GURUGRAM: While India has been less affected by COVID‐19 than East Asia, since 2nd March 2020, the virus has been spreading in the country. This situation highlights the importance of wellness and technology in the workplace. In its latest report ‘COVID-19: Impact on India Real Estate’, Colliers India Research made key recommendations for Occupiers and Landlords.
“We expect India’s economy, which has slowed but is still robust, to underpin office leasing demand. While there could be some delayed decision making, there should be no significant adverse impact on office absorption in 2020 as pre‐commitments should mature this year with the completion of new buildings. We recommend occupiers to consider a flex and core strategy for their workplaces, and, if required, even split office operations,” said Sankey Prasad, Managing Director & Chairman at Colliers International India.
Megha Maan, Senior Associate Director, Research at Colliers India further added, “We advise companies to review business continuity plans in preparation for further spread of the virus. Occupiers should identify key technologies that can support and elevate health and wellness of their employees in the organisation. If the outbreak continues, it could lead to the biggest remote working experiment ever seen in India“.
Colliers Research also highlighted the impact of COVID-19 across sectors that are mentioned below:
Office Sector: In 2020, Colliers Research forecasts 54.3 million sq feet (50.4 million sq meters) of gross absorption, and does not foresee any major impact on office demand due to COVID-19. However, some delayed decision making by occupiers who depend on clearances from overseas, especially Asia is expected. Occupancy in flexible workspaces is predicted to stay muted in March, especially in Delhi‐NCR, as several start-ups encourage employees to work from home.
Workplace: Colliers believes that the current scenario in India warrants greater stress on wellness and hygiene in the workplace and advise companies to review business continuity plans in preparation for further spread of the virus. This is a good opportunity for occupiers in India to prepare and implement remote working policies. It is recommended that occupiers should accelerate the adoption of technology and clarify their cloud strategy to lessen the shocks from the abrupt switch to remote working.
Investments: In 2019, institutional investments from Singapore, Hong Kong and mainland China together accounted for 28% of total real estate investment in India. At a time when funds from Asia are increasingly looking towards India’s Grade A office assets, it is anticipated that investors will remain bullish over the next five years. However, slower decision-making is foreseen in H1 2020, which could constrain capital deployment in India.
Manufacturing: India is among the top 15 most affected economies as China is its second‐largest trading partner, accounting for about 13.7% of imports in 2018. Precision instruments, machinery, automotive and communication equipment are the sectors most likely to be affected. This will likely have a moderate effect on office leasing demand in Q1. If the outbreak is contained in H2 2020, it is expected to see some recovery over Q3 2020. Demand for e-commerce increases as people avoid shopping centers, manufacturers are recommended to prioritize efficient inventory management and last-mile delivery for warehouses.
Travel & Tourism: The travel and tourism industry is expected to see significant effects from the COVID-19 outbreak, not only due to the probable decline in inbound tourism, but to declining domestic travel too. Since India has a high population density, this may also adversely impact upcoming holiday plans reducing occupancy levels in hotels, as well as retail footfall and sales, particularly in malls.
The full report to COVID-19 Insights and Recommendations can be downloaded here. Contact our relevant experts to find out about key trends and opportunities as well as Colliers suite of solutions across the Asia-Pacific region.
