The Royal Institution of Chartered Surveyors (RICS) – a leading industry body representing professionals across the country saw a jump in new tenants looking to rent Indian commercial property, with the uplift particularly prevalent in office spaces in during the start of 2022. Investor enquiries across all commercial property – that’s office, industrial, and retail – also continued to rise, according to the latest RICS Commercial Property Monitor, Q1 2022.
Respondents to the survey saw a notable increase in demand for office space in Q1 2022 with the net balance improving to +47% from +25% at the end of 2021. A considerable change in sentiment was also seen in the retail sector, as occupier demand moved into relatively positive territory (+17% net balance) since the -15% net balance reported in the previous quarter.
Occupier demand for commercial property has not been higher since Q1 2019, with a net balance of +31% of respondents reporting an increase across all sectors (retail, office and industrial uses). Investor enquiries also rebounded in the first part of 2022, with a net balance of +31% marking a strong result following -1% at the end of 2021. Moreover, this is the highest response since Q1 2019, showing that investor confidence has now returned to India.
Looking once again just at offices, investor demand rose from a net balance of +11% at the end of 2021 to +37% in Q1 2022, and the net balance of respondents predicting a rise in capital values for the office sector is the most positive since Q4 2019 (+34% net balance). With the jump in occupier demand for new office space, rents are expected to increase with a net balance of +70% expecting a rise, compared to +26% in the last quarter.
When assessing the performance of the commercial property market as a whole, a majority of respondents (60%) felt the sector was in the early stages of an upturn – with most (63%) also saying commercial property assets were fairly valued given these conditions.
Tarrant Parsons, RICS Economist, said: “Market conditions appear to have improved across India through the early part of the year, with respondents now reporting a positive trend in occupier and investor demand coming through across all sectors.
“In particular, sentiment within the office sector has shown a strong turnaround of late, evidenced by contributors upgrading their projections for growth in both capital and rental value expectations over the year ahead.”