ICICI Securities: Indian Commercial Real Estate - The Party Isn’t Over Yet
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ICICI Securities Report
Along expected lines, the Indian Commercial Real Estate (CRE) office market has seen a 49% YoY decline in H1 CY20 net absorption at 10.5 msqft. While the Covid-19 induced slowdown is expected to result in a 40-50% YoY contraction in demand and supply in CY20E, green shoots are gradually emerging. Developers in our coverage universe have reported over 90% office rental collection between March-June 2020 and have seen pickup in leasing enquiries from June 2020 onwards with few large pre-Covid deals also being honoured.
Rents also continue to sustain at pre-Covid levels for large, institutional landlords. With a limited number of 8-10 large pan-India office developers capable of building quality assets, India continuing to have affordable rentals of under 1 USD/psf/month and an abundance of STEM talent, we remain bullish on office asset developers...
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