The Indian commercial real estate office market witnessed a growth of 65% YoY on Q1CY22 (January-March 2022) with pre-commitments for larger transaction sizes, which bodes well for a recovery in the balance of CY22E, according to domestic brokerages and research firm ICICI Securities.
The brokerage office remains bullish on asset developers and has reiterated its positive stance on DLF, Embassy REIT, Mindspace REIT, Brookfield India REIT and Brigade Enterprises. The major risk to its call is the emergence of further COVID waves and global/domestic inflationary risks.
share it top stock picksICICI Securities said it has achieved buy ratings on DLF, Embassy Office Parks REIT, Phoenix Mills and Brigade Enterprises. Mindspace Business Park REIT, and Oberoi Realty get hold recommendation, while Brookfield India REIT, Prestige Estates Projects has its stance.
“While the global surge in Omicron cases since December 2021 has temporarily delayed office leasing recovery by a quarter, we expect this trend to improve from Q2CY22E (after April ’22) to a better pace of vaccination across India. This will be reversed with the gradual pick-up of employees in offices and international travel, recalling the corporates,” the note said.
ICICI Securities believes that the Indian office market retains many positives such as a limited number of 8-10 pan-India developers capable of building quality rental properties, India being one of the more affordable office markets in the world and is a leader in STEM (Science, Technology). , engineering, maths) talent for technology assignments with 2 million new graduates annually.
“While the jury is out on the final outcome of back to office schemes of various corporates, the broad consensus is that 15-20% of employees can work from office (WFO) permanently, 10-15% of employees can work from home permanently. (WFH) while the remaining 60-70% of the employees can work under the hybrid model of WFO with WFH.”
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.