In 2014, the real estate market is likely to see an increase in activity. Sanjay Dutt, Executive Managing Director (South Asia), Cushman and Wakefield, says, "With the economy expecting more stability in the post-election phase from 2014, the absorption trend is also expected to pick pace, especially in established markets of Bangalore, Mumbai, and the NCR."
Dutt says that the office market is expected to remain attractive for occupiers with steady increase in absorption. "We expect growth to set in from the second half of 2014, when an increase in leasing activities on account of entry of new companies into the country, the expansion of existing companies, and indeed relocation and consolidation activities that are expected to continue kick in," Dutt said.
With the increase in the absorption of office space, the demand for residential units will also increase. Samir Chopra, chairman of Re/Max India, a brokering firm, says, "Once elections are done, we will see the market pick up momentum again, as speculation will be replaced with clarity on norms and regulations." Normally, people tend to invest when they think there will be a stable government.
However, many consultants feel that as Indian cities are facing a huge shortage of residential as well as office space, the demand is likely to pick up. When demand picks up due to a return of the stability factor, prices shoot up. Therefore, it is always better to enter the market when the chips are down. Chopra says real estate will always be a booming sector. "The moment elections happen, we will see substantial money back in the mainstream of industry. Real estate can definitely look forward to better times", he adds.
Once the market starts booming, prices will shoot up and those who are waiting to buy property at the lowest level may miss the bus. Honey Katyal, CEO, Investors Clinic, says that it is, therefore, always advisable to buy in the market when sentiment is not so good, and wait for the market to revive, which is not very far.
In a report, the real estate consultancy firm Cushman and Wakefield estimated demand for office space across the top eight cities in the period of 2013-17 to be 132 million square feet (msf). Office space absorption in the top eight cities was expected to be around 22.50 msf in 2013. Going forward, the trend in absorption is expected to pick up at a steady pace with an expected absorption of 28 msf by 2015.
Bangalore ranks on top in total expected net absorption, which is estimated to be around 32 msf, between 2013-17, followed by Mumbai (24 msf), and the NCR (23 msf). Pune (ranked fourth) and Hyderabad (ranked fifth) are expected to record absorptions of nearly 14 msf each while Chennai (ranked sixth) will see absorption of nearly 11 msf. Kolkata (ranked seventh) and Ahmedabad (ranked eighth) finished the survey with seven and three msf of total absorption, respectively.
The supply of new office space for the same period (2013-17) is expected to be nearly 143 msf, of which nearly 90 msf is currently under various stages of construction and expected to be delivered by 2015.