New-age technology and data-driven concepts have significantly influenced asset management in the hotel sector today
Luxury hotel guests expect an international experience wherever they go and country-specific limitations are not accepted
Rising disposable incomes at the hands of the middle class, an increasing number of multi-millionaires and the growing quest to travel have given a major boost to the tourism and hospitality sector in India.
Over the last decade, this sector has accounted for nearly 7.5% of the country’s GDP. It is estimated that the Indian hospitality sector is likely to witness high double-digit annual growth by 2022.
The sector is a major direct and indirect employment generator, attracts massive FDI inflows and is the most important net foreign exchange earner for the country.
Considering its potential, the Government must necessarily incentivize investment into the hospitality sector by lowering the taxes on its development and giving it industry status.
Since it relies on a host of other sectors such as transportation,
Finance Minister, Piyush Goyal’s meeting with top industry stakeholders shows clear intent to salvage the sector
Despite the many interventions by the Government directly or indirectly benefiting the real estate sector in recent times, many pressing problems besetting this industry have remained unaddressed. A major one among these is the issue of stalled projects, which has been at the core of buyers’ discontent.
Taking cognizance of this and several other issues, officiating finance minister Piyush Goyal held a meeting with the top bankers and industry stakeholders to discuss measures that can be taken to bring the industry back on track.
After RERA, this was potentially the most direct and straightforward intervention move that the Government has taken on behalf of the struggling real estate sector.
The item of highest interest on the meeting agenda was the proposal to rope in the National Buildings Construction Corporation (NBCC) to complete stalled projects, a predominant burden of which is NCR.
What is at stake?
Even if 50% of the stalled projects are picked up by NBCC,
The e-commerce revolution and the upsurge in digital technologies are fundamentally transforming shoppers’ expectations.
This transformation also has a major bearing on the function of brick-and-mortar stores, which now need to render more useful and entertaining customer experiences.
As trends advance globally, mall operators are forced to rethink and re-strategize as to how they must design, enable and operate their physical stores.
The Advent of ‘Smart’ Stores
In today’s digital era, physical stores are getting ‘smarter’ by using technologies like robotic intelligence, analytical data and consumer-centric platforms such as Augmented Reality (AR) or Virtual Reality (VR) to attract customers and give them an impactful experience.
By uniting conventional methods with key success elements of the digital ethos, brick-and-mortar retailers, in fact, have an advantage over e-commerce, as they can offer mall visitors an experience that vastly surpasses that of online shopping.
Information technology can be effectively used to tap into tech-savvy consumers’ predilections with appropriate tech-enabled in-shop ‘responses’.
Numbers suggest that consumer expenditure in India will rise to US$ 3,600 billion by 2020 from US$ 1,595 billion in 2016.
For a very long time, real estate developers and investors focused almost exclusively on the metros and tier 1 cities, as these were considered the safest bets for sales and returns on investment. After all, these cities were generating the most employment and therefore inward migration.
As a result, the metros and tier 1 cities across India are currently experiencing the immense pressure of overpopulation due to urban migration in search of better livelihood and enhanced quality of life, thus resulting in an inadequate infrastructure for the citizens.
The Smart Cities Mission, launched in 2015, aims to tackle the escalating problems being faced in urban areas with regards to transportation, energy supply, governance, basic urban infrastructure services and overall quality of life.
Although the mission is trying to address these issues to a certain extent, the challenges of remodelling India’s tier 1 cities into smart cities are considerable, as many of them have reached their saturation point.
Tier 2/3 cities stage a comeback
As a result, more and more real estate demand and supply are now drifting down towards tier 2 and tier 3 cities of the country.
In any discussion about affordable housing in India today, the fact that a lot of such housing is actually lying vacant is bound to crop up.
One may point out that, especially with the Government’s avowed intention of providing Housing for All by 2022, this supply should logically go towards bridging the affordable housing gap.
However, it is obviously not that simple or it would already have happened. A lot of this budget housing inventory is lying vacant for good reasons.
Before we get into the reason, let’s take a quick look at the numbers. Around 237,000 units across top 7 cities belonging to the affordable housing segment (units priced less than INR 40 lakh) were unsold as of Q2 CY 2018.
This number pertains only to the unsold units of organized private developers and does not include Government housing schemes, which essentially means that the number would go further northwards if those are included.
Given the unrelenting requirements for urban budget housing, inventory that has been created in the major cities by seasoned organized players who know what they’re doing will eventually get absorbed.
Below ₹ 40 lakh budget category rules supply, followed by mid-segment (₹ 40-80 lakh)
Of all supply between 2013-Q1 2018, affordable housing contributed 64%, mid-segment 23%
ANAROCK Property Consultants’ latest report ‘Kolkata: The Shining Star of the East’ analyzes the city’s major real estate trends, and highlights that affordable housing has gained significant traction in Kolkata.
The state government has given a major push to this segment with its a new housing scheme ‘Nijoshree’, which provides homes under two categories to people whose monthly income is < ₹ 15,000 and < ₹ 30,000.
An important finding of this report is that a majority of the supply of housing units is in < ₹ 40 lakh budget. In terms of unsold inventory ageing pattern, only 9% of the units are ready-to-move-in, whereas more than 50% units are due to complete in the next 2 years.
Approximately 1,19,000 units launched in Kolkata between 2013 and Q1 2018, of which 68% were added between 2013 and 2015.
Kolkata accounted for 7% of the overall unsold inventory across the top 7 cities of India as of Q1 2018.
Despite new launches decline, property prices in Yelahanka did not correct significantly and actually appreciated by 9% in the past 2 years.
Existing since the 12th century, Yelahanka is closely linked with the origin of Bengaluru. The book ‘Bengaluru to Bangalore’ by T.V. Annaswamy mentions that the word ‘Yelahanka’ is derived from ‘Valipakka’, meaning ‘along the highway.’
Over a period of time, Valipakka (during Chola reign) transformed into Illaipakka (during Hoyasala reign) and finally into Yelahanka.
The construction of the Kempegowda international airport was a game changer for the region and initiated Yelahanka’s metamorphosis from a sleepy little settlement on the outskirts of Bengaluru into a buzzing residential investment destination.
Yelahanka, which is divided into Old Yelahanka and Yelahanka New Town, is home to many defence establishments such as CRPF training school, Indian Air Force’s Air Force Station and BSF Training Centre.
This micro-market also houses the largest facility of Mother Dairy in Karnataka, as well as the rail wheel factory (India’s largest manufacturer of railway wheels and axles).
Unsold inventory down 2% from 7.11 lakh units in Q1 2018 to 7.0 lakh units in Q2 2018
Unsold inventory declined 10% from 7.7 lakh units in Q4 2017
There has been a whopping 50% jump in overall new housing launches in Q2 2018 over the preceding quarter, with the maximum supply in the affordable segment (< ₹ 40 lakh).
Interestingly, the affordable housing supply increased by 100% in Q2 2018 over Q1 2018, and this supply has led the overall growth.
On the sales front too, housing sales across the top 7 cities of India also rose by 24% compared to Q1 2018, indicating that hitherto abstaining home buyers are back on the market.
Developers are working hard on clearing unsold inventory with attractive schemes, freebies and discounts. Moreover, the positive impact of the policy reforms including RERA and GST have begun to bear fruit.
Real estate development may seem to be little more than laying down brick and mortar to develop a massive concrete structure. It may seem to be a business that anyone can and probably should enter, especially considering the massive unmet housing demand in the India.
Nothing could be further from the truth – real estate development is a tough business. And though the entry barriers have reduced over time, the complexities of the real estate business have increased manifold.
As of now, developers across the country are grappling with a massive unsold inventory of more than 7 lakh units being unsold in the top 7 cities alone. How does a real estate developer make his mark in today’s dynamic property market where everyone is struggling to sell?
The 7 Hallmarks of Success:
Understanding that it’s still always about location:
Location is the most critical success component for any real estate development. Even the humblest of small-sized projects with the barest minimum of facilities and amenities will find takers if they are in locations with sufficient social infrastructure and good multi-nodal transport connectivity.