REDEFINING REAL ESTATE FOR ATTRACTING NEW AGE
Initiating the dialogue, Gautam Saraf, Managing Director, Mumbai & New Business, Cushman & Wakefield shared, “In the previous decade traditional real estate investors – the banks and NBFCs slowed down and the new age investors which came in the form private equity investments, sovereign wealth have been significantly growing. In addition are the evolving segments of REIT and fractional ownership of real estate in both commercial and residential assets. The demand for new age investors is beyond the economic returns where they have been looking at more socially responsible investments. Thus, Proptech as an asset class has gained significant traction in real estate making it more liquid than it used to be. Sustainability’s significance across the commercial asset classes today has stakeholders make a concentrated effort for reducing the carbon emission and footprint. Post the demonetisation we have seen institutional capital coming in residential as well.” Anjana Sastri, Director – Marketing, Sterling Developers said, “What has happened in the past few years is that a lot of investors and customers have been looking through the sustainability lens quite a bit. That is something that has also propelled a lot of projects into having far more green spaces and open spaces. Additionally, customers today not only want multi-functional homes but also elevated set up of amenities which can help them to be self-sufficient within the community that they will live in. That is something that has become very very important. Location is always an important factor but I think post covid people have realised that being closer to hospitals, offices, grocery stores and schools is more critical. From buyer’s perspective, they are investing in projects that are self-sufficient and have multi-functional homes for buyers to bet better returns.” Reshmi Panicker- Executive Director Land and Residential Services, Knight Frank stated, “We are seeing a lot more preferences for larger spaces with multifunctional areas which can be used for working out of home, office space etc. There is also a preference among investors and buyers for integrated township and gated communities, which offer lifestyle facilities and security for all age groups. Second homes is another asset class being preferred for investment especially in areas like Alibaug, Goa etc. On an institutional level, technology has allowed us to progress in real-estate from search & discovery of rental housing for youngsters, co-living and student housing to fractional ownership and REITS that allow you to own properties, be it commercial or residential at a fractional cost. I am seeing a lot of opportunities in the new age investments models that are still evolving but are definitely going to mature in the years to come.”Sharing her thoughts Hina Kamra, Managing Director - NeoWealth Management said, “The institutionalisation of real estate has been growing and if I were to define the new age investors in real estate, it is firstly the global financial institutions, mostly in commercial and logistics real estate, that are focused on ESG compliances for investments. The second is the large family offices run by professionals. They are tech savvy investors and prefer liquidity, transparency and governance. They have a portfolio approach. Overall, the preference for hard assets continues globally and in India. Financialisaton of savings has started even in India and the best example is the mutual fund industry which started off in India in 1994 and today is worth AUM of 40-41 lakh crores. If we talk about AIF which includes real estate, that has an AUM of over seven lakhs’ crores and the growth has been almost 45 percent over the last few years.. From 2000 to 2010 the institutionalisation of real estate took off in a big way both with respect to developers and investors. FDI came in and IPOs started happening, giving access to more capital. REIT itself is the outcome of financialization of Indian real-estate.” Talking about REITs Bani G. Anand, Vice Chairperson, ATS Infrastructure Ltd shared, “We have kept our focus on the residential real estate which has been our primary portfolio, but we have diversified into commercial real estate primarily with an objective that at some point in time we are going to have REIT of our own. In terms of Indian real estate, we are where the European and American markets were in their 60s. We are talking about fractional ownership, real estate derivatives and that’s how real-estate will be traded primarily because in urban cities the average age of real estate buyer is getting younger to late 20s and early 30s and they are digitally savvy. Theoretically, while in urban India residential REITs is a possibility, in general in Asian countries. REITs have not performed well in residential. Singapore and Japan failed because Asian sentiment is always home ownership but as Fin-tech is evolving, the conventional ideas may change. We are living in a country where inflation rates for the most part are higher than what bond returns are giving us. The liquidity of being able to trade it on stock exchange, opportunity to participate in real estate without a large amount of capital, take the risk of real-estate which is medium and be able to get the return of the equity that is high, all these are very attractive options for young investors.” Khair Ull Nissa Sheikh, Executive Director- WTC Services, World Trade Center Noida added, “We Indians love our investments in real-estate besides gold. It is the ownership that we like about real estate. As far as the fractional ownership in India is concerned, it is in a space where we are going to evolve because there are a lot of advantages. You get a wider range of investors with accessibility to retail investors. The digital platforms are going to facilitate fractional ownership transactions and the structures are going to get evolved. It will offer diversified opportunities in different locations, in different asset types which will mitigate risks and enhance investment returns. Gone are the days where investors based in Noida would only invest in Noida projects. There is going to be rise in specialised fractional ownership platforms, streamlining the legal framework solutions. And there is going to be a whole lot of advancement in terms of new investment structures, moving beyond the traditional property ownership. The shared equity arrangements, flexibility and alignment with the value appreciation of the property along with regulatory framework and standardisation is going to develop. We are already seeing the integration with the blockchain technology that will help improve transparency, efficiency and security in managing the transactions.” Sarah Jacob, Director Trine Holdings, “Today investors are inclined towards, office, retail hospitality and warehousing segments where the asset could be where this could be green field or brownfield and is a rent yielding asset. In the core investments they would like to buy out the highest quality of assets which will have the lowest yield but it is very safe. The next one is the core plus where a B-Class building is upgraded and investors see some sort of an increment value add. But upgrading a C-Class building or distressed asset into a higher grade asset involves risk and an opportunist investment strategy, In Greenfield project investment, location becomes critical. Supply and demand of the locations come into play. Investors prefer returns in three to seven years or steady yield such as from office lease. Retail has the short-term leases but they have higher appreciation. Most importantly new age investor is looking out for an attractive and niche product.” Given the rise in gig economy and declining interest of younger generation in owning property, structures and nature of investment in real estate will change. Large investments in real estate are coming from Tier 2 and Tier 3 cities largely because they want to have something which is aspirational New age investor is looking out for an attractive and niche product. There is good interest and demand for data centres logistics, warehouse, core retail and core commercial. Green building is likely to attract more tenants and investors. Second homes is another asset class being preferred for investment especially in areas like Alibaug, Goa etc. Real estate has become more regularized, developers are becoming more professional and they are open to new investing models. Fractional ownership will be a catalyst to portfolio management which we are seeing in India realty.
Tags : redefining real estate investing quality economic social value developers development marketing plans investors Gautam Saraf Managing Director Mumbai & New Business Cushman & Wakefield Anjana Sastri Director – Marketing Sterling Developers Reshmi Panicker- Executive Director Land and Residential Services Knight Frank Bani G. Anand Vice Chairperson ATS Infrastructure Ltd Khair Ull Nissa Sheikh Executive Director- WTC Services World Trade Center Noida Sarah Jacob Director Trine Holdings