The COVId-19 pandemic is expected to have a short-term impact on India’s office market. The demand is likely to fall by 45 per cent, while rentals are expected to soften by 5 to 10 per cent according to Anshul Jain, MD, India and South East Asia, Cushman and Wakefield. Jain was speaking at a webinar organized by Workplace Trends India founder Tushar Mittal.
He further projected that the net leasing or absorption of office space may fall to 25 million square feet this year, compared to 45 million square feet in 2019.
However, Jain was bullish on the medium to long term prospects of the office space market in India which according to him would be an attractive outsourcing destination for various outsourcing jobs. While Work From Home ( WFH) is likely to lead to a fall in demand for office space, the de0- densification of office space is going to largely offset it.
“The commercial real estate rental situation at present is very different from the Global Financial Crisis situation of 2008-09, when the supply outstripped demand, we were in an oversupplied situation then, right now we are not in an oversupply situation. Having said that there will be short-term softness in the market and I think the rentals may come down in some pockets between 5 and 10 per cent,” Jain said
Stating that the fundamentals of Indian economy remain intact despite the coronavirus pandemic, Jain said India might gain eventually. “I think our fundamentals are still in place, the factor advantage in terms of young working population, English speaking and top of it, skill set is increasing very significantly. Besides that, chances are that even in 2021 or 2022 we will be at 2019 wage levels, because there has been no wage growth this year. Instead, there is wage deflation this year. In 2021, the companies may possibly look at restoring salaries but may decide not to give further increments depending on the overall state of the economy. So by the end of 2021 and 2022 your wages would be at 2019 levels,” Jain observed.