Good morning, as a trend, sustainable investment strategy has been around for years, but between corporate greenwashing, spineless reporting bodies and unreliable data, standards on ESG (environmental, social and corporate governance) remain murky.
But one thing is beyond doubt, though: Interest in ESG is heating up, and the real estate industry has the potential to make strides across all areas of ESG, if the technology to back it is on point.
🏃♀️🥐🍎
Why Borrow When You Can Sell?
Real estate financing has finally become cheaper.
Don't rush to check the new interest rates yet because when we say financing, we mean cash flow required for construction is now increasingly being met by revenue from sales of units in the project itself.
As a result, costly construction finance deals are on their way out. Or so it seems, with reports indicating a dip in these deals in recent times and that is good news overall.
Positive trends worth noting
✅ Expensive debt deals have halved in residential realty in the last two years.
✅ NBFCs have lower liquidity-linked stress levels now according to experts.
✅ Listed and reputed developers are obtaining loans at attractive rates though some still find financing to be a slight challenge.
✅ With stronger sales volumes, developers are shying away from borrowing money at 18-20% and more. They are more amenable towards offering slight discounts to buyers and clearing off inventory instead.
✅ Many are refinancing existing loans at lower rates of interest.
✅ Quarterly sales figures touched 78,627 units between January and March per this report.
Why it matters
The September 2018 IL&FS default is still being talked about over antacids in the NBFC space. Many stopped lending to developers altogether. In came RERA and economic turbulence, leading to capital getting costlier for quite a few years.
However, real estate may finally be out of the woods improving revenue from sales is a much needed silver lining.
Fingers crossed about bypassing another wave, more inflationary troubles and raw material hikes.
200 Realty Projects In Unconstructed Dream Space
In an alarming development of sorts, close to 200 real estate projects remain stuck in limbo in Indore.
Their value?
More than Rs.3,000 crore as per estimates.
Why are they stuck?
Approval and permission delays from RERA and local authorities as per CREDAI Indore.
What it means
• Indore’s realty sector is ironically suffering at a time when demand has gone up significantly in the city.
• Developers are grappling with zero sales and severe losses.
• The State Government is also missing out on massive revenues.
There’s more
CREDAI also highlights 400-450 realty projects held up in Madhya Pradesh overall. Someone appease the RERA Gods please.
CRE Wants More From Real Estate Tech
This report talks about USD32 billion (and counting) for venture funding in proptech last year. There are also talks of commercial real estate and its technological switch.
Agreed, adoption has been on the slower side with E&Y reportedly finding 60% of real estate executives admitting roadblocks, while just 28% of them adopted one or more solutions in 2020, but the real estate sector's intent to make the tech transition is beyond doubt.
What’s happening and could happen
📎 Investors in the segment desire automation, easier process mechanisms and quality data.
📎 Robust tech stacks are the need of the hour for CRE players.
📎 Commercial real estate (CRE) firms may start with automation and CRM (customer relationship management) as their core tech pillars.
📎 CRM could take care of contacts, outreach automation, content generation and document organization.
📎 CRE firms should steadily bring in analytics and data technologies as well, and actionable intelligence should be at the top of the heap, especially if it enables sustainable investment to promote ESG parameters in real estate developments.
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In the US, climbing interest rates are crushing the mortgage market, as only a handful of homeowners can now benefit from a refinance and more potential homebuyers become priced out.
Total mortgage application volume fell another 6% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume was down 41% from the same week one year ago.
More updates tomorrow. 💚
☕ The Crew@Ginger Chai