Raja commonfloor states on commercial Realty Sector Plunge: A Harsh Reality Post the Economic Slowdown

Amidst reports on the possible recovery of economy as well as Indian realty sector, the impacts it left behind seem to be a matter of concern. Here is focus on the influence on one of the key revenue-generating sectors, the commercial real estate.

Though appears to fall on the right track, the housing sector is still far away from total recovery. Delay in project completion, lack of demand and inventory pile-up has had their impacts, calling for immediate implementation of the right measures.

The situation prevailing in the commercial sector is not much different from its housing counterpart. The weakening economy has forced companies to downsize or relocate, thereby reducing the demand for more office space.

Much of this reduction in demand happened during the third quarter in last year. Submissive demand along with high vacancy rates have made the conditions in commercial sector a bit tense, thereby calling for reforms to take place.

Contrary to the present financial and political setting, demand for retail real estate is likely to continue to be submissive in the immediate period. Corporates are anticipated to go on with their focus on optimum space utilization and cost cutting activities and transaction works are estimated to be inadequate concerning small and intermediate space. Lack of supply is expected to cause burden on rental as well as capital values.

Still, the ongoing recovery phase is likely to continue considering the fact that the rupee has recovered and is on the way to progress. In addition, non-resident buyers are now legalized to buy shares, whereas local firms are given sanction to invest 400% of their assets in overseas markets at present.

During the following 6 months, CBRE Research assumes that reforms would be approved so that the international exposure to Indian banking sector is increased thereby promoting investment from potential sources. 

Here, the export sector deserves a mention which plays its part perfectly with signs of improvement. And, of late, there are seen efforts to curb import activities and enhance export sector. All in all, scenarios for an enhancement in the exchange segment and India's foreign balances look absolutely superior than they did a few months ago.

The Monsoon season was with positive changes this year as compared to last year and yielded good agricultural productivity. Food prices had peaked during the recent time of crisis, further worsening the situation already affected by the weakening economy. With more productivity, the food prices seem to be in for a downward change, further easing the monetary imbalance.

In a nutshell, Indian economy can revive but with adequate and timely support from the governing bodies, regional as well as central. 

Experts emphasize on few key points for bringing in the desired results:

·         Allow more foreign investment

·         Boost investor sentiment

·         Identifying key areas with great potential

·         Bring in laws for fast-track approval

·         Exceptional economic management

·         Industry-centric approach

·         Easing rules regarding foreign investment

·         Set clear guidelines

·         After initial sectors, expand activities into other states as well.

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