Already Recovering, Commercial Real Estate Is Set To Rise: Prestige Estate
Office rental demand held steady for Prestige Estate Projects Ltd. even as a national lockdown imposed following the Covid-19 outbreak shifted workstations from office to home. The property developer anticipates the demand to only rise in the near future.
“This theory of work from home isn’t going to last forever. It’s only under compulsion that that’s happening,” Irfan Razack, the property developer’s chairman and managing director, told BloombergQuint in an interview. “It’s a matter of time that everybody will start going back to office.”
A Knight Frank survey, released earlier last month, signals otherwise. Data pointed to a 37% year-on-year drop—the steepest in a decade—in office transactions to 17.2 million square feet in the first half of 2020 in the top eight cities. Almost 6.3 million sqft of office space was surrendered during the months of lockdown, with Bengaluru accounting for the bulk of this figure.
Razack, however, denies having faced many occupant vacancies in his office premises spanning across India. “Things had gone a bit slow, but the momentum is picking up.”
There’s optimism in terms of office space as well, states Razack, predicting that space requirements are likely to go up because of social distancing measures. “Earlier, offices used to pack up many people in a smaller space of 50-60 sqft per seat. Now that will go up to maybe even 160 or 200 sqft,” he said.
The Bengaluru-based entrepreneur expects demand to be further fueled by India’s burgeoning information technology industry. “Demand will remain because India will be a hub for these services. There will be a lot more business within this segment.” He, however, estimates that it will take two-three quarters for the space demand to be realized as companies continue to grapple with operations and capex spending.
Commercial real estate only accounts for 28% of Prestige Estate’s overall business, while residential buildings—at 72%—is the key area for the developer.
Razack’s outlook for the residential sector
- Sales are going up as people seek larger and more outdoorsy spaces.
- Demand bolstered by a borrowing rate of 7%—a record low.
- Sales for residential properties picked up from June.
- Expect a further increase in September sales.
- High demand coming out of Bengaluru and Hyderabad. Mumbai, too, expected to open up opportunities when the lockdown eases.
The group, Razack said, has launched three projects in the last month—two in Bengaluru and one in Goa, and plans to launch projects in Hyderabad and Noida later this year.
“We do not want to slow down,” he said. “We believe there’s no sense in getting worried and scared. We have to stay positive at the same time Covid negative and go on with our work.”
Watch the full conversation here: