by admin | May 25, 2021 | Economy, Investing, News, Opinions, Property
By Taponeel Mukherjee,
As the Indian economy evolves, value-creation opportunities in real estate will exist as much in capturing the consumption-growth upside as in pursuing strategies of specialisation. The last decade has seen significant investments in real estate and real estate-related infrastructure, as investors braced for growth and development. The next phase of growth will be driven as much by value-added real estate strategies as by capital market innovation in real estate financing.
Mapping real estate by larger secular trends would give us fascinating insights into the real pockets of demand. Some of the broad secular trends we see are rising income profiles, a gradually larger pool of senior citizens with life expectancy increasing, increased retail consumption (both online and offline) and increasingly high consumption of data, among others. Not only have these trends created the need for specialised real estate, but also the need for greater partnerships between service providers and real estate investors.
Real estate strategies will have to go on to add value through a broad array of services through partnerships and astute asset selection. For example, warehouse real estate space has received significant investments over the past few years. The question is: How will the market evolve as demand further picks up?
The key to warehouse businesses is twofold. Firstly, scale up from being purely real estate providers to “solutions providers”. Such warehouse businesses should have the capacity and know-how to cater to an increasingly large and fragmented user-base with technology, real estate and supply-chain expertise to help support the business ecosystem. While this trend has started already, the future holds greater promise and investment returns, if done well.
Secondly, for warehouse businesses and platforms, it is essential to keep building on the spoke and hub model. Large-scale warehouses, linked to dispersed smaller warehouses, catering to increasingly quicker delivery times is how it is going to be in the future.
Another sector where the real estate partner can provide both real estate expertise and relatively inexpensive access to capital to the service provider will be healthcare. Assets such as hospitals and high-end laboratories need access to significant real estate. Usually, either the hospital acquires the real estate or rents it. There is potential going forward for institutional platforms to purchase land to be leased to hospitals. The key to the strategy mentioned above versus piecemeal renting of hospital land is the ability of the platform to source capital at a significantly lower cost versus what the hospital chain can do.
The healthcare real estate focused platform may able to do so for a variety of reasons such as having access to a pool of investors with a lower cost of balance sheets and better credit ratings. Both the factors will provide a lower cost of capital. Additionally, for platform investors, a diversified pool of real estate assets does lower the risk profile through diversification, which in turn reduces the cost of capital for healthcare real estate asset.
Such innovative real estate strategies will be vital to fuel the next phase of growth for real estate-heavy sectors such as healthcare. The ability of healthcare providers to focus on healthcare services and have a less demanding debt-burden will be a significant value creator in the ecosystem. Real estate-focused investors, funds and, eventually, healthcare Real Estate Investment Trusts (REITs) will provide a liquid capital base with which to scale business.
Ultimately, investor-access to platforms that allow for some degree of secondary market liquidity will further help reduce the cost of capital for businesses. A combination of innovation in real estate and the “capital structure” that drives the real estate will be significant business drivers.
The previous strategy or some modified version of it will apply to many of the new sunrise sectors. A sector such as datacentres is also a component of a differentiated real estate strategy, whereby a combination of technological capacity combined with real estate acumen will drive the data centre real estate play. In an economy such as India with a structural demand, value creation opportunities abound.
A word of caution: A thorough analysis of demand-supply dynamics will be critical for long-term success. Given the very nature of real estate, both macro and local factors have a significant influence on investment returns. Past experience suggests that when local factors are ignored, investment returns can be adversely affected even with positive macro fundamentals.
(Taponeel Mukherjee heads Development Tracks, an infrastructure advisory firm. Views expressed are personal. He can be contacted at taponeel.mukherjee@development-tracks.com or @Taponeel on Twitter)
—IANS
by admin | May 25, 2021 | Opinions
Representational Image
By Ankit Kansal,
The hitherto unorganised brokerage space began witnessing massive changes in the latter half of the previous decade when numerous search and discovery platforms emerged on the Indian realty landscape. Equipped with super-powerful algorithms and high-end analytics, these websites assimilated large databases of real estate information on integrated platforms. Coupled with easy and attractive user interfaces, users could access large chunks of data with a few clicks.
However, they were still unable to solve one of the biggest challenges in the real estate transaction cycle — to enable end-users purchase properties. At the onset of the present decade, a host of consulting companies began to facilitate this and offer a wide range of other services under one umbrella. Besides advanced technologies, these advisories had high-quality manpower that helped in handholding the buyer throughout the transaction cycle.
Modern real estate consultants connect the dots across the entire value chain. They take special care to conduct due diligence before entering into an agreement with developers. This ensures that they seal deals only with developers who have a strong track record of on-time delivery and regulatory compliance.
Modern transaction advisories invest a lot in developing state-of-the-art user interfaces to showcase properties in a digital manner. They also give importance to analytics while developing benchmarking tools that help users navigate across numerous properties, compare them and identify the right project fit.
The contribution of the digital interfaces is augmented by the efforts of an on-ground sales force that helps buyers map their property requirements and identify suitable projects. The team comprises seasoned property experts who have an in-depth understanding of their respective local markets. Acting as relationship managers to individual clients, they assist them in mapping their individual needs, arranging iterative site visits, evaluating numerous options available and finally zeroing in on the best property fit.
However, the role of property advisors does not end here. To ensure consumer convenience, dedicated CRM (customer relationship management) teams are set up to handhold buyers through the documentation and legal process, thereby ensuring a hassle-free experience from start to finish. Advisories are also helping buyers in securing home loans, as they have tie-ups with banks and other financial institutions.
As the real estate sector becomes more organised, the advisory space will gain further momentum. Currently, the primary residential brokerage space in 10 major Indian cities is valued to be around $3 billion (Rs 212 billion). More than two-thirds of the market share is controlled by individual brokers, whose number is estimated to be slightly over 200,000 in these cities.
In the light of policy overhauls such as RERA, the demand for professional advisories will continue to grow. In the next five years, it is estimated that nearly half of the transactions will be facilitated through organised consultants.
New-age consultants are embarking on active channel partner programmes, wherein they are empanelling individual brokers on their platforms. In the newly-evolving symbiotic relationship, while brokers will share their contacts with the bigger advisories, the latter will offer professional support to individual brokers in the form of access to deals with larger developers, marketing support and training programmes, etc. As RERA compliances are becoming mandatory, smaller brokers will further try to align themselves with bigger advisories to stay afloat in a dynamic market.
(Ankit Kansal is Founder and MD of 360 Realtors. The views expressed are personal. He can be contacted at ankit.kansal@360realtors.com)
—IANS
by admin | May 25, 2021 | Corporate, Corporate Buzz, Investing, Markets, News, Property
Gurugram : The Haryana Real Estate Regulatory Authority (HRERA) is all set to supervise directly an incomplete residential project in Gurugram and has already seized the bank accounts of the developers concerned, said Authority’s Chairman on Friday.
HRERA chief K.K. Khandelwal said that real estate developer Orris and Three C-Shelter Infrastructure allegedly cheated homebuyers who invested in the developer’s project proposed in Sector 89 here.
Khandelwal said that taking direct supervision by authority of any stalled project is first of its kind in the country.
Addressing the media, Khandelwal said that Orris obtained licence for the residential project over a 47-acre plot in 2011 and later signed a contract with Three C-Shelter Infrastructure.
Acting on the grievances of homebuyers of Greenopolis, the incomplete residential project, HRERA has appointed M.S. Turan as the Investigation Commissioner.
Khandelwal said that all the stakeholders of the project will be part of the investigation.
Quantum Infrastructure has been assigned the task to conduct quantity survey of the stalled project.
“Three C-Shelter Infrastructure was supposed to construct all the flats or houses with 35 per cent share with Orris but failed to do so. Both firms allotted 1,862 units and were supposed to deliver all units by Dec 2015 but they did not keep their promise,” Khandelwal said.
“Allottees paid more than 80 per cent of the amount against units they booked but to date, just 40 per cent work has been completed,” he said.
“Accounts of both builders have been seized and they will be able to withdraw amount to only fulfil the stalled construction needs in the supervision of appointed authority,” he added.
He said that the probe will be completed in a stipulated time frame and the Investigation Commissioner will submit its report in two months.
The Investigation Commissioner was appointed under Section 35 of H-RERA Act 2016.
“August 28 has been fixed the next date of hearing in the case,” he further added.
Due diligence — an investigation or audit of a potential investment firm — will done into the financial transactions executed by the “tainted” builders.
—IANS
by admin | May 25, 2021 | News
New Delhi : With Jaiprakash Associates Ltd (JAL) failing to deposit Rs 1,000 crore, the Supreme Court on Wednesday asked the real estate firm to pay Rs 600 crore to pay back to the home buyers who have opted for a refund.
A bench of Chief Justice Dipak Misra, Justice A.M. Khanwilkar and Justice D.Y. Chandrachud asked senior advocate F.S. Nariman, appearing for JAL, to take instruction from the company on depositing Rs 600 crore, instead of RS 1,000 crore, with top court’s registry.
The bench said that after the amount is deposited by the JAL, it would ask the National Company Law Tribunal (NCLT) bench at Allahabad to expeditiously decide the company’s plea on revival or restructuring of Jaypee Infratech Ltd (JIL), a subsidiary of holding company Jaiprakash Associates Limited.
The bench on May 16 had asked JAL to deposit Rs 1,000 crore, in addition to Rs 750 crore already deposited, with its registry by June 15, to refund the principal amount to the hassled home buyers and that on submitting the amount, the liquidation proceedings against JIL would remain stayed.
However, failure to deposit the amount would result in the start of insolvency proceedings against JIL, the bench had said.
On Wednesday, the court was informed that Rs 1,000 could not be deposited. Rs 750 crore has already been deposited with the top court and another Rs 600 crore would be required to pay the principal amount to home buyers, the court was told.
To this, the bench asked the JAL to “establish its bonafide by paying the money”, and directed it to inform by July 13, the next date of hearing, about the company’s stand on depositing Rs 600 crore with it.
JAL had sought, in apex court, a direction for restraining the NCLT bench at Allahabad from proceeding further with the insolvency proceedings.
Earlier, the bench had sought from JAL details of its housing projects in the country and said that the home buyers should either get their houses or their money back.
The court was hearing the pleas of home buyers contending that around 32,000 people had booked flats and were paying instalments, but were not left in the lurch after the NCLT, on August 10, 2017, admitted the IDBI Bank’s plea to initiate insolvency proceedings against the debt-ridden company for allegedly defaulting on a Rs 526-crore loan.
—IANS
by admin | May 25, 2021 | Corporate, Corporate Reports, Investing, Property
New Delhi : Foreign investment into the Indian real estate sector stood at $2.6 billion in 2017, a Knight Frank report said here on Monday.
According to Knight Frank Indias Chairman and MD, Shishir Baijal, inflow of foreign capital into the segment registered a 31 per cent growth on a year-on-year basis in 2017.
“Cross-border capital inflows (excluding development sites) to India stood at $2.6 billion in 2017 recording a 31 per cent growth over 2016.
“Ranking an impressive 19th position amongst 73 countries that attracted cross-border capital into their property market, India has surged ahead of its Asia Pacific regional counterparts which collectively attracted lesser capital flows compared to India,” Baijal added.
Foreign investments into Indian real estate was higher than collective foreign investments in the other Asia Pacific countries of Malaysia, Thailand, Indonesia, Vietnam and Philippines, said Knight Frank’s “Active Capital: The Report 2018”.
The report further observed that due to reform measures including the Real Estate Regulatory Act (RERA), Goods and Services Tax and demonetisation, “the attractiveness of Indian real estate potential has caught the fancy of international investors and developers alike resulting into this favourable investment account”.
Capital flow into Indian property market was 10 times higher than the outflow in 2017, it said, adding that “$2.6 billion of inflow was recorded compared to outbound capital flows to the tune of $0.26 billion last year”.
—IANS
