What’s in store for Indian real estate in 2018?
Globally, 2017 was a blockbuster year for real estate, with a swath of deals in Asia Pacific hitting the headlines. Close to home, the Real Estate market saw a slew of reforms aimed at increasing transparency and accountability. For India, after an eventful 2017, all eyes are on how the policy changes will help in ramping up India’s Real Estate market in the coming year.
So what should real estate investors and occupiers look out for in 2018? JLL reveals some of the trends that will shape the year to come.
Indian real estate will be on the hit list for more global investors
Institutional players targeted Indian real estate in several high-profile investments in 2017, with Singapore’s GIC purchasing a 33 per cent stake in a unit of DLF Cyber City for US$1.4 billion. The real estate arm of global insurer Allianz also announced its partnership with India’s Shapoorji Pallonji Group to establish a fund worth US$500 million to target India’s office market.
India will continue to be the top developing market for investors in 2018, according to JLL’s regional head of research. India’s Tier 1 office and retail sectors are projected to show the highest total returns in 2018. We’ve seen the end of the short-term disruption in India resulting from reforms such as demonetisation and the implementation of Goods & Services Tax. 2018 may be the year for investors to consider a strategic entry into India, given its positive long-term fundamentals and economic growth.
Alternatives will be a choice pick for real estate investors
Investors will seek opportunities in the alternative real estate sector such as aged care/senior housing, student housing, education, data centres, and self-storage facilities, to diversify their portfolios, and for long-term growth.
JLL regional research also reports a growing interest and a huge opportunity for alternatives real estate. Demand in these sectors clearly outweighs supply, and the demographic demand drivers in the region are growing quickly. Yields on self-storage facilities are attractive compared to other traditional asset classes, ranging from five to seven per cent in Tokyo and Singapore, five to eight per cent for Australia, and around eight percent in China and India.
Technology will increasingly impact the way we use real estate
Proptech – the convergence of property and technology – is the latest disruptor in real estate and is likely to pick up steam in 2018. This market has already made it big in India, with the country reporting 77 deals amounting to $ 928 million in the property technology space since 2013, the maximum by any country in Asia–Pacific region.
In the long-term, we will see the introduction of Internet of Things (IoT), which include smart digital systems driving greater transparency into real estate portfolio utilisation and performance. Smart systems in buildings will not only help owners and occupiers improve performance but also help save costs. With rapid urbanization, India’s young population and the ever increasing startup- culture thrown into the mix, the time is right for the proptech sector to make a big impact by adding efficiency and transparency into the process of how India views, acquires and manages its real estate.
Companies will design cool offices in the war for talent
While managing costs remains a priority for most businesses, so is access to talent. With organisations using the workplace to boost employee engagement and attract and retain talent, there will be a continued rise in companies using co-working spaces in 2018. Those that offer high-tech, personalised and innovative space offerings – such as collaborative workspaces, food and beverage, gyms and wellness areas – that create a human-centric experience will stand out and attract the best in the war for talent.
India’s increased share in the asset class of co-working already bordered on over 5% of total space occupied, hinting at increased proliferation of the human- centric and collaborative culture. The shift to creating a holistic user experience is beginning to transform office space. The workspace of the future is one that can meet employee needs, while driving effectiveness and engagement levels.
Source- JLL APAC Press Release