Good morning, Monday is finally here.
There are informative blurbs on infrastructure and proptech to be read below, the office or your home desk has a cup of strong ginger chai to wash away the weekend hangover, and the festive season is now fully underway.
All in all, it's a mighty fine day for a real estate newsletter.
Distress Signal
The most significant fallout of the pandemic in the commercial real estate segment is that properties can’t meet their debt commitments due to lagging, or no rents.
While this is hurting the property owners, it's also presenting a tantalizing opportunity for fearless investors willing to venture into today's messed up landscape.
How Does That Work?
For example, distress real estate investment fund ABC makes an INR 300 crore investment to help a new office tower in Bangalore, where the pandemic has bottomed out the office space market.
Only half of the 200 office units have been sold, so ABC’s money gives the project some breathing room until the markets have improved.
This is when ABC can sell the units back to interested parties at market price, turning a large profit.
Context, Please.
Similarly, a lot of money is flowing into real estate lately, a sector with uncharted post-pandemic prospects. Like Barry Sternlicht’s Starwood Capital, which has raised a new distressed fund with $10 billion of cash, which will enable it to buy office and hotel properties at lower-than-market rates.
While some segments, like warehousing, are stronger than ever, distressed price tags are most likely to appear from properties that have been dislocated as a result of the pandemic, like office buildings and hotels in larger cities.
Are Good Returns Assured?
Distress funds require a high risk appetite and a deep understanding of local markets.
With office space demand uncertain, and hotel rooms lying vacant as business travel is on life support, a wrong investment decision could become an expensive one.
The key to success is staying away from buildings destined to remain empty, a call only the most undaunted can make today.
Gateway Not Found
Spur Of The Moment
The upcoming Jewar Airport in the Greater Noida area is expected to start commercial operations in 2024-25, with the first of its four phases welcoming 12 million passengers annually.
By the end of its entire four phase construction over the next decade, the airport will serve over 70 million passengers and millions of tonnes of cargo each year.
And all of that requires solid road connectivity.
New Roads Coming?
Yes. The Noida administration has recently notified the acquisition of land for a spur road linking the Delhi-Mumbai expressway with its upcoming airport at Jewar.
NHAI reiterated that the spur road has been created under the Bharatmala scheme and is expected to improve freight movement as well.
This link road will also lead to the DND and the Faridabad-Ballabgarh bypass, creating brand new real estate hotspots on each end, while making existing ones even more investment worthy.
The Backstory
Last week, the National Highways Authority of India (NHAI) had asked the district administration to start work on acquiring private land chunks on its behalf.
Around 69.4 hectares will have to be acquired for the spur road and the list of private plots that will be needed to construct the spur road is ready.
Land owners on that list have been given 21 days to file their objections or suggestions.
Zooming In
The total length of this connecting spur road will be 31.2km and it will be elevated to go over the Yamuna.
Land will be acquired across five villages — Dayanatpur, Falauda Bangar, Karauli Bangar and Rampur Bangar.
Half A Cup Extra
- As more and more people go back to the office, the residential property boom may shift to commercial properties next.
- Money, mimicry and mind control: How Big Tech firms are slamming the ethics brakes on Artificial Intelligence (AI).
- McDonald's to start testing McPlant burger in U.S. next month. 🍔
Making Leaving Harder
Technology's sole purpose is to make life easier, more sustainable and perhaps, even more delightful for its users - that's us.
Most property technology today is invested heavily on the easy and sustainable bit, and rightly so.
But new proptech platforms are trying to address delight too, raking in big gains in the process.
Zooming In
The latest bunch of property tech startups are betting that after a year spent locked indoors, residents living on rent can use a little help meeting and mingling with their building neighbours.
These techies are aiming to create hyperlocal social networks designed to connect renters with nearby events, businesses as well as other renters.
Their business mantra? If renters feel connected to where they live, they’ll be less likely to move.
Behind The Seen
Every landlord and renter in a closed digital community is connected by an app, which the landlords pay for - typically a monthly fee per apartment that they own and lease out.
Each property/area then gets a dedicated volunteer “area leader” who organizes events. There’s a newsfeed on the app to post about upcoming stuff and a marketplace to buy and sell goods and services: drumming lessons, for example.
Does It Work?
Data from Venn, one such proptech startup shows that buildings using its platform had reduced tenant turnover by 30% and vacancies by 40% in 2020 — a year when urban to rural migration rattled big cities worldwide.
Going forward, proptech startups in the consumer delighting space reckon expansion of such tech will continue as tenants, craving experience will inevitably turn to such apps to participate and stay back in their community.
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More real estate updates tomorrow.
Have a fruitful day ahead. 💙
☕ The Crew@Ginger Chai