☕ Occupied

Good morning, to put it simply, demand for hotel rooms is back.

Per ICICI Securities, the Indian hotel industry has broken through the 65% occupancy mark in April this year for the first time since the onset of the Covid pandemic in March 2020. 

Going by industry estimates, occupancies are expected to touch pre-Covid levels of 66% sometime in CY22E/FY23E and reach 70% in CY24E. 

📌 And with demand expected to grow by 15% in FY23E and at 10% CAGR over FY23-26E, it will result in a boost in industry RevPARs (Revenue per available room) from FY24E as demand outpaces supply. 

✊ Hospitality industry folks - hang in there, the good times are just round the corner. You deserve all of what's in store, and more. 

Rahul Mishra and Anuvab Chattopadhyay 

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GLOBAL TRENDS

China's Real Estate Mess Could Drag Down Global Economy

If the words recession and Chinese property market were to ever appear in the same sentence, this is it. 

The big realty mess-up in China is pointing the global economy towards the ICU and we’re talking serious issues here, with household debt nudging USD10 trillion.

What’s even scarier? 27% of Chinese bank loans are linked to real estate. Now imagine if they all turned turtle (or NPAs).

Why the realty slowdown is pinching everyone

Real estate was once China’s biggest employment generator, but these days, it's having its Lehman moment (aka 2008’s Lehman Brothers’ bankruptcy) with unsold inventory surpassing 65 million units. 

In a cruel twist of fate, real estate is now viewed as a national threat in China as prices soar higher than the skyscrapers.

China Evergrande is the most indebted real estate developer in the world and that’s just one chapter from the book called What Women Want. The Government’s taken over HNA Group in the past, but even Beijing does not have bottomless pockets.

Why it hits globally?

A market crash in China could spark massive global unemployment and deflation. It may cripple the financial markets in China, with consequences in the U.S. and elsewhere.

What the experts want

📉 Lower property prices

❎ Lesser dependence on construction for GDP growth

🆕 Creating newer investment channels.

⛔ Lesser speculative housing market activity through Government measures.

Is Beijing listening? Or are we at the crossroads of a Chinese property-driven global outage?

There are thousands of questions but no answers yet. For our sake and mostly theirs, we hope they find those answers soon. 

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xRE ESSENTIALS

Sun Shines On Mumbai Realty

Make hay while the sun shines. The adage seems tailor-made for the Mumbai realty market. 

Why: In a burst of good news, property registrations went up by 78% (YoY), touching 9,523 units for May, 2022. Mumbai City (BMC) saw 5,360 registrations for May. Both secondary and primary market transactions touched good-looking peaks. 

Continued growth story 

📎 While April property registration figures came down by 30% (11,744 units) as compared to 16,726 units for March, they were still the highest in ten years. 

📎 Buyers preferred homes between 500-1000 sq. ft., which accounted for more than 55% of the tally. 

📎 Residential units comprised 85% of registrations in the month. 

What this indicates 

A stable housing market in Mumbai for one. In spite of interest rate and price hikes, raw material increases and other challenges, Mumbai realty has been undeterred in its quest for growth. 

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Infra-Read Thursday

For a change, both animals and humans have welcomed the elevated stretches of highways on the Seoni (Madhya Pradesh)-Nagpur (Maharashtra) sector of the national highway 44 passing through the Pench Tiger Reserve. 

The elevated roads through the forest, built in 2019 at a cost of INR 240 crore also boasts of a 750-m long underpass - believed to be the world’s longest highway underpass built exclusively for wild animals. 

In One Sip: Just water a tiger under the bridge. 

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ENVIRONMENT

Housing And Climate Change: Ignore At Your Own Peril

While hurricanes and thundering typhoons put thousands in disarray every year, a whole other bunch of folks have floods and earthquakes to contend with. 

Put your ears to the ground - what does it mean?

There is a link between climate change and weather-driven disasters that are ravaging coastal housing zones, as rising sea levels are affecting many other areas in myriad ways.

⚠ Look at the US, where more than 13% stay within a 100-year old flood plain. If you think that's a lot, this could be 15.8% and 16.8% by 2050 and 2100. The UNEP has also estimated a 30% increase in wildfires by 2050 with even slight temperature rises.

Funny part is, homebuyers continue to throng these high-risk zones to pay through their noses for properties that could become unliveable within the next two decades.

Why are realty buyers in silent mode?

With a large chunk of properties at risk, buyers need to ask more questions, especially if they plan to settle somewhere. Disclosure levels in the industry are not heartening either.

Home buyers are not enquiring about elevation, flood risks, extreme weather conditions and other vulnerabilities.

🤷‍♀️ And then there are extreme ironies - though California had 5 out of the 6 largest wildfires in state history in 2020, the devastated zones saw home price hikes with overwhelming demand. Climate change needs to be a part of home buying decisions.

And the questions need to flow thick and fast. 

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North by Northeast: Central Govt projects worth INR 1.34 lakh crore are reportedly under execution in Northeast India. 

While investment figures from governments can sometimes be taken with a pinch of salt, visitors returning from different parts of the Northeast corroborate anecdotally, an upsurge in development activity - railways, highways, waterways, power, air traffic, healthcare and broadband. 

On that note, we wrap up today's email. More tomorrow. 💚

☕ The Crew@Ginger Chai

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