Good morning, and welcome to the first edition of Ginger Chai in 2022.
Before we dive into the business end of the pool, tradition warrants a discussion of those impossible-to-keep, new year resolutions. And today we have smart solutions.
🍏 Atomic Habits author, James Clear says that instead of worrying about the results you want, focus on becoming the type of person who can achieve those results. So if you want to lose 10 kilos, focus on being the kind of person who doesn’t miss workouts.
🍎 An article in the Guardian says that the key to self-improvement is to abandon the concept of “reinvention” and accept yourself the way you are—only once you no longer believe that you must transform into a “New You” are you able to make meaningful changes.
Cheers to the new year. It's a good feeling.
😷↔1 metre↔😷
Institutional Investment Lessens In 2021 YoY
Institutional investment in Indian real estate has been a mixed bag last year, per a new report by Colliers.
🔼 On the upside, capital flows came on a broad-based recovery across most real estate segments, geographies, and Indian realty saw the number of investment deals double, when compared to 2020.
🔽 On the downside, real estate institutional investments in 2021 closed at USD4 billion, a 17% drop when compared to 2020, which had witnessed the closure of some large transactions.
Best Year For Logistics And Residential
With about 50% of the total USD4 billion flowing into the industrial, logistics, and residential sectors, 2021 has been one of the best please-take-my-dollars years for these assets.
The industrial and logistics sectors alone saw investments rise to a five-year high of USD1.1 billion, a 5X increase from 2020.
Offices Still Dominant
The office sector by itself attracted the highest investments at USD1.2 billion - 31% of the total investments in 2021.
Offices have always been the dominant real estate segment but in 2020, offices had commanded 45% of the total USD4.8 billion investments.
Plan Bs Are In Demand
Alternate segments (student housing, co-living, life sciences, data centres) accounted for 11% of the total investments in 2021, up from 8% in 2020, while data centres got the lion's share with 60% of total investments in alternate assets in 2021.
Opportunities Galore...
🎙 "The broad-based recovery signals signs of ebullience amongst investors....niche asset classes such as data centres, student housing and life science will provide a unique opportunity for investors to diversify their investments," opines Vimal Nadar, Colliers India.
Hope You're In The Pink
Here's a historic image of the Hawa Mahal (Palace of Winds), Jaipur, taken in 1905.
The palace is one of the most famous buildings in Jaipur, and was designed by Lalchand Usta and built by Maharaja Sawai Pratap Singh in 1799, as an addition to the existing City Palace.
Like all the buildings in the old walled quarter of the city it was painted pink, the only colour we wish to see you in, health wise.
Things We Are Watching
A ‘Roaring Recovery’: Per market watcher CRISIL, home sales are expected to go up 30-35% to about 190-200 million sq. ft. in fiscal 2022, after declining a 17-22% in fiscal 2021. This means, sales should surpass the pre-Covid-19 levels of 170-180 million sq. ft.
Decongesting New Delhi: In an effort to stop heavy (and more polluting) vehicles from entering NCR city limits, NHAI is working on a solution to move all warehousing and logistics hubs to the peripheral ring roads.
Artificial Intelligence For Everyone: Natural language processing is reaching new audiences, with startups looking to democratize the tech by helping companies build, train, and deploy AI models via open-source tools—and offering pretrained models for download and customization.
As You Sow Shall You REIT
What's A REIT?
REIT, short for a real estate investment trust is an entity that owns, operates or finances income-producing real estate.
REITs provide an investment opportunity, like a mutual fund, that makes it possible for anyone who can invest INR 15 to 20 thousand, to benefit from valuable real estate by owning a fraction of it.
More Yields Than You Imagined
📌 Since their recent Indian debut, REITs have emerged as top investment alternatives, outperforming the BSE Sensex, the Realty Index, and a majority of small, mid and large-cap mutual funds.
Also, REITs seem to be running on stabilisers because despite the pandemic, neither the Embassy Office Parks REIT nor the Mindspace Business Parks REIT ever traded below their issue price.
Even the Brookfield India REIT has recovered exceptionally well in the last six months, per this report.
2022 Outlook
REITs are primarily powered by high rent yielding office buildings and India has approximately 310-320 million sq. ft. of REIT-worthy office space. Of this, around 87 million sq. ft. is owned by REITs today.
As the commercial office market bounces back, new office buildings will be added to REITs, while newer REITs shall be formed to service increasing high-grade office supply across top cities.
📎 In 2021, Blackstone and Brookfield have added about 30 million sq. ft. through acquisition of select portfolios from Prestige and RMZ, respectively.
In One Sip
It's true that REITs offer post-tax returns twice as much as fixed deposits, recurring deposits, government bonds and other classes, but no two REITs are made alike.
🔮 If investing, put your money in a high-quality REIT managed by a reputed brand, say experts.
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We were making a New Year’s resolution to stop procrastinating, but after second thoughts and vehement protests, we decided to postpone it to next New Year’s.
Have a great day ahead. 💚
☕ The Crew@Ginger Chai