In-vogue or indisposed?
The 28th edition of the four-day International Interiors, Architecture and Design (INDEX) 2016 - the flagship show of the organisers UBM Index Trade Fairs in Mumbai, integrated on one common platform, internationally-renowned architects, interior designers, builders, project managers, hoteliers, ultra HNIs and fashionistas, to present their in-vogue products and offerings.
“The demand for housing, offices has witnessed a robust growth, but the quality of architecture is rapidly going downhill as the Government, which is the patron, selects tenders offering the lowest prices, which often results in architects being judged by the final result of these tenders,” chief guest and Padma Bhushan Architect Hafeez Contractor said, while lamenting the sad decline of the architecture industry.
“My grouse against the Government is because of the way in which architects are being appointed for the Government jobs – not on financial basis, but tenders – where talent is not highlighted. Despite being caught up in cut-throat competitions we (architects) have maintained our code of conduct. Since Independence, brilliantly-planned architecture and architects have contributed to India’s glory, but now that is slowly disappearing as everything is judged by its price tag,” he told Millennium Post, adding, that the solution lay in “attracting talented competition while ensuring that the fees commensurate with it.”
Erdal Sabri ERGEN, Consul General, Consulate General of Turkey said that the Indian middle class and upper class today were demanding ‘high quality works’ and Turkish architects sought to highlight their skills here in this regard.
Yogesh Mudras, Managing Director, UBM India said, “The luxury market has seen a growth of CAGR 25% over the last couple of years and has the potential to grow from $18.5 billion currently to $50 billion by 2020. A rising middle class, brand awareness amongst the youth and purchasing power of the upper class in Tier-II & Tier-III cities are driving the growth in India’s luxury market.”
INDEX witnessed sessions by international and other experts on ‘Social Housing: Inhuman Reality and Human Solutions’, besides an ‘Art Enclave’ displaying signature paintings and sculptures by renowned artists, and a stunning ‘Design Atrium’ by architect Prem Nath.
Meanwhile, realtors urged for tax reliefs and land parcels to meet the “Housing for All” target at the recent NAREDCO Summit in Mumbai, which focused on creating a ‘housing revolution.’ “We support our Prime Minister’s call of Housing for All where over two crore houses need to be built.
However, developers face hurdles in terms of land, environment and other issues by activists who hamper development and create impediments, which contradict the very purpose of affordable housing,” Niranjan Hiranandani,
President NAREDCO West and Managing Director, Hiranandani Group pointed out during the two-day, high-level, Real Estate and Infrastructure Investors’ Summit 2016 organised by NAREDCO in association with APREA-Asia Pacific Real Estate Association, which witnessed intense discussions on attracting more investments – following Governments’ focus on housing and infrastructure being the main plank for development of the country and economy.
Noting that real estate like any other industry has also experienced ups and downs and there was need for doing business based on sound principles, Rajnish Kumar, Managing Director, National Banking Group, State Bank of India, urged for time-bound completion of housing projects to check spiralling costs. “The cost of land, transaction fees are all contributing to high cost of property.
In India, construction time is lengthy compared to the west, due to which finance cost goes up. Hopefully, with recent amendments and new regulatory regime, banks will be willing to pass on the benefits to the home buyer,” he said.
“India has access to REITs and many countries are introducing REIT legislations in their countries. The United States of America took 27 years to get it right, while India took barely 27 months, Peter Verwer, Chief Executive Officer, Asia Pacific Real Estate Association (APREA) said.
Describing real estate as the second-largest employer in the country after agriculture, Gautam Mehra, Leader – Tax and Regulatory, PwC India, said that REITs offered a wide platform for investors to come and invest in and that affordable housing, smart cities and infrastructure development are all linked to REITs.
“India is witnessing tremendous international capital draw with 2016 seeing new investors and LPs seeking opportunities here. However, development firms need to seize the opportunity, build corporate assurance models and gear up to meet the new regulations under RERA and GST,” Amit Goenka, MD & CEO, Nisus Finance & Convenor of the Summit, stated.
The Summit noted that Private Equity (PE) investments from foreign funds in Indian realty sector rose by 33 per cent to Rs 14,974 crore during last year. Housing all citizens by 2022 requires investment of US $ 2 trillion for construction of 9 crore housing units – including the present shortage plus the additional demand for housing by 2022.
The recent passing of the Real Estate (Regulation and Development) Act, 2016 (RERA) is set to boost investor confidence, accentuating more foreign investments into a more transparent realty sector, the Summit concluded, while observing that there has been a surge of demand for non-housing asset classes like commercial and IT/ITES space, warehousing etc and other income producing assets, buoyed by the enabling regulations under REITs.
Indian real estate major JP Infra Pvt Ltd recently signed up with Singapore’s internationally- acclaimed master-planners P&T for developing a ‘one of its kind’ residential landmark project ‘NORTH’ in Mumbai into a master-planned “green” neighbourhood with world-class amenities .
Shubham Jain, Director JP Infra, said, “The project highlights higher durability of concrete to withstand ‘seismic’ shocks. A Solar photovoltaic plant would ensure reduced power charges for life, while five-metre-depth ‘aquifers’ have been identified for water provision through Central Ground Water Board permission – thus reducing ‘water footprint’ – and also “carbon footprint’ by reverting back to nature through recycling zero waste alongside revenue
creation”, he said.
Meanwhile, a Global Cities 2017 report by Knight Frank showed that compared to 2009, cross-border commercial real estate investment has increased more than five-fold to US$ 320 billion in the 12 months to June 2016 (USA to Asia capital flow was US$ 5.4 billion, while Middle East to Asia was US$ 2.5 billion.)
Fast-growing cities are at centre-stage in the innovation economy, and in most of the 34 Global Cities, supply is not keeping pace with demand for both commercial and residential real estate. Consequently, tech and creative firms are increasingly relying upon pre-let deals to accommodate growth, while their young workers struggle to find affordable homes.
The survey of 34 Global Cities showed that the urban economy is increasingly becoming people-centric. Whether a city is driven by finance, aerospace, commodities, defence or manufacturing, the most important asset is a large pool of educated and creative workers. Consequently, real estate is increasingly becoming a business environment that attracts and retains such people.
For the modern office occupier, all the world’s a stage. Three powerful and disruptive forces – slower economic growth, new technology and the war for talent – are forcing occupiers to adjust or extend their footprint.
This is creating robust demand across global real estate markets. The hi-tech challenge has brought exposure to the third disruptive force – the need to attract and retain talent in a global labour market. In the USA, the Council of Advisors on Science and technology predicted a shortfall of one million technical professionals by 2020.
Globe-wise, Toronto – one of North America’s major economic centres and hub of Canadian financial industry with six million inhabitants - is continuing its largest and most-rapid expansion in over 175 years, and has the most skyscrapers under construction among the 26 major global cities included in PwC’s Cities of Opportunity report.
With 40% of Canada’s business headquarters, a fifth of its GDP and 45% of Ontario’s GDP, Toronto is currently ranked fourth in the world in terms of global competitiveness, and as the 10th most influential financial centre. Toronto has shown that a diverse workforce (in terms of ethnic origin, educational background and skillset) effectively incorporated into the cultural fabric can be tremendously powerful.
The challenging realities of disruption are driving increased levels of occupier mobility as a new geography of occupancy emerges – one dominated by the Global Cities. The fragmentation of business processes has led to the rapid rise of ‘shoring’, whereby functions have been relocated to locations that have clear labour or cost advantages.
Delhi is poised to benefit from opportunities across the logistics value chain, fuelled by a renewed focus on infrastructure development and the e-commerce boom.
The logistics sector’s ‘storage’ sector has recently garnered attention from developers and private equity investors in the National Capital region (NCR) of Delhi. Currently, NCR’s total stock of warehousing space is estimated to be 223 million sq. ft, of which over 80% (180 million sq ft) is with the manufacturing sector and food processing, auto, chemical and pharmaceutical sectors account for 70% of total warehousing space occupation in the region.
Mumbai, with unprecedented investment committed to its infrastructure development, shows no signs of its growth slowing down.
Its upcoming US$ 2.6 billion Mumbai TransHarbour Link (MTHL) is a 22-kms, six-lane sea bridge connecting Mumbai to its satellite city Navi Mumbai, and will link a residential market costing US$ 443 per.sq.ft to another at US$ 52 psf. Similarly, the upcoming 36-kms Coastal Road – running along the city’s coastline – will be a first of its kind controlled access highway providing high speed connectivity between the north-south corridors of the city. Both projects are scheduled for completion by 2019.
Bengaluru – touted to be the IT hub of India - has emerged as one of the most attractive destinations for multinational companies looking to set up innovation centres and tap technology talent, alongside its thriving tech start-up scene.
Over the past few years, many Fortune-500 giants have set up camp in Bengaluru, while the companies setting up innovation centres here include; Airbus BizLab, Visa, Lowe’s.
Real estate needs to meet the demands of growing number of people travelling for business and pleasure with a range of hotel product to suit all budgets and durations (from basic single night business hotels to longer stay apart-hotels). IATA forecast suggests global passenger numbers will increase by around 5% p.a. for the next five years, and the hotel sector in gateway cities should continue to benefit from this increase bin travelers.