What the pandemic has taught us

The upbeat economic performance after a period of relative lull is evident from the improvement in a host of macroeconomic indicators

The two years immediately preceding the pandemic witnessed record-breaking office leasing of over 47mn sqft in 2018 and approximately 56 mn sqft in 2019, in the six key commercial markets of the country. The residential segment too, after a downturn of few years, appeared to be emerging out of the NBFC (Non-Banking Financial Companies) crisis.

However, the sector took a drastic hit in 2020 with effects lasting till the first half of 2021. It was severely impacted by varying degrees of lockdowns, restrictions and supply chain interruptions. As offices recalibrated their work strategies, transaction activity fell by 43% to 31.9 mn sqft in 2020. The second wave eroded the fleeting confidence of early 2021, and H1 2021 subsequently recorded only 10.9 mn sqft of activity. Industrial and warehousing — often reckoned as high-growth segments — witnessed an absorption decline too, as 36 mn sq ft of leasing in 2019 slid to 28 mn sq ft in 2020.

The most important lesson for real estate is probably better preparedness to tackle such black swan events in the upcoming future. Alertness and preparedness for such potentially disruptive events will play a critical role in shaping the future of real estate. The key learning is a renewed focus on wellness, technology, flexibility and accessibility.