Unlocking Real Estate Potential with REITs in India

Residential

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September 24, 2024

Unlocking Real Estate Potential with REITs in India

As India’s real estate market surges toward unprecedented growth, Real Estate Investment Trusts (REITs) are emerging as a game-changing investment avenue. Offering an accessible entry point into the high-yielding real estate sector, REITs are gaining traction among retail investors seeking exposure to the booming market without the need for significant capital. By providing transparency, liquidity, and diversified real estate portfolios, REITs present an exciting opportunity in a sector projected to reach $10 billion by 2030.

India’s real estate market is forecasted to grow at a Compound Annual Growth Rate (CAGR) of 10% from 2022 to 2030. Among the standout segments is commercial real estate, expected to grow at twice the rate of the overall market. Sectors like Information Technology, finance, and e-commerce are driving this demand, creating a robust pipeline for office space. This growth reflects India’s demographic shift, with rising urbanisation and favourable government regulations encouraging infrastructure development.

Despite these promising indicators, the high cost of direct real estate investments has historically kept retail investors at bay. The prohibitive ticket size of property ownership is a significant barrier, as Anarock data shows a 13-33% increase in housing prices across seven major cities over the last three years. Commercial real estate has not been immune to this surge, with prices climbing by an estimated 15%, further intensifying the affordability challenge for investors. REITs provide a solution to this challenge by allowing investors to pool their funds into income-generating commercial real estate assets such as office spaces, malls, and warehouses. This model allows retail investors to earn regular rental income while enjoying a diversified portfolio of high-quality assets. Moreover, REITs eliminate the need for large, upfront capital investments and provide liquidity, making real estate investment a viable option for many who would otherwise be priced out of the market.

From a sustainability perspective, REITs also contribute to responsible real estate growth by encouraging the development of energy-efficient and eco-friendly commercial properties. By investing in sustainable infrastructure, REITs help ensure long-term value creation for investors while promoting environmentally-conscious development in urban centres. The rise of REITs in India signals a democratization of real estate investment, allowing more investors to participate in the country’s burgeoning property market. As India’s urban landscape continues to evolve, REITs are positioned to play a crucial role in offering affordable, transparent, and sustainable investment opportunities, transforming the future of real estate in the country.

The Fern Expands in Pune with New Hotel

Commercial

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Homes and buildings

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September 24, 2024

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The Fern Hotels & Resorts has further solidified its presence in Maharashtra with the launch of The Fern Residency in Vadgaon-Talegaon, Pune. This new addition brings the brand’s total number of properties in the state to 35, including four hotels already operational in the Pune market. A spokesperson for The Fern Hotels & Resorts expressed enthusiasm about the group’s ongoing expansion and dedication to exceptional hospitality.

The new hotel will fortify the brand’s standing as a leading hospitality player in Maharashtra, providing comfortable accommodation, top-tier facilities, unparalleled service, and warm hospitality. Set amidst scenic natural surroundings, The Fern Residency, Vadgaon-Talegaon offers a range of amenities, including well-appointed rooms and suites, a fully equipped gym, swimming pool, children’s play area, games room, and transportation services. The property also boasts five state-of-the-art banquet and meeting rooms. Guests can enjoy diverse dining options at the hotel’s restaurants and bars, which offer a variety of Indian and international cuisine.

The beautifully designed outer space, Quarter Deck, provides spectacular views of the pool and surrounding nature. Vinod Cougnery, General Manager – Sales & Marketing (Maharashtra), highlighted the strategic importance of the new launch, noting that with four hotels now operational in the Pune market, The Fern covers multiple areas in the city and offers its award-winning environmentally-sensitive practices to guests. Conveniently located just 4 km from Talegaon State Transport Depot, 4.4 km from the Talegaon Dabhade Railway Station, 37.4 km from Pune Junction Railway Station, and 40.2 km from Pune International Airport, The Fern Residency, Vadgaon-Talegaon, Pune is ideally situated for both business and leisure travelers.

Mumbai’s Rental Market Embraces Short-Term Leases

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September 24, 2024

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Mumbai's Rental Market Embraces Short-Term Leases

The real estate landscape of Mumbai, short-term rentals are gaining traction as an appealing option for both landlords and tenants. Traditionally dominated by one-year leases, the market is witnessing a shift as properties are increasingly rented for brief periods, typically ranging from two to six months. This change reflects a growing demand for flexibility in housing solutions, particularly among expatriates, professionals, and those seeking temporary accommodation.

Real estate brokers in the city have noted that while there are no legal barriers preventing short-term rentals, landlords often charge a premium—approximately 20% above the standard market rate. This increase is intended to offset the challenges associated with higher tenant turnover and the potential inconvenience of frequent changes in occupancy. The leasing mechanism in Mumbai predominantly employs leave and license agreements, which are formalised through the payment of stamp duty. On average, around 30,000 such agreements are registered monthly with the Maharashtra government, illustrating a robust rental market despite the fluctuations in rental patterns. Property owners leveraging short-term rentals are capitalising on a market characterised by limited supply. As a Mumbai-based property consultant articulates, “A property that might attract a rent of ₹500 per sq ft for a long-term lease could command ₹600 to ₹700 per sq ft for a six-month lease.” The scarcity of available properties for short durations justifies this premium, making it a lucrative opportunity for landlords seeking higher returns.

However, nuances exist within this premium structure. In instances where landlords are actively seeking tenants, the premium may be slightly negotiable, leading to more competitive pricing while still remaining above long-term rates. This adaptability reflects the dynamic nature of Mumbai’s real estate market, catering to evolving tenant needs. Recent transactions in the commercial sector highlight the trend of premium pricing for short-term leases. A notable example includes Agni Commex LLP, which leased a 5,830 sq ft commercial space to IMC India Securities Pvt Ltd at ₹700 per sq ft in the prime BKC area, generating a substantial monthly rental of ₹40.81 lakh. This growing trend of short-term rentals underscores the flexibility and adaptability of Mumbai’s real estate market. As both landlords and tenants navigate the complexities of short-term leases, the market continues to evolve, presenting opportunities and challenges alike. The premium on short-term rentals, driven by limited supply and strong demand, serves as a testament to the dynamic and competitive nature of property rentals in India’s financial capital.

Mahindra Lifespaces Expands Happinest Kalyan-2

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Homes and buildings

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September 24, 2024

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Mahindra Lifespaces Expands Happinest Kalyan-2

Mahindra Lifespaces Developers has launched the second phase of its Mahindra Happinest Kalyan-2 project, expanding the “Health Sampanna Homes” concept. This phase introduces three new towers, offering 493 residential units and ten exclusive townhouses. Building upon the success of the initial phase, Mahindra Happinest Kalyan-2 continues its focus on holistic well-being. It is the first affordable housing development in India registered for IGBC health and wellness certification, emphasizing its commitment to providing a healthy living environment.

Phase 2 incorporates and enhances the features that made the first phase a success. Residents can expect over 55 thoughtfully designed amenities catering to physical, social, and mental well-being. Highlights include an inclined cycling and jogging track, rope wall yoga, a camping area, a Miyawaki forest, outdoor calisthenics, and a parkour and obstacle course. Additionally, Phase 2 offers ten exclusive 3 BHK townhouses, each featuring a G+1 storey layout with a private courtyard garden. These units are designed for discerning buyers who prefer the privacy and independence of a standalone house within a secure gated community.

Strategically located just off the Mumbai-Nashik Expressway and a mere two minutes from the planned Rajnouli metro station, Mahindra Happinest Kalyan-2 ensures excellent connectivity to various parts of the city. The project’s proximity to the under-construction Mumbai-Nagpur Expressway further enhances its appeal. With Phase 1 already completed, Mahindra Lifespaces continues to set benchmarks in affordable housing by combining innovative design with a strong emphasis on health and wellness. The second phase of Mahindra Happinest Kalyan-2 is poised to further solidify the project’s reputation as a leader in value housing.

India’s Retail Realty to Expand by 45M Sq Ft by 2028

Retail

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September 24, 2024

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India’s Retail Realty to Expand by 45M Sq Ft by 2028

India’s retail real estate market is set for a significant expansion as urbanisation, growing consumption patterns, and economic growth reshape the country’s retail landscape. With a forecasted 45 million square feet of retail space set to be developed across the top seven cities by 2028, this surge indicates the increasing demand for large-scale, experience-driven shopping environments. According to a report from JLL India, the country’s retail market is entering a new phase, with developers focusing on creating comprehensive destinations that cater to the evolving needs of modern consumers.

Over the next five years, Mumbai, Delhi-NCR, Bengaluru, Hyderabad, Pune, Kolkata, and Chennai will see the addition of 88 new retail properties. This upcoming supply surpasses the 38 million square feet of retail space developed in the last decade, marking a pivotal shift in the sector’s trajectory. Importantly, the average size of new retail developments is also set to grow by 30%, increasing from 391,099 square feet to over 507,341 square feet. This reflects the trend towards creating experience-oriented spaces that combine shopping, entertainment, dining, and leisure under one roof, offering a holistic retail experience for consumers.

The growing appeal of larger retail centres is largely driven by changing consumer preferences. With exposure to global retail trends and increasing expectations for unique shopping experiences, modern consumers are seeking more than just stores—they want destinations. Developers are responding by integrating diverse amenities such as entertainment zones, dining options, and recreational areas, creating spaces that appeal to families, millennials, and affluent shoppers alike. This shift is critical for cities like Delhi-NCR, which is expected to lead the retail supply with 43% of new projects, followed by Hyderabad (21%) and Chennai (13%).

Sustainability is playing a crucial role in the planning of these developments. As cities across India embrace eco-friendly practices, developers are incorporating green building standards into their projects, focusing on energy-efficient designs and sustainable materials. This commitment to sustainability not only addresses environmental concerns but also enhances the long-term viability of these retail spaces, aligning with global efforts to reduce carbon footprints in urban areas. The retail real estate boom is also attracting institutional investors. JLL India reports that 16% of the upcoming retail space will be owned by institutional players, underscoring the growing confidence in India’s retail sector as a viable investment avenue. As these projects take shape, India’s retail real estate market is set to transform, offering expansive, multi-faceted shopping experiences that cater to the needs of its rapidly urbanising population. With significant opportunities for developers, investors, and consumers alike, the future of retail real estate in India looks dynamic and promising.

BluSmart Raises $24 Million for EV Expansion

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Homes and buildings

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September 24, 2024

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BluSmart Raises $24 Million for EV Expansion

BluSmart, an innovative ride-hailing startup focused on electric vehicles (EVs), has successfully secured $24 million in a new funding round. This investment, led by existing backers, will fuel the company’s ambitious expansion plans, including building EV charging infrastructure and expanding its fleet. The company’s commitment to scaling operations and solidifying its presence in the competitive ride-hailing market is evident in this latest funding round.

BluSmart has demonstrated significant growth, reporting an annualized revenue run-rate (ARR) of Rs 550 crore. The company currently operates a fleet of 7,500 EVs and employs over 9,800 drivers nationwide. In the fiscal year 2023-24, BluSmart generated revenues of Rs 390 crore, a substantial increase from Rs 160 crore in the previous fiscal year. Co-founder Punit Goyal revealed the company’s ambitious goal of achieving profitability at the EBITDA level by March 2026.

BluSmart differentiates itself from rivals like Uber, Ola, Rapido, and Namma Yatri by owning or leasing its entire fleet of cars and charging stations. Furthermore, the company employs its drivers, ensuring a stable and motivated workforce. This strategic approach not only enhances the company’s control over its operations but also ensures a higher standard of service reliability and customer satisfaction. BluSmart’s growth trajectory and strategic initiatives reflect a robust response to the increasing demand for sustainable and eco-friendly urban transportation solutions.

HGH India to Showcase 2,500 Innovative Products

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September 24, 2024

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HGH India to Showcase 2,500 Innovative Products

HGH India, the premier bi-annual trade show dedicated to home textiles, décor, furniture, houseware, and gifts, is set to launch its 15th edition from July 2 to July 5, 2024, at the Bombay Exhibition Center in Mumbai. Over the past decade, HGH India has emerged as a vital platform connecting both Indian and international home product brands with the domestic market, enabling a robust exchange of ideas and products.

This year’s event is expected to be expansive, covering a massive 50,000 square meters across four exhibition halls. Exhibitors will be categorised into key segments, including home textiles and furnishings, home décor, furniture, and houseware and gifts. The trade show aims to provide comprehensive sourcing solutions to a diverse array of attendees, including retailers, distributors, importers, architects, interior designers, and institutional buyers, while highlighting emerging design trends that resonate with modern consumers. Approximately 2,500 innovative products will be showcased by leading brands and manufacturers during this edition. The event will feature around 700 exhibitors from 32 countries, either presenting their products directly or through Indian partners. Notably, new entrants from Germany, Hong Kong, Malaysia, Russia, and Ukraine will debut their collections of furniture, wallpaper, home décor, houseware, and interior accessories.

In addition to international participation, 120 new exhibitors from India will introduce a wide range of offerings, including furnishing fabrics, bed and bath items, decorative accessories, handicrafts, cookware, and gifts. These products reflect a blend of traditional craftsmanship and contemporary design, catering to the evolving tastes of Indian consumers. Special focus areas such as the World of Sleep, Home Furniture, and Smart Kitchen will spotlight trends within specific categories, offering attendees insights into the latest innovations. The World of Sleep section will delve into advancements in sleep technology and bedding solutions, while the Home Furniture segment will showcase contemporary and functional designs. The Smart Kitchen area will feature cutting-edge kitchen technology, catering to the modern homeowner’s needs.

HGH India’s consistent growth underscores its significance in the home improvement sector, serving as a catalyst for innovation and collaboration. By connecting manufacturers and brands with the Indian market, HGH India plays a crucial role in driving industry growth and responding to consumer demands. As the event draws nearer, excitement is palpable among exhibitors and attendees alike, promising another successful edition. This year’s showcase not only reaffirms HGH India’s commitment to fostering connections but also highlights the dynamic and evolving nature of the home improvement industry, paving the way for sustainable practices and innovative solutions.

India’s Retail Real Estate Set for 45M Sq Ft Expansion

Residential

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September 24, 2024

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India’s Retail Real Estate Set for 45M Sq Ft Expansion

India’s retail real estate market is on the cusp of a transformative phase, with a projected 45 million square feet of retail space set to emerge across major metropolitan cities by 2028. According to a detailed report by JLL India, 88 new retail projects are expected to be completed, underscoring the rapidly growing demand for organised retail infrastructure. This upcoming wave of development will take place in key urban hubs like Mumbai, Delhi-NCR, Bengaluru, Hyderabad, Pune, Kolkata, and Chennai, reflecting a significant shift in India’s retail landscape.

This planned 45 million square feet of retail space surpasses the 38 million square feet developed over the past decade, indicating a strong upward trajectory in the sector. JLL India’s analysis shows that the new retail centres will be larger, with the average size increasing by 30% from 391,099 square feet in the previous decade to over 507,341 square feet by 2028. This move towards expansive retail spaces is designed to cater to evolving consumer preferences, integrating shopping, entertainment, dining, and leisure into comprehensive lifestyle destinations.

Delhi-NCR is poised to lead the retail space expansion, capturing 43% of the upcoming projects, while Hyderabad and Chennai are set to follow with 21% and 13%, respectively. The focus on these cities stems from their robust consumer bases and strong retail growth potential, making them prime locations for large-scale developments. This regional expansion reflects a strategic move towards markets with high consumer spending and demand for modern retail environments. Sustainability is also a key consideration in the development of these retail spaces. With the growing emphasis on eco-friendly construction, developers are focusing on green building practices to align with global sustainability goals. From energy-efficient designs to the use of sustainable materials, the upcoming retail spaces are expected to contribute towards a more environmentally responsible real estate market in India.

Additionally, the rising interest from institutional investors is a notable trend in the retail real estate sector. Foreign and domestic investors are increasingly drawn to greenfield and brownfield opportunities within the retail market, recognising the long-term growth potential. JLL India projects that institutional players will own 16% (7.2 million square feet) of the new retail space, highlighting the growing confidence in India’s retail sector. The combination of expanding consumer demand, a strategic focus on key metropolitan markets, and a shift towards sustainability and modernisation points to a vibrant future for India’s retail real estate. As these developments take shape, the country’s retail landscape will be poised for a significant transformation, offering both businesses and consumers new opportunities in high-quality, experience-driven spaces.

Mumbai Leads India’s Co-Working Rental Surge

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September 24, 2024

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Mumbai Leads India's Co-Working Rental Surge

Mumbai has emerged as the leader in India’s co-working rental growth, registering a significant 27% surge since FY20, according to the latest report by Anarock, a top real estate consultancy firm. The city outpaced other flexible workspace hubs such as Gurugram, which saw a 19% rise in the same period. This trend highlights the growing demand for co-working spaces, driven by the evolving needs of businesses and an increasingly flexible workforce.

The report reveals that average monthly rentals per seat in Mumbai’s co-working spaces have jumped from ₹12,500 in FY20 to ₹15,900 in FY24. In comparison, Gurugram saw rentals climb from ₹8,500 to ₹10,100 per seat, reflecting a strong demand for co-working environments. Other key markets like Delhi, Bengaluru, and Noida have also experienced notable rental growth at 18%, 15%, and 14%, respectively, underscoring the nationwide shift towards flexible workspaces.

Co-working spaces have now become a substantial part of the commercial real estate market in India. In the current financial year, co-working accounted for 18% of total office space supply across the top seven cities. Since 2017, nearly 34 million square feet of new co-working spaces have been added to the market. This steady growth reflects the increasing reliance on flexible work models, especially from startups, small and medium enterprises (SMEs), and even large corporations adopting hybrid work models. From a sustainability perspective, co-working spaces represent an environmentally friendly solution. By optimising space usage and reducing the need for large, permanent offices, these spaces contribute to lowering energy consumption and supporting sustainable urban development. The sector’s continued integration of green technologies and shared resources further enhances its sustainability credentials, providing an additional incentive for businesses prioritising environmental goals.

The rise in co-working rentals is propelled by the increasing flexibility that these spaces offer to businesses. Startups and SMEs find co-working spaces particularly appealing due to their cost-effectiveness and scalability. Moreover, the shift towards hybrid working models by larger corporations has further fuelled demand. This trend not only allows businesses to reduce long-term real estate commitments but also fosters a collaborative work environment that boosts productivity and employee well-being. Looking forward, the co-working sector is poised for sustained growth. The integration of cutting-edge technology, focus on collaboration, and commitment to employee wellness are expected to keep driving demand. Mumbai’s lead in rental growth signals the dynamic nature of India’s flexible workspace market, with other cities contributing significantly to this upward trajectory. As the sector evolves, it is likely to play an even more critical role in shaping the future of office leasing across the country.

Indian Real Estate Hits $2.5 Billion Milestone

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September 24, 2024

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Indian Real Estate Hits $2.5 Billion Milestone

Indian real estate investments surged to a record $2.5 billion in the second quarter of 2024, the highest level seen in three years. Major metropolitan areas, particularly Bangalore and Delhi NCR, have emerged as prime hotspots for investment, with a distinct focus on the industrial and warehousing sectors. According to a recent report by Colliers India, a leading real estate consultancy, these segments have captured the lion’s share of capital inflows, marking a notable shift in market dynamics.

The industrial and warehousing segment emerged as the standout performer, accounting for an impressive 61% of the total investment, equating to approximately $1.5 billion. This growth trajectory is largely propelled by the rapid expansion of India’s burgeoning e-commerce sector and a heightened emphasis on domestic manufacturing. High-quality warehouses and logistics facilities are becoming critical to support this boom, making them particularly attractive to investors keen on capitalising on the sector’s potential. Investment momentum saw a significant uptick in Q2 2024, following a more subdued start in the first quarter. The residential real estate segment also posted remarkable growth, with investments increasing by 7.5 times compared to the same period last year. This rise underscores a growing investor confidence in residential properties as secure and profitable investments.

Conversely, the office real estate segment has faced challenges, with investments plummeting by 83% year-over-year. However, the quarter-over-quarter decline was a more moderate 41%, hinting at possible stabilisation and a gradual recovery in the coming months. Foreign investors, primarily from the United States and the UAE, accounted for a significant 81% of these investments. This influx of global capital reflects a burgeoning confidence in the Indian economy and its real estate sector. Colliers India’s report further noted that the residential segment attracted 21% of total institutional inflows, securing a robust presence despite the overall downturn in office investments. The industrial and warehousing segment witnessed an astounding 11-fold increase in investments compared to the previous year, driven by several large transactions indicative of strong demand. Both domestic and global investors are expected to play a pivotal role in consolidating industrial and warehousing properties across India, spurred by the rise of e-commerce and retail consumption, which will likely increase demand for AI-enabled warehouses and micro-fulfilment centres.

Notably, multi-city deals dominated the landscape, constituting 72% of total investment inflows during Q2 2024. Bangalore and Delhi NCR accounted for around 23% of total inflows, primarily driven by foreign investments. In Bangalore, 56% of quarterly inflows were channelled into residential assets, while Delhi NCR experienced a robust 86% year-over-year surge in investment, particularly within the office segment. This boom in real estate investments reflects the evolving landscape of the Indian property market, with industrial and warehousing assets leading the charge. As this sector continues to expand, it is poised to attract further investment, underscoring its essential role in India’s economic development.

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