Looking back at the past two years, Covid-19 was most definitely a curveball that companies and individuals alike had to adapt to. Prior to Covid-19, the real estate industry was at its peak. However, with the imposition of two lockdowns, the real estate sector faced a bit of a slowdown, but the industry has still managed to overcome these challenges through:
An inbound interest in Indian real estate
At the start of 2021, I read the World Economic Outlook report by the IMF (International Monetary Fund) that highlighted the specificity of how India is rebounding and will be on track to build a five trillion-dollar economy. In my opinion, the financial impetus by the government, increasing FDIs (foreign direct investments) and boost to manufacturing are three endeavours that have been undertaken to ensure the country reaches this goal. These efforts, in turn, have led to exponential growth in the commercial real estate sector given that large-scale MNCs are now looking to set up their manufacturing base as well as secondary offices across the Indian subcontinent. This push has resulted in world-renowned brands like Tesla, Apple, and Samsung setting up their offices across India.
The burgeoning growth of Tier II and Tier III markets as commercial hubs
The pandemic induced lockdowns led to the subsequent return of a large part of India Inc to their hometowns, spanning tier 2 and 3 India. Even as we move towards an increased sense of normalcy each day, employees have realised that staying close to home helps them be more present, maintain a work-life balance, as well as be more productive. This observation has been supported by employers and recruiters because it allows them to diversify their base to different markets, while also slashing their expenditure on rentals in metro cities.
Many employees returned to their hometowns but soon realised the need to socialise with other employees and work in a structured environment. This served as a window for MNCs, developers, co-working players to build their presence in the smaller regions of the country. These regions offered low rental rates, subsidised development costs, and most importantly a booming market of opportunities.
With the Indian startup culture witnessing the rise of unicorns and soonicorns, business cost optimisation is easily enabled by flexible space providers, especially in tier 2 and tier 3 regions. According to a report released by JLL-Awfis Survey in December 2021, 50 percent of occupiers in tier 2 cities use flexi-office space. Of the total office stock in the top seven cities, the flex space stands at 3.5 percent, and it could reach around the 4-4.5 percent mark over the next two years.
Hybrid working: The middle-ground where employers and employees meet
Since India had the potential to accommodate new businesses, India’s work environment strongly pivoted during the pandemic in 2020-21 either to work from home, hybrid work models, or remote working strategies. With an influx of business opportunities, the commercial real estate sector of the country repurposed its offerings according to the growing need for healthcare, technology, and also shifts in attitudes. There exist various legs to commercial real estate, but the post-pandemic reality is converging it all into one as offices could now exist in a mall or a hotel. The co-working players and other offices are on their toes to automate the property systems through contactless solutions like automated dispensers, retina scanners, touchless doors, and so on. They have provisions for basic healthcare facilities and ensure the rules and regulations of stringent Covid-19 protocols are followed.
What does the future hold?
As we make our way into 2022, accessibility to booster shots, acquired immunity, and progress in medical science will invariably reflect on the positive growth for office space in India. According to Knight Frank’s Outlook 2022 report, IT companies alone have hired around 2.6 lakh new employees from April 2020 to September 2021. It means that while the work from home strategy was the most accepted way of work at the start of the pandemic, not many companies and employees are keen on continuing with the same. This massive shift in behaviour calls for the need for immediate office spaces.
Since the world of work is seeing constant changes, flexi-spaces have become a reliable option for employees and companies as they provide individual flexibility and will surely define the future of office in India for the next few years. In my opinion, we must remain optimistic even in the face of an anticipated third wave and realign the real estate sector to stay ahead of the curve.
Given the boom in hybrid work culture and mass vaccination across the country, the co-working sector will expect an increase in demand from large organisations, startups, and freelancers as employees are eager to return to the office. In 2022, flexi-space providers will be key growth drivers for commercial real estate with their on-demand, modern, digitised and quality workspace solutions.
The writer is CEO & Founder of Awfis.
The thoughts and opinions shared here are of the author.
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