Good morning, while chatting with friends and loved ones over the last two days, we often got into the ‘looks like the pandemic is never going to end’ conversation…
/General Motors has been the top-selling automaker in the US in every single year since 1931. But in 2021, Japan’s Toyota dethroned GM as the No. 1 automaker in the country - a trend broken after 90 years./
…but the truth is that nothing lasts forever, and that includes Covid.
In fact, many signs point to the fact that Omicron may be the last big Covid wave after all. Stay positive. 💪
😷↔1 metre↔😷
2021: Housing Gained, Office Lost
The folks at Knight Frank India are done crunching the numbers and thus, real estate's 2021 performance report is out.
The Overall Picture
Home sales across top 8 cities increased by 51% last year when compared to 2020, while the office market continued to decline with gross leasing decreasing by 3% YoY.
When Compared To 'Pre-Pandemic' 2019. . .
In 2021, home sales increased to 2,32,903 units from 1,54,534 units in 2020, but demand was 5% lower than 2019 pre-pandemic levels.
In 2021, gross office leasing fell to 38.1 million sq. ft. from 39.4 million sq. ft. in 2020, and was much lower than the record 60.6 million sq. ft. leased in 2019.
Home Prices Spelled Resilience
YoY change in home prices in 2021:
Chennai - 7% 🔼
Hyderabad - 5% 🔼
Bengaluru - 4% 🔼
Mumbai - 1% 🔼
Delhi NCR - 1% 🔽
Pune, Kolkata and Ahmedabad saw no change in prices.
Please Adopt That Lake First
According to a totally awesome, brand new policy, real estate developers in Hyderabad have to adopt lakes and water bodies that are located within a 500 metre radius from their projects.
Wet, wet, wet: The Hyderabad Metropolitan Region has around 3,100 lakes of various sizes and the authorities want developers to take responsibility of the ones that are located in their communities, and restore them to former glory.
Coolest part: This new lake-adoption policy probably won't need any enforcement because without it, project start permissions will not be given to the developer.
👀 - Folks in Kolkata.
Let's Talk Logistically
The logistics and warehousing sector have had a record run in 2021 when it came to leasing as well as investments.
Experts feel that in 2022, this er, bull run shall continue unabated.
They say the sector will enjoy favourable tailwinds, resulting in an extended cycle of growth — at a CAGR of 9-10%.
This growth will be led by rising demand, coupled with more consumers adopting online shopping.
🛒 Over 130 million shoppers spent USD46 billion online in 2021. By 2025, the number of online shoppers is expected to grow to 300 million and the e-commerce turnover to USD110 billion.
The newer models of e-commerce such as q-commerce (on-demand delivery) will further push up demand for warehousing and logistics real estate.
Pushed Into Creativity By The Pandemic
These days, a heartening sentence with both 'pandemic' and 'retail store' in it is pretty hard to come by. While housing and industrial real estate shone through the lockdowns, retail real estate witnessed its dark moment.
All's Well That Bends Well
Brick-and-mortar stores were already struggling before Covid, with consumers shifting to online stores in hordes, but that trend accelerated in 2020-21 as lockdowns downed shutters and e-commerce sales soared.
The resulting abundance of retail store vacancies taught landlords to be more flexible.
From Panic To Being Creative
In order to continue making money from massive retail real estate investments, flexible landlords are deploying various novel techniques to keep out of the red.
Here are some cool ones:
🎨 Rents and Leases: After the initial pillow fights with retail brands, landlords have started waiving rents or entering into revenue-sharing agreements. To woo new brands, they are reducing rents, offering free rent periods and agreeing to customize spaces. Landlords are also scaling back lease terms.
🎨 Display Space: To bring in whatever revenue, some landlords have given storefront windows over to digital advertising. Now companies are bringing interactive ads for movies, automakers and sneaker brands to empty store windows, and landlords are receiving a percentage of the amount charged to advertisers.
🎨 Pop Up Retail: Some landlords are opening their gates to pop-up* retailers, — luxury brands are using temporary stores to kick off collections, e-commerce companies to introduce themselves, and companies of all types like the opportunity to test out a site.
* Pop-up retail, also known as pop-up store or flash retailing, is a trend of opening short-term sales spaces that last for days to weeks before closing down.
While Short Term Creativity Is In Vogue. . .
. . .But ultimately, most landlords engaging in short-term activations hope to lease out their retail real estate to long-term occupiers.
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Hardware giant Nvidia just announced that a version of its “Omniverse” platform is now open to the public.
Haha. Why worry about the race to build a metaverse when you can simply call it something even more ambitious and zoom right past?
Wonder what virtual land deals will be worth there.
More tomorrow. Stay safe. Stay positive. 💚
☕ The Crew@Ginger Chai