Good morning, exactly one year ago today, the first Covid-19 vaccine started going into arms in the United Kingdom.
Since then, many Covid-19 vaccines have been approved and 55% of the world has received at least one dose.
In other news, we have lost one of our greatest soldiers in a chopper crash along with his beloved wife, and other souls - a tragedy beyond comprehension.
🙏
On To A Better World
General Bipin Rawat was an alumnus of St. Edward's School, Shimla and the National Defence Academy.
Bipin was commissioned on Dec 16, 1978, into the Fifth Battalion of the Eleventh Gorkha Rifles of the Infantry, which was commanded by his father.
He was appointed India's first Chief of Defence Staff on Dec 31, 2019.
🎙 Gen Bipin Rawat was an outstanding soldier. A true patriot, he greatly contributed to modernising our armed forces and security apparatus. His insights and perspectives on strategic matters were exceptional. His passing away has saddened me deeply. Om Shanti. - Prime Minister Modi
USD 188 Bn To Absorb Real Estate Shock
Like India, China is a nation of savers, and the country stashes its money in properties.
A meteoric rise in homeownership over the past 20 years has diverted an enormous share of China’s household wealth—70%—into real estate.
Naturally, when Chinese real estate giants (for example, Evergrande is under $300 billion of debt and unable to service it) fail as badly as they recently have, it threatens the country's economic stability.
Houses Are For Living Only
Per CNN, Beijing had been pretty firm in cracking down on what it saw as excessive borrowing and unruly activity in the property sector.
Xi in 2017 famously announced that "housing is for living and not for speculation" — a statement that has appears to have driven policy in China for years.
While industry watchers have long dreaded that Evergrande's collapse could have ripple effects across the property sector in China, which accounts for as much as 30% of GDP, Beijing does not believe in a bailout package, probably to weed out speculation in real estate.
Economic Stability Package
The People's Bank of China is slashing the reserve requirement ratio for Chinese banks by half a percentage point, starting December 15.
This move, which lessens the amount of money that banks are required to hold in reserve, will make available 1.2 trillion yuan (USD188 billion) for business and household loans.
CRE Trends For 2022
Proverbially, rising tides are supposed to act equally on all vessels but nothing in today's world is truly equal anymore. Why should commercial real estate (CRE) be an exception?
Right off the bat, take the example of warehousing. While demand for offices and retail showrooms did the disappearing act, there's not enough empty warehouses around.
With that as the premise, let's see what 2022 could look like for CRE.
🧨 Warehousing
Demand for warehouse space all along the logistics pipeline drove prices to record heights and vacancies to record lows throughout 2021, thanks to ecommerce majorly. From Flipkart, Ikea to Nykaa, ecommerce majors are driving the growth of distribution facilities.
Manufacturers will also be requiring more space as they look to start keeping more parts in stock on-site or nearby, going from "just in time" to "just in case" inventory practices.
🔥 Multifamily
Just like in industrial real estate, multifamily investors can expect strong demand to support higher rent in most markets - to the tune of 10% according to industry watchers.
🤷♀️ Retail
Brick and mortar retail will continue an uneven roll even in 2022, especially with Omicron rearing its ugly head on the planet.
For landlords, essential brands - grocery, healthcare - will continue to be stable tenants and anchors, and individual entrepreneurs could lease retail spaces that were previously unaffordable to them.
For investors, the structure that REITs/private investment houses typically use will continue to work well for those that have survived the retail apocalypse.
🔥/🧊 Office
Offices shall continue to be a mixed bag - till 2024, per industry veterans. While some companies have started bringing people back to their desks, there's a long way to go for the office, given the continued uncertainty of COVID-19 and the effect of its variants.
The shared economy (coworking, student housing) will begin to recover, increasing overall leasing volume and Tier - II, III cities will see an uptick in office space leasing.
Builders Get More Power In JVs
This is how it all started.
Back in 2018, a builder and a land owner got into a joint venture (JV) agreement in Tamil Nadu, where the landowner was promised 2 flats/apartments out of the 6 that were supposed to built on his land by the builder - fair enough.
As construction commenced and some time passed, the builder decided to construct 8 flats instead of the earlier 6, saying the 2 extra flats would be added once a new building approval was obtained.
The land owner objected to this addition in built up area and filed a case against the builder, probably wanting to increase his share of the profits coming from the sale of 2 extra flats.
Say Hello To TNRERA
Tamil Nadu's RERA panel has just announced that once an absolute power to develop a land has been given to a builder, no objection from the land owner will be entertained if additional construction is done, provided the builder has not stepped beyond his undivided share of land.
Moral Of The Story
⚠ Authorising a builder to develop your land at his 'own discretion' is equal to signing away all rights to object, if additional space is built, subject to FAR/FSI rules applicable.
Probably coming to other states soon, FYI.
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After being in place for more than 50 years, a ban on private companies in Cuba was lifted this year, enabling many to pursue long-held business projects.
📺 Watch this report on emerging Cuban dreams, by Reuters.
We sign off with that. See you tomorrow. 💚
☕ The Crew@Ginger Chai