New Delhi: The outbreak of the corona virus is expected to take a heavy toll on the office space absorption in the country. The office segment of the real estate industry is expected to see lower gross absorption of 45-50 million square feet in 2020 in the top seven cities of the country, according to property consultant Colliers India.
The lower absorption will be due to delay in decision-making amid the ongoing COVID-19 outbreak.
“We recommend investors to capitalise on the situation and focus on commercial real estate assets as their cap rates are likely to decline in line with the falling 10-year government bond yields. This should place commercial assets in a more lucrative position, possibly generating higher returns for investors. We also recommend investors to scout for assets in data centres and warehousing and logistics, given strong potential in terms of cloud infrastructure, and robust domestic demand”, says Sankey Prasad, Managing Director and Chairman at Colliers International India.
In the long run, MNCs in India are expected to re-evaluate their workplace strategies in terms of global in-house centres/support centres and call centres in India to lower continuity risk. The current situation may be a precursor to a gradual change in the idea of workplaces and hence Colliers India has recommended that occupiers evaluate their density plan. Currently, Indian workplaces are typically about 60-80 sq feet per seat.