Good morning, we are always researching, reading and writing real estate stuff that we think will resonate with all of you.
Though some of our stories, just like the truth, leave us all with more questions than answers, today's blurbs are rock solid in their conclusions. In fact they're rated - Absolute No Brainers.
On another note, if you live in one of Ahmedabad's 2700+ buildings that are yet to receive clearances from the Fire Department, and are reading this, please proactively participate in making your building fire safety compliant.
Readers elsewhere, always a good idea to check the fire readiness of your building. We reckon it shouldn't take more than fifteen minutes this easy Saturday morning.
Speaking of which, Friday is almost here. You're gonna make it! ❤
Large Vessels Only
In FY17, around 2.03 lakh homes were sold across the top seven Indian cities, in which the share of the top eight listed players was 6% and that of leading unlisted players was 11%. The remaining 83% share belonged to the smaller/unorganised players.
Cut to FY21, around 1.58 lakh homes were sold where the share of the top 8 listed developers stood at 22%, leading unlisted players were at an 18% share while smaller/unorganised accounted for the balance 60%.
Smaller Vessels Stay Away
Real estate development is not a function of social status, muscle power or networking. Primarily, it is about having really deep pockets that can see a developer through the ever changing weather without having to always depend on new sales or favours to stay afloat.
While all of that fitted into just one tiny paragraph, thousands of small/unorganised property developers across India are learning it the hard way - by losing it all and exiting the sector. Whatever little hope of revival they carried in their hearts was neutralized by Covaxin.
And experts think that this is just the beginning. They estimate that the market share of top listed developers will increase from 22% in FY21 to 29% by FY24, per a report by ICICI Securities.
Bail, Bail, Bail.
Over the last decade, as large corporates entered the real estate sector, they brought along transparency, better build quality and smoother consumer experiences - core factors that were lacking in the business plan of the smaller developers.
Since today's home buyers hate spending money on antacids and anti-stress medication, they abandoned the smaller builders and instead trusted the large/organised/listed ones with their hard earned money. As smaller players faced a demand crunch, they ran out of banks and NBFCs who could loan them money to continue construction.
The net result? Thousands of builders going kaput with projects midway, leading to a fall in consumer sentiment and trust that the real estate sector will take a long time to recover from.
Fair Weather Ahead
Experts are of the opinion that with healthy balance sheets, access to boat-loads of capital and with many small developers being blown out of the water, the market share of large organised developers is set to grow further in the next two to three years.
With more on time deliveries, better construction quality and the comfort of working with trusted brands, consumer sentiment across top Indian cities could finally be on recovery mode.
Digital All The Way
We recently came across a fairly young startup that wants to change all that with fully digital mortgage workflows.
Digital All The Way?
Yes. Home loans today are complex processes that require tonnes of paperwork, credit checks and a host of other formalities which have not yet been integrated into a seamless digital process.
Until now that is. Easiloan founders felt the need to transform mortgage into a bring hassle-free, all-digital experience, quite like what Indian consumers are used to with other financial products, like personal loans and credit cards.
How Does That Work?
The startup's idea is to rethink the way home loans are processed - by using digital platforms for the documents, KYC, credit learning and writing, and by getting banks to do credit appraisals online.
Their tech aims to brings developers, direct selling agents (DSAs), customers, banks, and NBFCs on a single platform for end-to-end digital processing of home loans. The software also allows customers to compare and choose from shortlisted home loan options based on their profile.
Proof Of Concept?
From what we know, Easiloan has already serviced over 750 successful mortgage sanctions and is working with the country's top banks and housing finance companies to provide these loans for home buyers.
Better Safe Than Sorry
Assume you are a real estate broker who moved into a new town with no corporate offices. After a while, a large FMCG company started scouting for office space in your town. You understood their space requirement and matched it with a fitting commercial property and a local landlord got a tenant for the next few years.
Over a few years, you closed numerous such deals, so now you are sitting on some very crucial and profitable data, from both the demand and supply sides. This would contain information on companies, key decision makers, their space design and the colour of the wallpaper the city head likes behind his chair.
You also have a directory of properties, the deal specifics, local landlord information, upcoming supply and the times when these space leases are due for renewal.
Audi, Here I Come
Hold on to your horse because what if that precious information you possess was stolen? All your power, granted to you by the ownership of that data would come under threat immediately. Heck, that's just about everything your business operates on.
In today's competitive and aggressive marketplace, the loss of that data would mean that in a few months, you'd be thinking twice before booking an Ola.
Moral of the story - In the commercial real estate industry, data can make or break you is CASH!
Data Security and Real Estate
In the modern age, data security is as crucial as personal security.
In the real estate sector, investment decisions have always been and will always be driven by people with information, akin to the data you collected from our imaginary small town.
Today, investors and service providers must effectively utilise gargantuan amounts of data to create and capture value in a complex and competitive marketplace.
Secure access to this key information is the critical pathway to operate at scale with speed and precision. Yet with increasing and expanding use of data assets, there are corresponding data liabilities and increasing cyber threats.
This is the new balance sheet as the real estate business goes digital.
Woah! That Sounds Serious
Yes. Cybersecurity and data protection today are the bedrock for building and protecting enterprise value in the commercial real estate industry. In fact, expertly managing information security risks is now minimally expected of institutional investors and fiduciaries.
The stakes are high and thankfully, this is slowly getting the full attention of industry leaders in India.
- When it comes to Indians and investments, gold and real estate are still the top choices. Here's a small note and a cool infographic on the taxes that apply to short-term and long-term gains from these two asset classes.
- Of the 10,164 buildings that are required to obtain fire NOCs after a thorough inspection by the Ahmedabad Fire & Emergency Services, over 2700 buildings have not received a valid fire NOC yet. Residential buildings are the largest violators, surprisingly.
- Delhi Lieutenant Governor Anil Baijal recently directed setting up of a board of enquiry for hearing and considering all significant objections and suggestions of the public, on the draft Master Plan of Delhi 2041.
- With the real estate market continuing to be scorching hot in many areas of the US, there are discussions of property price latency, akin to the stock market. FYI, latency is the delay between an input into a system and its recognition or display. (Remember typing really fast in Internet Explorer and waiting for the text to appear?)
When a cookie is broken on the plate this way instead of being stuffed into the face whole, one theory suggests that it demonstrates our natural instinct to share.
So let's not mess around with such path breaking research. Share the Chai. All it takes is for you to forward this email to your friends with this note - ‘Check these blokes out. They got swag'.
Have a great day ahead.
☕ The Crew@Ginger Chai