Good morning, Anglo-Australian miner Rio Tinto's admissions of sexual assault, racism and bullying in an internal report have sparked calls from investors for the entire industry to clean up its act, per Reuters.
And it's not just mining, misconduct with employees in some form is commonplace in the real estate and construction sector too.
Cleansing the sector of this menace requires each one of us to contribute in order to usher in positive change.
📢 Leaders please remember - employees first, customers second.
But before we set out, 😷
2022: Industrial Real Estate Is On A Roll
With a sustained demand from 3PL, e-commerce and manufacturing businesses, industrial and warehousing space absorption increased 35% YoY across Tier-I Indian cities last year.
To match this demand surge, warehousing supply in Tier-I cities also shot up by 64%, per this report.
Fast Forward To 2022
And you will find that many of the forces that drove the economy in 2021 are still in the driver's seat and the long-term upward trend of e-commerce is stronger than ever.
What's Making Industrial Real Estate Hot?
🍕 Ecommerce: Every time you buy a book from Flipkart or fashion from Ajio, the order has to be fulfilled somewhere. So, the more revenue e-commerce companies earn, the more money they pump into new warehouses and fulfillment centres. This means more industrial real estate please.
🍕 Immune To Interest Rate: There's an interest rate hike coming in FY23 and that spells bad news for real estate investors. But analysts believe warehousing is interest-rate-immune. That's because industrial real estate is often purchased by seasoned businesses with solid finances, newer e-commerce businesses, and REITs, all mostly unaffected by a rise in interest rate.
🍕 Moonshot Ventures: There are some explosive growth industries that are looking for industrial real estate, for example, Cryptocurrency. Crypto needs large facilities for growing (mining new coins). While it's true that crypto is getting more eco-friendly, requiring lesser space than it once did, it still needs a lot. That translates into an increasing demand for industrial real estate.
Looking Ahead
In 2021, over 4,200 acres of manufacturing and warehousing land transactions took place in India.
With NHAI’s upcoming warehousing policy and a push towards Multi-Modal Logistics Parks, industrial real estate investors will be spotted chilling in the green.
Hello Tailgater
A Trojan asteroid - now named 2020 XL5 - has been recently discovered riding along in Earth's orbit, per Reuters.
Scratching The Surface: Our reeeaally long-term companion rock is about 1.2 km wide and might remain as a hitchhiker with our planet for at least 4,000 more years while posing no danger.
Are There More? After looking nervously in the rear view mirror, researchers confirmed it is one of only two Trojan asteroids traveling as companions with our planet.
Triple Or Nothing
1️⃣ Sales of virtual real estate in the metaverse exceeded USD500 million in 2021 and could double this year, according to investors and analytics firms.
2️⃣ Yesterday, lending major HDFC reported an increase of 11% in its standalone Q3, FY22 net profit on a year-on-year basis.
3️⃣ Pinterest is introducing a new augmented reality tool for home furniture, which will allow users to see how the items would look in their homes via the company’s mobile app.
The Govt. Spending Route To Real Estate Growth
The real estate sector was expecting direct support for itself in the Union Budget 2022 - you know stuff like infrastructure status, GST revisions, tax breaks et al - but the Finance Minister took the route of government spending instead.
Naturally, yesterday, real estate offices all over the country reported a strange aroma in their coffee cups - the distinct smell of dissatisfaction.
But, But, But. . .
Budget 2022 seems to depend on the strong inter-dependency of real estate with the overall economy. The rise in government capital expenditure by 35% over last year - budget estimates of INR 7.5 lakh crores - is expected to fuel all engines powering the economy.
This increased economic activity will help the real estate sector in particular, by keeping demand for residential, industrial, and commercial real estate high.
Zooming In
Apart from the INR 48,000 crore incentive to affordable housing, Budget 2022 dishes out substantial structural support to the real estate sector.
🏗 The Prime Minister's Gati Shakti and other initiatives to set up multi-modal logistics parks to connect urban transport to railways, will drive significant investments in logistics and warehousing.
🏗 Infrastructure status for data centres will propel the industrial and commercial real estate through increased institutional investments.
🏗 The proposed new legislation around special economic zones (SEZs) should lead to increased capacity creation for industrial and commercial real estate, and with the emergence of more sizable assets, Indian real estate investment trusts (REITs) will scale newer heights.
🏗 The budget also maintained its long-term commitment for supporting creation of smart and sustainable real estate across Tier 2 and 3 cities, by establishing centres of excellence for urban planning.
Zooming Out
Per experts, the theme for real estate in FY23 is in sync with the overall theme of keeping the core of the economy energised with higher government spending.
And no matter how desirable, direct sops to sectors which have been riding a four to five year cycle of structural reforms, is not on today's agenda.
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Across the world and in our own country, many early smart-city projects have not worked out completely as envisioned.
Some experts argue that’s because these projects focused too much on glitzy tech, and not enough on the problems faced by city residents. But now, that could be changing.
Change is welcome. See you tomorrow. 💚
☕ The Crew@Ginger Chai