Good morning, in a nation-level spin to the timeless tiff over real estate, China told Indonesia to stop drilling for oil and natural gas in maritime territory that both countries regard as their own.
There's absolutely no need to go all possessive on things we should share. Like this newsletter, for example. A simple forward brings your friends/colleagues in the know.
Especially when we are unveiling what 2022 has in store for real estate.
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Real Estate Trends For 2022
2020 - Brutal for real estate. Brick and mortar retail, offices and housing were all hit badly.
2021 - Less Brutal - Net store closures have slowed down to a trickle, offices have started to see humans within those walls, demand for housing is up, and hotels, which also saw rock-bottom occupancy levels in 2020, are witnessing a revival.
2022 🔮
🛒 Retail - Deloitte predicts that online spending will well outpace in-store spending next year too.
All of this means that poorly located malls could really struggle in the coming year and retailers may be forced to draw the curtains on store locations that don't see enough foot traffic to justify keeping them open.
However, while lockdowns may have killed quite a few stores, one breed of store that hasn't fallen victim to that trend is the Tier-2-and-below discount shopping centre. Those will continue to thrive as inflation is here to stay for a while.
🏢 Offices - Office leasing will pick up, if Covid doesn't misbehave again. But overall growth in office rentals is still some distance away. The shared economy - co working, student housing - will begin to make a comeback after a messed up 2020-21.
🏗 Warehousing - 2022 would be about sustained demand for warehousing and distribution centre space as retailers expand their online footprint and speed up deliveries.
The rise of e-commerce may be bad for brick-and-mortar retailers and malls, but it's great for industrial investors and REITs.
🏡 Housing - Demand for housing is healthy and going by experts who crunched Q3, 2021 numbers, new home sales as well as launches will continue to grow right through 2022 and beyond.
💽 Data Centres - The pandemic brought in a tide of workers doing their jobs remotely. And while companies are recalling employees back to the office, many will no doubt remain remote in 2022.
As day-to-day data volumes increase and companies grow increasingly tech-savvy, high-capacity data centres will remain in demand.
ABCs Of A Real Estate Investment
Before we begin to unpack some tips on real estate investing, we will try and make this fruitful for you - as in worth your time.
You think a real estate investment is bad in India - Correct. This blurb is not for you. Scroll on. 🍪
You think a real estate investment is worth trying or the idea requires further exploration - Correct Again. Come right in.
Thumb Rule For Beginners
When first entering the real estate investment market, start small.
Tell yourself this every time you are faced with a 'lifetime investment opportunity' brochure - Real estate is expensive, so I have to be sure it’s something I'm comfortable doing.
What's Your Poison?
Narrow down on the type of investment you want to make and prepare accordingly. Are you buying to fix and sell quickly for profit, rent, or hold?
Buying To Fix And Sell Quickly For Profit - If you’re looking to flip (flipping houses, like omelettes, is about buying an older property, refurbishing it and selling it asap for a profit), start small because expenses add up quickly. Stick to revamping features that add value, not expenses for the new buyer.
Returns on Flipping - Generally decent but market and location linked.
Buying To Rent - If your goal is to buy and rent out, be prepared to manage the property. Being a landlord and having tenants is very different from flipping and selling; you must be prepared to deal with issues such as rental market changes, repairs, breakdowns, and crappy tenants.
Returns on Renting - Average.
Buying To Hold - If you plan to buy a secondary home to hold now and sell later, do a thorough due diligence, especially on the location and the kind of people in the community. Bad neighbours can quickly make your investment, un-cashable.
Returns on Holding - Generally high.
India's Growing Data Centre Appetite
A few decades ago, a computer with processing power equivalent to today's average laptop would have required an entire floor of a small building to fit in.
While arguably, that entire floor's computing power can now sit on your wrist, computers have become space hungry again as digital acceleration now needs acres of space - to store and manage data.
Are Data Centres That Big?
Byte this. Yotta Infrastructure - a Hiranandani Group owned company is building a 250MW IT load capacity data centre in Greater Noida, which can cater to all of the region's data needs.
The blessed hard disk (okay, okay, we get it) when fully operational will consist of 6 interconnected data centre buildings across a 20-acre campus.
The Digital World Is Real Estate Hungry
With growing digital adoption and over 800 million smartphones by 2022, every UPI transaction, regional movie, music, videos, and whatnot needs to find a home on the cloud.
In return, the cloud needs more data centres, aka more specialised real estate.
Per a recent report by JLL, India’s data centre market size is expected to grow from 375MW in H1 2020 to 1,078MW by 2025, registering a CAGR of 21%.
Currently, India’s data centre industry is concentrated in four cities–Mumbai, Delhi, Bengaluru, and Chennai, with Mumbai taking top slot in installed capacity.
It's Complicated
With mandatory 24x7 electric supply that could challenge a small town and other factors like weather, flooding, storms, earthquakes, and highly specialised manpower, the data centre laundry list is long, complex and unviable in remote locations as of now.
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🌱
Over centuries, boat loads of folks from Portugal, Spain and Britain came to our shores, lived, loved and left a deep impact on our architecture, food and culture.
And at the heart of this confluence of peoples, is pepper - that famed spice from Kerala that brought the world to our land, and sometimes held nations to ransom.
Oh yeah. Masks and social distancing. 💚
☕ The Crew@Ginger Chai