Demand for office and residential spaces
It is expected that GDP growth will enable expansion and also attract investment the need for office space has increased by over 20% since the previous year because banking tenants have renewed interest and technology companies are also looking at expansion. With the increase in entrepreneurship and the related ecosystem in India, this has had terrible effect on multiple sectors which also include office space. In the last five years, co-working spaces have seen progress and now have over 200 players in this segment. There is also been a demand for residential housing especially with the growth in population and urbanisation. With the increase in nuclear families and disposable incomes demand for housing is only set to grow. There have been issues with sales mostly because of mismatch of prices. Home developers are putting in effort to sort the sizes of residential units to meet the both of the buyers. Buyers nowadays wish to make informed decisions. And now that the government is also focusing on housing that is affordable we can expect to see some traction in this segment.
With all the financial mess that is there, small players are seeking help from reputed players to help them complete their projects. In the recent past joint ventures, joint development and other similar management agreements have been made between the landlord and developers, both small and large and this trend is expected to continue. This will not only be related to developers but can also be extended to co-working operators.
And the current crisis in NBFC has also slowed the disbursal of loans to the real estate sector. As banks become more and more cautious, it has become a challenge for developers to get funds for their projects and are now exploring other financing options, and this is making their cost of capital very expensive. The recovery of the sector will get extended and not happen as anticipated if the crisis of NBFC is not resolved. The sector has seen both growth and flux and this trend is likely to continue. There have been various reforms especially in the tax and the regulatory business environment. There has been a visible increase in accountability and transparency which has impressed the institutional investors who have now been re-evaluating the sector with keen interest.