Knowledge Report by NAREDCO & KPMG launch at 15th National Convention of NAREDCO
Riding on the tech enabled disruptions, the Indian real estate sector is witnessing a significant rise in investments flowing to tech-based real estate start-ups in construction technologies (ConTech); property technologies (PropTech); digital business platforms, and ‘shared economies’ based real estate models. And as conventional sources for real estate capital are increasingly coming under pressure due to slow growth life cycles, alternate modes of financing such as REITs have emerged, offering potential of creating a real estate asset focused substitute financial market. These observations are highlighted in NARECO- KPMG in India’s publication titled ‘Disruptions in real estate in India’. The paper launched today at the 15th National Convention of NAREDCO- Housing for all 2022. “ Real Estate inflection point: Readying for the Future”
Commenting on the disruptions influencing the real estate sector, Chintan Patel, Partner and Leader, Building, Construction and Real Estate, KPMG in Indiasaid, “Disruptions are inevitable and they have arrived in Indian real estate and construction industry. Businesses willing to adopt and adapt to the new trends and technologies will be geared to succeed in capitalising the opportunities emerging from these disruptions.”
Dr. Niranjan Hiranandani, President, NAREDCO said, “”The economic disruptions has transformed the face of Indian real estate progressively leading towards rapid urbanization and age of technological advancement. Adopting neo -tech practices augments output deliverables with enhanced quality, efficiency, compliant friendly and in line with the financial disciplinary. The resurgence of New Digital India is unbound with emerging millennial’s hub discovering opportunities to unleash new asset class and fostering fast track growth globally. As we know that the real estate sector is one of the key economic driver for rising GDP growth and multiplier job creation effect, it’s quick revival is imperative for the growth traction of India”
“The real estate industry is facing unprecedented transformation. These pose challenges and create an opportunity for businesses to take advantage of and get a competitive edge. The sector is steadily switching to newer technologies that are improving market access, competency, quality, timely and assured deliverables and a better consumer experience.” Said Mr. Rajeev Talwar Chairman NAREDCO.
“Emerging disruptions in the Indian real estate sector have led the industry to inflection point where paradigm shifts are emerging in the way real estate businesses operate currently and will shape up in the future. Being the second largest employment generating industry, to revive the real estate sector we need to take some rigid steps in the near future. And I believe that the government is taking steps toward newer technologies and advanced financing mechanism are coming to the forefront needing deeper exploration and adoption to accrue major gains for the real estate industry.” Said Mr. Parveen Jain, Vice Chairman NAREDCO.
Technology enabled disruptions across real estate construction lifecycle:
Adopting technology interventions, embedding technology enabled construction efficiencies and enabling ICT-based infrastructure solutions is redefining stages of the real estate business life cycle across financing, construction, operation and management, marketing, and transaction stages:
- Land acquisition: Drone mapping & Geographical Information Systems in land maps, Blockchain and E-MIS streamlining land records
- Designing: Building Information Modelling (BIM) used in designing efficient buildings, and AR / VR technologies offer better means for collaboration and minimize design & construction related conflicts
- Construction using Lean Principles, Cloud based Project Management tools enabling real time monitoring, data analytics, use of interventions such as internet of things, smart sites technologies etc. is enabling efficient utilization of resources and resulting in time and cost savings
Demand for faster, more efficient and cost-effective construction has resulted in increased usage of innovative construction technologies. Globally, with the rise in construction costs (up to 5.6 per cent in 2018 and 5.5 per cent in Q1 2019), decline in construction workforce (by 12.9 per cent since 2007) and increasing wage bill (31.2 per cent hike on average), real estate developers and construction companies are heavily investing in proven construction technologies bearing potential to solve time, cost and skilling issues. Considering scalable technology solutions is a specialized task, several start-ups have emerged globally in the ConTech space, leveraging on available investor funding to grow and partner with real estate developers and contractors for collaborative construction delivery models. Given the rapidly changing global business environment, leading organizations in real estate and construction space are readily focusing on defining an encompassing digital strategy being driven from the top to drive growth and efficiencies.
Additionally, digital real estate platforms are witnessing increasing market interest from end users and financial investors as e-commerce business platforms evidences positive growth. The global focus has now shifted towards online marketplaces, integration of digital technology, and innovative business models, leading to the emergence of PropTech industry.
Critical success factors for enabling technology adoption in the real estate sector:
- Establish dedicated team for implementing technology innovations ensuring continued use for solving real business problems
- Develop digital and technology adoption strategy for leveraging innovation in achieving strategic business objectives
- Create ecosystem to build relationships and drive strategy for stakeholder buy-in across real estate life cycle
- Transition from business focused to customer-centric approaches driven by digital and tech innovations
- Establish future vision and seek management commitment to drive tech initiatives
- Focus on tactical and strategic business transformations enabled by digital & technology innovations
- Continuously measure implementation outcomes and impacts delivering by use of technology and digital innovations
- Keep abreast with market disruptions and harness tech driven insights to evolve businesses
- Imbibe learning culture for calibrating with emerging market and consumer trends
- Adopt agile and adaptable business model frameworks
Future of Co-working ecosystem in India: With 42 per cent of the Indian population expected to work in urban areas by 2025 and cost economics becoming a critical factor for commercial office real estate investment, the demand for co-working spaces is expected to grow exponentially. The co-working segment however still needs to sort out challenges that arise from its one-model-fits-all and shared space concept. It may see emergence of shared workspace specialists, growing presence of conventional real estate developers through own and operate models and service differentiation driven by customized end user experiences, virtual office set-ups, use of technology (AI, Big Data, Analytics) and effective workplace management solutions.
Future trends in co-living real estate: Similar to co-working in the commercial real estate sector, the rental accommodation real estate has witnessed a major industry disruption due to emergence of co-living real estate business models. Unmet demand for student accommodation and increasing migrant workforce in urban commercial centres are the two core segments driving demand for co-living asset class in India.
Future trends in co-living in India:
- Real estate developers to construct built-to-suit spaces and apartment complexes that will cater exclusively to co-living requirements, primarily around Tier I cities and IT hubs
- Unorganized and conventional rental players partner with incumbent co-living partners
- Existing co-living operators expand to tier II and tier III cities by appropriately customizing the change in requirements
- Global co-living players enter the Indian market, either through franchise model or tie-ups with local operators
Future of REITs in India: REITs/InvITs evolved from a need for alternative investment instruments in the real estate sector. As more real estate developers explore the REIT based financing avenues using diversified asset classes, the instances of REIT listing is expected to rise across the real estate sector. Future of REITs in India:
- Office: Approximately 294 million square feet of office stock eligible for REIT in the near future, USD 35 billion investment required to unlock potential and emerging co-working models witnessing phenomenal expansion
- Logistics and warehousing sector to attract USD 10 billion investment in the next five years, 200 million square feet space to be added and supply to be doubled by 2022 and high traction expected in Tier I and Tier II cities
- Retail: As India sets out to become the third-largest consumer economy by 2025, more than 10 million square-feet of additional retail space to be added in 2019 – nearly 3x that of 2018
- Hospitality: Additional requirement of 32,400 hotel rooms across top seven cities in India and anticipating to receive USD 2.8 billion investment by 2022
- Healthcare: increased healthcare demand, driven by improved health awareness, rise in lifestyle diseases and increasing health insurance coverage via National Health Mission (NHM) programme
Fire mock drill at Pyramid Urban Homes
A fire mock and evacuation drill was conducted for 1 hours at Pyramid Urban Homes Sector 67 Gurugram. The purpose...
Ashiana Prakriti Phase 1 sold out on Day 1
New Delhi, March 20, 2023: Ashiana Housing’s latest project Ashiana Prakriti, Jamshedpur, has sold out its Phase 1 on Day...
Urban Square Mall partners with Sunset Cinema Club for movie screening
Udaipur, March 19, 2023: Urban Square Mall organised a movie screening of Hindi movie, Jab We Met, on March 19,...
Floor property prices to shoot up post Haryana Govt’s decision revoke construction of stilt plus four floors
March 20, 2023: The Haryana Government’s decision to rescind all the fresh and pending stilt plus four-storey building plan approvals...
OKAS launches 2nd fund to invest in Indian realty
Delhi, March 20, 2023: Following the success of the firm’s first fund, launched in 2018, OKAS, the real estate private...
Rishikesh and Haridwar becoming popular second-home destinations in North India
By: Ankit Kansal (Founder & MD, Axon Developers) Situated in the foothills of the Himalayas and adjacent to river Ganga,...
News4 weeks ago
NAREDCO Mahi to host its 2ND Convention
News3 weeks ago
Phoenix Mills, B Safal launch Palladium
News4 weeks ago
SKA Group’s initiative for better child education on World Social Justice Day
News4 weeks ago
Bengaluru Home Habba to offer savings of up to Rs. 9 lakh for home buyers
News4 weeks ago
Bhumika Group to soon launch Phase II of its Urban Square Mall in Udaipur
News3 weeks ago
House of Hiranandani’s plogging initiative
collects over 100 kg waste from Thane city
News4 weeks ago
BCD Gp-ArisUnitern cross Rs 300 cr of development works in South India
News3 weeks ago
NoBroker expands its Series E round with Google joining other investors