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| Xiaolong Wong/Unsplash |
ICRA has just released some welcome news for the commercial real estate sector.
What: The outlook is anticipated as Stable for FY23 throughout the retail mall and office segments. Retail malls had the outlook revised from Negative to Stable, thanks to rising rental income, rent escalations and trading density improvements.
There's more: ICRA also forecasts growth in the commercial office sub-category to 28 million sq. ft. in CY2022 from 20 million sq. ft in CY2021. Offices are buzzing again and there could even be hiring growth.
Of course, net absorption could be lower than CY2019 (41 million sq. ft) but it’s a good recovery curve nonetheless.
Some other predictions worth noting
📎 CY2022 may witness impressive supply figures in Bengaluru and Hyderabad while vacancies could dwindle down to 18.4-19.4% overall.
📎 Rentals should be steady for Grade-A properties in suitable locations.
📎 A 5% revenue growth is expected as occupancy grows.
📎 Retail malls should recover with more relaxations, big-ticket movie releases and greater consumption.
📎 Pre-COVID-level footfalls to arrive in FY23 itself though average per footfall spend may slightly reduce.
📎 Mall rental income could outstrip FY20 figures by at least 4-6%.
📎 45% YoY growth in FY23 with 60-70% operating profitability.
Here’s to ICRA’s predictions coming true, and a better year for commercial realty.