30 -79%
Pune 0.0 0.63 –
Total 5.77 9.18 59%

Source: Real Estate Intelligence Service (REIS), JLL Research

In sync with net absorption, Bengaluru and Hyderabad led the increase in new completions accounting for 87% of the total new completions in Q3 2020. Notably, new completions in both these markets even went past the average new completion levels witnessed in the four quarters of 2019.

Vacancies go up in Grade A offices

Increased office space consolidation and optimisation strategies of corporate occupiers resulted in subdued net absorption levels, which could not keep pace with new completions. This resulted in overall vacancy increasing from 13.1% in Q2 2020 to 13.5% in Q3 2020. Despite the rise in vacancy levels in southern markets, Bengaluru, Chennai and Pune continued to hover in single digits. This augurs well for a strong rebound in these markets when economic and business conditions improve in the coming quarters.

Vacancy in Grade A office

  As of Jun 30 2020 (%) As of Sep 30 2020 (%)
Bengaluru 5.3% 6.5%
Chennai 7.9% 7.6%
Delhi NCR 28.0% 27.9%
Hyderabad 9.2% 11.3%
Kolkata 26.4% 26.3%
Mumbai 13.4% 13.4%
Pune 4.4% 4.7%
Total 13.1% 13.5%

Source: Real Estate Intelligence Service (REIS), JLL Research

Rentals across markets remain stable

Except for Bengaluru which witnessed a marginal increase in rents, office rents in Q3 2020 vs Q2 2020 remained stable across all markets under review. With stable rental values and low vacancy levels, the office market in India continues to be landlord favourable. However, it is important to note that landlords across markets have become more flexible in providing increased rent-free periods, reduced rental escalation and fully furnished deals to prominent occupiers which reduces their net outgo.