India saw its worst wave of covid infections and deaths in the second quarter of 2021, which led to a series of lockdowns across the nation. However, it recovered in the second half of the year and GDP grew by 8.9 percent in the calendar year, more than recovering the ground lost in 2020.

Real estate transaction volumes remain subdued compared with pre-pandemic levels, and private equity investment in the year to the end of March 2022 fell to $4.3 billion, from $6.3 billion in the previous 12 months, according to Anarock Capital. Meanwhile, the nation’s real estate players are consolidating, and India is benefiting from the institutional influence of real estate investment trusts.

In 2021, the industrial and logistics sector saw substantial growth.

CBRE data shows take-up in the sector accelerated during the year, rising by about 39 percent year-on-year to more than 28 million square feet. Supply almost kept pace, rising 38 percent to 27 million square feet. Global sector specialists and larger domestic developers are now providing India with much-needed modern logistics space.

Runners and riders

Demand for modern logistics space drove rental rises across the country – in markets such as Mumbai, Chennai, Hyderabad and Ahmedabad, double-digit rent increases were seen.

40.5m sq ft

Gross office absorption grew in 2021, even as hybrid working gained popularity

Private real estate investors in the sector include Blackstone Group, CapitaLand, IndoSpace, Mapletree and Xander Group, which spent more than $900 million in 2021, according to CBRE data.

The pandemic has sparked an interest in life sciences space across the world, and India is set to capitalize on this, as the largest manufacturer of generic drugs in the world and also a location for multinational life sciences companies. Life sciences hubs are emerging across the country.

India is also expected to be a major location for data centers, due to growing e-commerce and the rise of cloud computing. In 2021, Digital Realty and Brookfield formed a joint venture to develop data centers across India.

Nonetheless, the office sector remains the largest sphere of private real estate activity, with new partnerships announced by Canada Pension Plan Investment Board and Ivanhoé Cambridge in 2021, while Blackstone acquired a $1.5 billion office portfolio.

Investor interest in the office sector was backed by improving take-up. CBRE data shows gross absorption of 40.5 million square feet in 2021, up from 35 million square feet in 2020. However, take-up is still well down on 2019’s 65 million square feet. India has moved toward hybrid working patterns as much as any market in Asia-Pacific, with close to 60 percent of employers offering the opportunity to work from home.