In a groundbreaking move, the Securities and Exchange Board of India (SEBI) has introduced amended regulations for SM REITs, opening the door for retail investors to participate in high-value real estate assets with a minimum investment of INR10 lakhs. This initiative enables a diverse group of investors to collectively own units of premium properties, providing access to real estate assets.

The rise of SM REITs is expected to create a ripple effect across the real estate industry, by offering developers an efficient exit strategy and enabling reinvestment of capital into new ventures, fostering sustained growth in the sector, which is one of the largest employers in the country. As per the Fractional Ownership Platforms (FoPs), the increased liquidity and flexibility offered by SM REITs also enhance the attractiveness of real estate as an investment class, potentially leading to healthier returns, depending on the asset class, locations, tenant profile, size of the project.

While the potential of SM REITs is immense, the report also highlights the inherent challenges and risks associated with fractional ownership. Liquidity concerns (relative), somewhat less favorable tax regime compared to regular equity investments, and the need for consensus among co-owners are critical factors that necessitate careful consideration and strategic management. SEBI’s regulatory framework, which mandates a minimum 5/15 percent units in the scheme of SM REIT to be held by FOPs/IM (depending on leverage), aims to safeguard investor interests and bolster confidence.

Driven by the rising demand for residential (rental) and commercial real estate, the anticipated surge in demand is expected to unlock opportunities for a broader spectrum of investors, driving growth, and fostering innovation in the real estate sector.

“India’s real estate sector is at the brink of a revolutionary transformation, driven by urbanization, economic growth, and technological advancements. Fractional ownership is redefining investment paradigms, enabling retail investors to partake in high-value properties with a minimum investment of INR10 Lakhs. While this model offers significant potential, navigating its inherent challenges requires thoughtful deliberation and robust regulatory oversight. Moving forward, the sector’s resilience and adaptability will hinge on innovative solutions that navigate these complexities while harnessing the sector’s growth potential. The synergy between innovative investment platforms and regulatory frameworks will be more pivotal than ever in shaping a dynamic and resilient real estate market.” – Chintan Patel, Partner – Deal Advisory & Head – Building, Construction and Real Estate, KPMG in India.

“The Indian office market has consistently showcased significant resilience and delivered strong performance. This surge in demand is closely tied to the rising popularity of co-working spaces and fractional ownership opportunities in India. With SEBI overseeing regulatory matters, it facilitates dual objectives: strengthening investor confidence and enhancing transparency, thereby bolstering the security and liquidity of fractional ownership investments. The fractional ownership model offers a redefinition of traditional property ownership, with healthy returns, easy monitoring and diversification benefits – all contributing to its increasing popularity.” – Boman R Irani, President – CREDAI

Also Read: At USD 2.5 Billion, Q2 2024 institutional investment in Indian real estate touches a 3-year high

The post New Frontier in Real Estate Investment: Unlocking the Potential through Fractional Ownership appeared first on Square Feat India.

Of the 5,260 candidates, 3,081 are from the Mumbai Metropolitan Region, 1,533 from Pune, 518 from Nagpur, 40 from Nashik, 28 from Sambhajinagar, 21 from Kolhapur, 20 from Sangli, and 7 each from Amravati and Jalgaon, along with 5 from Nanded.

So far, the test has been held four times and about 9,295 candidates have cleared the exam. There are around 47,000 agents registered across Maharashtra. Of these, registrations of 13,785 agents have been cancelled due to non-renewal. Subsequently, in April-end, MahaRERA suspended registration of over 20,000 agents who failed to comply with the training and certification requirements by December 31. They will have to comply with the mandatory requirement to resume operations in the real estate sector. Due to the action initiated, the number of candidates appearing for the upcoming test has increased to over 5,000 from around 1,700 in the previous edition.

In the real estate sector, the ‘agent’ is a crucial link between homebuyers and developers. Often, homebuyers’ first point of contact is agents who share primary information about various projects. Their role and importance in the real estate sector cannot be undermined and has to be recognized. They need to be well-versed in the provisions of the Real Estate (Regulation and Development) Act. Through the agents, a flat purchaser receives details such as provisions in the agreement for sale, stamp duty and registration, allotment letter, carpet area, payment schedule, regulatory provisions, etc. Hence, it is essential that agents provide all of this information consistently and with utmost clarity. Based on this set of information, the investor makes an informed decision about purchasing a home. Therefore, to safeguard customer’s interests is of utmost importance for which it is mandatory for the agents to undergo such training and certification time-to-time.

“In the real estate sector, an ‘agent’ plays a crucial role for homebuyers and developers. Therefore, it is imperative for the agents to be well-versed in the provisions of RERA Act. They are expected to have credible primary information about the developer and the project, land rights, RERA carpet area, project’s commencement certificate, clearances from local authorities, developer’s liabilities, and much more. A homebuyer processes this set of information to make an informed choice on their flat’s purchase. Therefore, MahaRERA has made it mandatory for the agents to undergo training, pass an exam to obtain certification. Failure to comply within the stipulated time frame to obtain this certification will result in tough decisions such as discontinuing dealing in real estate transactions. Recently, MahaRERA suspended registrations of over 20,000 defaulting agents who did not comply with the mandatory due diligence. So far, 19,403 people have completed the training and 9,295 candidates have cleared the examination. Test for 5,260 candidates will be conducted this month end. Securing and protecting homebuyers’ interests is MahaRERA utmost priority. It is MahaRERA’s resolve not to tolerate any harm done to the homebuyers,” said Ajoy Mehta, Chairman, MahaRERA.

Also Read: MahaRERA initiates action against 628 projects for not displaying RERA registration number and QR code

The post After MahaRERA suspended 20k agent registrations 5k to appear exam on July 29 appeared first on Square Feat India.

The fractional ownership market in India is projected to grow over 10 times and exceed USD 5 billion by 2030, according to recent findings by a JLL – Property Share Report. With a vast portfolio of over 328 million sq. ft. of office assets valued at approximately USD 48 billion, which are considered suitable for Small and Medium REIT investment, the potential for investment in this sector is tremendous. Fractional ownership is a concept where multiple investors collectively own a share or fraction of a high-value asset, such as real estate, without having to buy the entire property.

The two metros of Mumbai and Delhi NCR has emerged as top hotspots for asset acquisition opportunities under the SM REIT umbrella, reveals latest data. Additionally, the tech markets display notable growth potential, with attractive investment opportunities found in well-leased mid-sized assets that fall under the scope of SM REITs.

SM REIT potential in India’s top 7 markets unveiled.

Mumbai, Delhi NCR, and Bengaluru lead the SM REIT market, representing 73% of worthy assets in the top seven cities’ office sector.

“Mumbai presents unparalleled opportunities for SM REITs, offering a healthy mix of well-leased large and mid-sized assets ideal for acquisition by Fractional Ownership Platforms. With over 55% of the Grade A office market, equivalent to 84.4 million sq ft of assets, available and suitable for SM REITs, the investment potential reaches approximately USD 18.7 billion. The robust demand for rent-yielding assets and the presence of a professionally managed platform makes SM REITs an enticing choice for retail investors. Considering the high capital values in Mumbai, SM REITs prove to be a superior option over smaller office formats, eliminating the increased costs associated with acquiring and managing such properties.” said Dr Samantak Das, Chief Economist & Head of Research and REIS, India, JLL.

Kunal Moktan, Co-founder & CEO, Property Sharesaid, “Through the SM REIT regulations SEBI has effectively introduced an entirely new asset class to the retail and institutional investor universe, continuing the march towards securitisation of real estate assets that started with REIT regulations in 2014. SM REITs provide a tremendous opportunity to monetize income generating assets that currently do not have access to liquidity and when paired with technology has the potential to completely transform the real estate investment landscape in the country. As the first and largest FOP platform, Property Share will try and play its part in ensuring the success of these regulations and bringing exciting investment opportunities to the market.”

Mumbai leads with a USD 9 billion opportunity for SM REITs, followed by Delhi NCR. Both cities offer well-managed portfolios of small and mid-sized leased assets under a strata ownership model (distinct entities owning specific units within a larger development). With diverse occupier bases, Mumbai’s SBD North and Core and Fringe BKC corridors present significant SM REIT opportunities.

Gurugram dominates the Delhi NCR office segment, capturing 61% of the SM REIT market. Commercial corridors of Golf Course Extension, Golf Course Road, and MG Road present a USD 3 billion investment potential for SM REITs, indicating where such FOPs (Fractional Ownership Platforms) could explore potential opportunities. The Prime NH-8 corridor is also promising, with around 6 million sq ft of SM REIT-worthy assets amounting to a substantial USD 1 billion opportunity.

Bengaluru is one of the most well-occupied cities in the country, with its strong tech-driven demand from both global and domestic firms. The robust office ecosystem supports the availability of a portfolio of assets that are relevant for SM REITs. However, with large tech parks that are either under institutional or single developer ownership accounting for a large chunk of the total Grade A office market in the city, the SM REIT opportunity stands at just ~51 million sq. ft, around 1/4th of the total Grade A office stock. The biggest corridors are the ORR Southeast stretch and Whitefield in terms of physical asset availabilities.

These two are also the biggest markets when it comes to occupier demand and hence are the best opportunities for SM REITs to look at well-leased assets within the defined asset value parameter of INR 500 crores. Quality opportunities also exist within the off-CBD corridor stretching from Koramangala to peripheries along the Bannerghata Road and Mysore Road, where a host of small to mid-sized commercial office projects are available for potential investments under SM-REITs.

Hyderabad, propelled by its booming Grade A office stock and a strong demand from global GCCs, offers healthy opportunities for SM REITs. The market is led by assets in the Hitec and Gachibowli corridors, which account for 84% of the available potential, representing a USD 3.7 billion opportunity. With attractive valuations for a plethora of well-leased and mid-sized assets, Hyderabad is a prime destination for portfolio acquisitions by SM REITs.

India’s fractional ownership market is witnessing exponential growth, with significant potential for investors in the top seven markets. Currently valued at around USD 500 million, this market is expected to surpass USD 5 billion Assets Under Management (AUM) by 2030 despite regulatory compliance challenges. The JLL – Property Share report sheds light on the immense growth potential of India’s real estate fractional ownership market, providing valuable insights for those seeking opportunities. Mumbai, Delhi NCR, Bengaluru, and Hyderabad are leading the way in terms of investment prospects.

Also Read: Mumbai’s plush properties now tread the spiritual route 

The post Mumbai, Delhi NCR, and Bengaluru: Prime cities for Small and Medium (SM) REIT investment prospects appeared first on Square Feat India.

-Failure to comply could lead to MahaRERA withholding registration and may even lead to cancellation of project’s registration

-Starting January 1, promoters of all the housing project are required to engage only trained and certified agents

The Maharashtra Real Estate Regulatory Authority (MahaRERA) has issued a fresh circular on 29th April, emphasising the need to have a trained and certified agent for every housing project. Starting January 1, 2024, promoters of all the housing projects across Maharashtra are required to disclose names and addresses of the trained and certified agents they are transacting with for sale and marketing of their respective projects. Non-compliance of the directive may result in action against such projects, a point emphasised in Maharashtra Real Estate Regulatory Authority’s (MahaRERA’s) order issued earlier this year. As per the order, action can be initiated even during the project’s development phase.

Following the order issued on January 10, 2023, training for obtaining certification for new agent registrations and renewals was delayed. MahaRERA granted several extensions to meet with this requirement. Thereafter, MahaRERA’s organised various awareness programs in collaboration with other institutions. Experts and senior figures from the industry from the field provided guidance about a multitude of topics. Then, the agents took a year to obtain the mandatory certificates.

A year from issuing mandatory certification order, MahaRERA resolved not to allow new agent registrations or renewals without this certification. Developers were also instructed to engage with only trained and certified agents for their operations post-January 1, 2024. January 2024’s order also explicitly stated action on failure to comply.

As some developers did not adhere to MahaRERA’s directives, as mentioned in the order, despite regularly highlighting the same, it was found necessary to initiate tough action.

The action can include rejection of project’s registration application or revocation of existing registration or imposition of penalty.

Having ‘agents’ in a stable real estate sector is crucial for homebuyers and developers, alike. Often, agents are the first point of contact for homebuyers and the agent introduces them to the projects. Even the receive primary information of a housing project through the agents.

Hence, agents are an integral part of a stable real estate sector and they need to be aware of the importance of RERA regulations. They must be knowledgeable about various aspects such as project credibility, validity of land rights, RERA-compliant carpet area, commencement certificate, local authority approvals, potential litigations, and financial capabilities of developers. Customers make home buying decisions based on this information. Therefore, MahaRERA has made it mandatory for agents to obtain certification after training to ensure customer satisfaction.

Also Read: MAHARERA PROPOSES THREE BANK ACCOUNT SYSTEM TO SAFEGUARD HOME BUYERS’ INTERESTS

The post MahaRERA says only trained and certified agents to operate in the real estate sector appeared first on Square Feat India.

The Indian residential real estate market has greatly benefited from several reforms by the Modi-led government, helping the industry to not only to emerge stronger but also to scale new heights. A new report ‘Real Estate Unboxed: The Modi Effect’ by ANAROCK and NAREDCO showcases a housing landscape that is ripe with potential for evolving growth opportunities.

Anuj Puri, Chairman – ANAROCK Group, says, “The report tracks how India’s residential real estate sector has thrived in the past decade. The findings are convincing – housing demand and new supply in the top 7 cities have soared in the last 10 years, particularly post the pandemic, and housing sales are now aligned with new launches. The report finds that approximately 28.27 lakh units were sold in the top 7 cities between 2014 and 2023, while cumulative new launches stood at over 29.32 lakh units. Residential property prices have also registered significant demand-led growth across the top 7 cities. Over the last decade, average housing prices have appreciated in the range of 25-60% across these cities.”

Niranjan Hiranandani, Chairman – NAREDCO, says, “In light of the Indian government’s reforms over the last decade, NAREDCO and ANAROCK collaborated to assess the Indian real estate sector’s growth. Over the last decade, India’s economy has impressively leapfrogged to the 5th position on the global economic performance ladder. The Indian economy has maintained its status as the fastest-growing major economy for three consecutive years, a beacon of hope in a contractionary global economic climate. A market size of US$ 1 trillion is expected by 2030, up from US$ 200 billion in 2021. This market size is expected to contribute 13% to India’s GDP by 2025, making the sector a pivotal contributor to economic development, employment, and government finances.”

The report finds that housing inventory overhang has seen a significant drop over the last 10 years. The pan-India housing inventory overhang stood at 15 months at the end of 2023 – displaying a positive decline from 41 months in 2017, when available inventory was at its peak. Given that 2020 was the Covid-19 year, it is more of an outlier. This is significant, considering the massive new supply added during this period.

Source: ANAROCK Research

The report further highlights that completion of units in the top 7 cities has seen significant growth over the years, particularly post pandemic. Data indicates that at least 44% more units were completed in 2022 as compared to 2021. This is interesting because during the pandemic all construction activities were completely halted for a period. As of 2023, we saw completion of nearly 4.35 lakh units in the top 7 cities while in 2024 it is estimated that more than 5.31 lakh units are expected to be completed.

Source: ANAROCK Research

A Decade of Change

The report tracks a decade of significant change in the Indian real estate sector, led by various game-changing reforms and policies like RERA and the SWAMIH alternate investment fund, which reignited confidence and hope in the sector. Implemented across many states since 2017, RERA finally brought regulation to the real estate sector, safeguarding the interests of homebuyers by ensuring transparency, timely project completion, and accountability among developers.

According to the latest government data, approximately 1.23 lakh real estate projects have been registered across states since RERA’s inception till date, and more than 1.21 lakh consumer grievances have been addressed across the country.

Since its inception in 2019 till December 2023, the SWAMIH Fund has completed approximately 26,000 homes in the country, and 80,000 more are projected to be completed over the next three years.

The government backed SWAMIH (Special Window for Affordable and Mid-Income Housing) Fund aims to provide financial support to stalled affordable and mid-income housing projects that were struggling due to capital shortfalls. It has played a crucial role in addressing the sector’s liquidity issues, especially amid challenging economic conditions. It has also boosted the growth of many ancillary industries in the real estate and infrastructure sectors, having successfully unlocked liquidity of more than INR 35,000 crore.

The report also highlights the positive impact of various other government-backed initiatives such as PMAY (Urban & Gramin), GST, demonetization, and the growing adoption of technology in real estate over the last decade.

PropTech (Property Technology) has ushered in innovative solutions such as blockchain for secure and transparent transactions, AI-driven analytics for property valuation, and enhanced smart home technologies. These advancements streamline processes, improve efficiency, and reduce the time required for transactions. Currently, PropTech Startups account for 6% of India’s total recognized startup universe.

By 2030, the Indian residential real estate sector’s market size is estimated to reach USD 1 trillion, with an expected contribution of 13% to the nation’s GDP by 2025.

In the years to come, the real estate industry will proactively restructure its strategies to align with economic conditions. This strategic shift towards balance will highlight the industry’s ability to withstand challenges and adapt flexibly. The sector’s growth prospects will be strengthened by factors such as a stable government, consistent interest rates, job creation, and increased private sector investment.

Also Read: Nirav Modi’s watch sold at a price, for which one can buy a HOUSE in Mumbai

The post Housing Under Modi – A 10-Year Retrospective appeared first on Square Feat India.

·       Technology led leasing during Q1 2024 at 23% share, followed by Engineering & manufacturing at 21% share

·       Vacancy levels remained rangebound; rentals rose up-to 8% YoY across major markets

The first quarter of 2024 has started on a strong note, registering total leasing of 13.6 million square feet across the top 6 cities, marking a remarkable 35% increase compared to the same period last year. Although this is a significant drop from the record office space take-up in the last quarter of 2023, the remarkable annual increase is indicative of upbeat occupier sentiment, given the fact that the first quarter is typically slower. Bengaluru and Hyderabad emerged as frontrunners for demand of Grade A office space in Q1 2024, cumulatively accounting for more than half of the India leasing activity. The office market of Hyderabad especially demonstrated a strong momentum with 2.2x space uptake in Q1 2024 as compared to the corresponding quarter last year. This demand was driven by Healthcare & Pharma and Technology sectors. Amongst other major office markets, Mumbai too experienced a notable surge in leasing activity, an impressive 90% YoY rise in Q1 2024.

“Hyderabad continues to strengthen its role as a prominent commercial office market in the country. The city offers occupiers including Global Capability Centers considerable price arbitrage compared to other markets. Furthermore, proactive government policies, continuous infrastructure upgrades and a favorable business ecosystem makes Hyderabad a compelling destination for investors, occupiers, and leading developers of commercial real estate in India. Within Hyderabad, the trifecta of Hi-Tec City, Gachibowli and Madhapur continued to drive leasing activity in Q1 2024. Of the 2.9 million square feet of Grade A space uptake in the first quarter, over 80% of the demand was concentrated in these three localities.” says Arpit Mehrotra, Managing Director, Office services, India, Colliers.

Trends in Grade A gross absorption (in million sq feet)

Source: Colliers

Note- Q1: 1^st January to 30^th March of the year

Gross absorption: does not include lease renewals, pre-commitments and deals where only a letter of Intent has been signed.

Top 6 cities include Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai, and Pune

During Q1 2024, new supply across top 6 cities remained steady, at 9.8 million square feet, almost at par with the level seen in Q1 2023.  Bengaluru witnessed significant new project completions, contributing to 45% of the total new supply, followed by Hyderabad at 27% share. With demand outpacing supply, average rentals saw up to 8% uptick on a YoY basis across most of the major markets. Vacancy levels, meanwhile, are expected to remain steady, hovering around 17.3% by the end of Q1 2024.

Trends in Grade A new supply (in million sq feet)

Source: Colliers

Note- Q1: 1^st January to 30^th March of the year

Top 6 cities include Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai, and Pune

Technology, Engineering & Manufacturing and BFSI sectors drove space uptake in Q1 2024

“Driven by strong domestic occupier activity across Technology and Engineering & manufacturing sectors, the first quarter of 2024 signals a strong start for India’s office market. During Q1, occupiers from Technology, Engineering & Manufacturing, and BFSI sectors collectively accounted for 58% of total leasing activity across the top 6 cities. This momentum, coupled with the resurgence in GCC demand, sets the stage for the rest of the year. Healthy demand supply dynamics are likely to prevail throughout 2024. As business sentiments and economic outlook remains positive, domestic occupiers, especially will continue to drive the office market of the country.” says Vimal Nadar, Senior Director and Head of Research, Colliers India.

During Q1 2024, the demand for office space across the top 6 cities continued to remain broad-based. At 2.8 million square feet, Engineering & manufacturing leasing soared to over 2.3x times in Q1 2024 compared to the first quarter of 2023. Bengaluru accounted for about 55% of the activity in the sector, underscoring occupiers’ continued preference for the market. BFSI and Flex space too continued their healthy space take up across most cities, garnering 14% and 13% share, respectively in overall India leasing for Q1 2024.

Sector-wise Pan India leasing (in msf)

Source: Colliers

Note: Others includes Logistics, Media & Telecom etc.

Data pertains to Grade A only

Key deals Q1 2024 Hyderabad

Source: Colliers

Also Read: Leasing demand for manufacturing space surge, expected to reach ~16 million sq. ft by 2024 

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However, there’s more to the story than just affordability. Here’s a closer look at how the MMR residential market performed in 2023 and the factors fuelling its housing boom.

MMR Residential Real Estate Snapshot:

• The MMR housing market holds the top position in both supply and demand, with new launches of approx. 1.57 lakh units in 2023 and sales at approx. 1.53 lakh units – both at all-time high levels.

• Both housing supply and sales in MMR have been on an upward trajectory since 2020. New launches and housing sales in 2023 surged 27% and 40% annually when compared to 2022.
• MMR witnessed a 15% growth in average property prices – from approx. INR 11,890 per sq. ft. in 2022 to approx. INR 13,700 per sq. ft. in 2023.

• Mumbai emerged as MMR’s undisputed champion in 2023 with the highest year-on-year jump in housing sales compared to 2022. Mumbai’s peripheral western suburbs are seeing a protracted housing boom, with sales skyrocketing by a whopping 82% compared to last year.

Source: ANAROCK Research

Factors fuelling MMR’s Housing Boom:

• Strong Economic Outlook: MMR is the financial and commercial powerhouse of India, attracting a vast talent pool seeking better career prospects and a higher standard of living. This demographic contributes significantly to the real estate sector of MMR, driving demand for housing.
• Infrastructure Development: The government’s push for infrastructure development in the MMR is another major driver. Improved connectivity through new highways, metro lines, and upcoming projects like the Navi Mumbai International Airport, Mumbai Coastal Road Project, and establishment of a new city ‘Third Mumbai’ are enhancing the overall quality of life. This is incentivizing buyers to invest in micro-markets that will benefit from better infrastructure in the future.
• Increased Focus on Homeownership: The pandemic has accentuated the importance of owning rather than renting homes. People seek a sense of security and stability after the uncertainties of recent years. This shift in preferences, combined with a growing middle class aspiring for homeownership, are adding to the demand for residential properties in MMR.
• Fear of Missing Out (FOMO): The consistent property price appreciation in MMR has instilled a fear of missing out (FOMO) among buyers. They believe that delaying purchase will only lead to steeper prices later. This perception, vouchsafed by past trends, is leading them to enter the market even at current high property prices.
• Investment Potential: Real estate in MMR has historically proven to be a high-yield investment. Investors see property as a hedge against inflation and a source of stable rental income. With the expectation of continued economic growth in Mumbai, the potential for capital appreciation also remains high, making MMR an attractive investment proposition.
• Wide Range of Options: The rise of fractional real estate investments is providing alternative investment opportunities for those seeking exposure to the luxury real estate market without directly buying the entire properties.
• A Constantly Evolving Market:  The MMR market is constantly transforming, offering an increasingly wider range of property options. From smaller, affordable apartments to luxurious high-rises, there are options in for budgets and lifestyles. This caters to the diverse needs of today’s homebuyers and is driving the housing boom in MMR.

Also Read: MMR, Bengaluru and NCR emerged as India’s most searched regions for properties in 2023

The post MMR’s Housing Boom Defies Rising Property Prices appeared first on Square Feat India.

·       2024 office net absorption to increase by 20-22% year-on-year, reaching 45-47 mn sq ft

·       2023 office supply expected at 47-49 mn sq ft

·       2024 supply projected to rise by 22-23% year-on-year, reaching 58-60 mn sq ft

The office sector has seen sustained growth in demand in 2023 despite the global sluggishness and is poised to achieve next level of growth in 2024 according to JLL recent report titled ‘2023: A Year in Review’.

Net absorption from Jan-Sep 2023 was at 26 mn sq ft which is 68% of 2022 full year number. In 2023, net absorption in office market is expected to be at par with 2022 to close at 37-39 mn sq ft. With leasing activity expected to further pick up pace in the last quarter of 2023, the year is expected to surpass the 2017-2019 average. The office markets’ performance is a testament to the strong fundamentals of demand and the absence of any lasting effects of the global headwinds.  In 2024, Net absorption is further expected to increase by 20-22% to touch 45-47 mn sq ft.

Despite a 23.9% year-on-year decrease in supply during the first nine months of 2023, it is anticipated to strengthen and reach approximately 47-49 mn sq ft by the end of the year. In line with the net absorption, the supply in 2023 will be higher than the 2017-2019 pre-pandemic average. In 2024, it is expected to increase by 22-23% y-o-y to reach 58-60 mn sq ft. It is seen that there is a trend of flight to quality creating demand polarization towards buildings owned by institutional owners and established developers.

“The office space in India’s top seven markets is expected to increase to over 800 mn sq ft by the fourth quarter of 2023, up from the current 792.8 mn sq ft as of September 2023. ESG continued to remain a decisive action point for all stakeholders in 2023 as energy consumption, green and net zero commitments are driving corporate action. The increasing importance of sustainability is reflected in increase in green certified buildings in last few years. Green certified buildings share in Grade A office stock went up from 39% in 2020 to 53% in 2023 (as of September 2023),” said Rahul Arora, Head – Office Leasing Advisory and Retail Services, India, JLL.

India’s office market: performance-based resilience

Source: Real Estate Intelligence Service (REIS), JLL Research

Headline vacancy is expected to remain within 16-17% range by end of the year. With a strong supply pipeline of 55-60 mn sq ft lined up in 2024, vacancy is likely to remain sticky at 16-17% on the back of strong demand. Core markets, however, will continue to see single digit vacancy levels.

In 9M 2023, there is a slight decline in space take-up by tech firms but is still likely to account for the biggest share in gross leasing by the end of the year. Other segments such as manufacturing / industrial, BFSI and Consulting through setting up of Global Capability Centres (GCCs) strengthened their participation in leasing activity. Interestingly, GCCs have a 54% share in active office space requirements in top seven cities of India.

“In the year 2023, so far, India’s office market has stayed truly on course to see remarkable performance as net absorption is expected to exceed the three-year pre-pandemic average. We are likely to see net absorption of around 37-39 mn sq ft which is further expected to go up by 20-22% y-o-y to reach 45-47 mn sq ft in 2024. India’s innovation-led ecosystem, large talent pool and favorable policy initiatives will create a perfect growth tide for the office sector to flourish further in 2024. It is expected that more R&D Centres of Excellence will be set up in India at an accelerated pace. Therefore, GCCs will continue to be major drivers for increasing occupier demand in the future.” said, Dr Samantak Das, Chief Economist and Head of Research and REIS, India, JLL. 

Flex continues to drive market activity.

With sustained demand for flexible and managed enterprise services, flex leasing in 2023 is expected to surpass the previous peak achieved in 2022 to close at ~145,000 seats. 9M 2023 is already ~80% of the total seats leased in the full year 2022. In 2024, around 150,000+ seats are expected to be leased by flex segment. There is sustained demand for flex as an essential element of occupier strategies which now assimilate both conventional and on-demand flex spaces for portfolio optimization and better employee experience.

Trends look forward to in 2024:

·       GCCs key to increasing occupier demand; to help push absorption near previous peak levels. Segments like manufacturing, engineering R&D with Tech & BFSI are key drivers in this segment. 

·       With a strong supply pipeline of 58-60 mn sq ft lined up in 2024, headline vacancy is likely to remain sticky at 16-17%. Core markets, however, will continue to see single digit vacancy levels.

·       Institutional, quality assets will remain first choice of occupiers with ‘flight to quality’ a running thread in space requirements.

·       Sustainability will be key to real estate planning and portfolio strategy with occupiers demanding responsible real estate as part of their net zero targets.

·       Office portfolios are likely to expand further as hybrid working evolves with a strong ‘office-first’ approach.

·       Flex segment and dispersed Tier 1/Tier 2 strategy to drive space needs in 2024.

Also Read: How Infrastructure Projects are Creating New Real Estate Opportunities

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This comes after a September 2023 announcement suspending registration of 388 real estate projects in Maharashtra. This was owing to non-compliance and violations of the RERA Act, 2016, by the developers.

MahaRERA said that this decision comes because 291 of the 388 realtors have still not complied with the RERA provisions, despite the suspension notices. Owing to this, the action will be taken post November 10.

On the announcement of suspension, a few developers had taken the initiative to comply, bringing the list of suspensions to 363.

“Of this so far, 72 projects have complied and paid a penalty of Rs 50,000 each. The scrutiny of these compliance is under process. However, there are 291 projects yet to respond. If there is no response, by November 10, we may go ahead with revoking registrations of these projects thereafter,” said MahaRERA in a statement on October 09.

Last month MahaRERA had issued a notice of suspension of registration of 388 projects – and restricted their further sales, marketing or advertising for failing to comply with regulations on uploading details online. Sub-registrars were also directed not to register sale agreements and sale deeds of flats in the suspended projects. All these projects were registered in January 2023. The regulator’s decision was taken to enforce compliance with regulatory provisions on making details of the projects available on its website.

The MahaRERA had issued notices to non-complying projects registered in January 2023. According to MahaRERA, 746 projects were registered in January.

The developers had time until April 20, 2023 to upload details of their projects such as the number of flats, the funds received and the funds utilised, on the regulator’s website. However, many developers did not do this. Hence, notices were issued to all of them followed by suspension of registration and levy of Rs 50,000 penalty.

Also Read: MahaRERA suspends registration of 388 developers for not providing quarterly updates

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The reason being that these 584 realty projects registered with MahaRERA have not uploaded quarterly progress reports (QPR) for their projects.

According to a MahaRERA statement, these 584 projects, are among the 746 that were registered in January in Maharashtra. The cost of these 746 projects is ₹22,449 crore and comprises of 50,288 apartments, and of these 546 realty projects have not uploaded their QPRs, which they were suppose to update by April 20.

MahaRERA has given a period of 15 days to these developers to respond and if they don’t then action will be taken by the authority.

Once project registrations are put under suspension, the developer cannot market, advertise, or sell apartments in the project until the suspension order is revoked.

As per Section 4 (2) (D) of the Real Estate (Regulation and Development) Act, 2016, promoters are required to open a separate account in a scheduled bank exclusively for the project. RERA stipulates, that 70 percent of the amounts received from homebuyer for the real estate project is to be deposited in a separate RERA-designated bank account to cover the cost of land and construction for the project.

QPRs allow homebuyers to track the actual status of construction and progress of projects every quarter, which enables them to decide whether or not to invest in the project.

Under the act, developers are required to submit project status, the financial position of the project, booking numbers, annual reports, quarterly reports, and other details.

“As per Section 11 of the RERA Act, the developers after receiving RERA registration number of their project are expected to upload quarterly progress reports. However, the compliance level is very low in the fresh projects registered in January 2023. Out of the over 746 registrations, 584 have not given any quarterly update, and around 162 developers have given some update,” read a statement by MahaRERA.

According to MahaRERA data, over 21,500 projects are currently underway and close to 40,000 have been registered in the last six years.

Also Read: MahaRERA fines 12 developers Rs 5.85 lakh for printing advertisements without MahaRERA number

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