2018-19: Key Trends Defining the Future of Organized Real Estate in India

By Ashish Bhutani, CEO, Bhutani Group

Aligning fast with the changing market dynamics, the retail real estate sector in India has shown tremendous resilience in the recent past. There is no second thought that malls and organized retail spaces are a symbol of India’s great consumerism story. The concept of shopping malls in India started sometime back in early 2000 and since then it is a learning experience for all the stakeholders, right from developers and retailers to shoppers.

Today, we are in a completely different world. Developing a shopping mall is no more a fancy work, it is all about systematic planning, researching and strategizing. The future of retail real estate is going to be shaped up by certain trends that are clearly visible in the market now. Here are the major ones.

Survival of the fittest

In the period between 2005 and 2015, we saw a large number of retail real estate projects coming up in metros and some select Tier-II cities in India. However, only a few of them got successful. Many of them suffered high vacancy rates and low footfall. Why? If we refer to a research study done by JLL, it clearly shows that while the A-grade malls had an average vacancy rate at 8%, the average and poor grade malls registered 17% and 39% respectively.

This simply proves that quality is the single largest success factor for any mall. And quality is not just about construction and design but other aspects that include accessibility, location, parking and other facilities provided to the visitors.

It is also noticed that if the above factors are met, malls even if they co-exist within a short radius can experience success. The Great India Place, Garden Galleria and Mall of India in Noida are a case in point here.

Focus on Consumer Experience (CX)

Developers and retailers have to factor-in the point that malls are not just shopping destinations; they are the modern hang-out zones for families and youngsters alike. Therefore having a good tenant mix is crucial here. As visitors are increasingly looking for experiences and not just merchandize, there needs to be an exquisite mix of supermarkets, grocery stores, apparel shops and other regular retail points with entertainment zones with great food, music, cinema, 3D-7D shows to name a few.

The malls which organize live events consistently stand a better chance to gain more footfalls than others. For that matter, thematic malls are also well-placed to get better footfalls.

The rise of e-Commerce

The growing popularity of e-commerce portals is already giving physical retail stores a run for their money. The war is going to intensify with the global retail bellwethers like Walmart aggressively entering the e-commerce market in India through acquisition of Flipkart. The retail stores have to prepare well to meet the challenge.

If we notice the profile and buying behavior of consumers today, it is apparent that they are upwardly mobile, tech-savvy and impatient to a great extent. They won’t like to be a part of long billing queues which have become normal at popular grocery supermarket chain stores and will resort to online buying as soon as they get better pricing and conveniences.

For the retail stores, it will again come back to ‘CX’. People will buy from them due to the experience they won’t get in online buying. That means, the in-store experience will need to be enhanced with great ambience, better displays and faster check-outs. Technology will play a key role in ensuring that people prefer to buy from stores and enjoy their shopping.

Author’s Profile: Ashish Bhutani

Ashish is a young and dynamic corporate leader spearheading the Bhutani Group’s success story. Having completed MBA from the University of Cardiff, UK and graduation from University of Sheffield, UK, he brings a global outlook towards commercial real estate development in India. He has travelled extensively across the world and is applying all of his know-how on global best practices in his projects.

Ashish is a thorough management professional who believes in fulfilling commitments to his company’s clients, partners and employees. Under his leadership, the Group is achieving tremendous success and their flagship project Alphathum has been sold by more than 90% in a short span of 3 years, making it the fastest selling commercial real estate project in India today. The project is under full-swing in sector 137 Noida.

He is not only a corporate captain focused on project conceptualization and delivery, but also a thought leader who contributes to various social causes, from rural development and healthcare to education. He firmly believes that all the children in our country as well as the entire world should be empowered with quality education so that they can make a difference in their own lives and to their families and the society at large.

For more information, visit: http://www.bhutanigroup.com/

 

Check 5 points before invest in commercial real estate

Want to invest in commercial real estate may not be as difficult as it appears if some of the important aspects are taken care of. There is a possibility of earning more than debt instruments if the principles of long-term investments are followed.

Points which every aspiring investor to invest in commercial real estate should factor-in before making the big decision.

 

  • Location & Connectivity

Looking for locations with less than five per cent vacancy can help keep supply dynamics in check. That shows that there is no excess supply and that the property will have a higher chance of buying and renting. The limited level of supply would automatically lead to capital appreciation and higher rents – the two prime sources of generating revenues from commercial property investing.

 

  • Background check of the Developer

Before investing in any real estate project, an investor should always check the background of the developer. Make sure that the developer has built projects in the past successfully and try to visit those projects. That will give you an insight of his experience and expertise.

 

  • Quality check

Much like what is seen fetches the most customers, the buildings that are spoken of as better with quality services and rents will be rented first. The investor stands to gain in terms of faster capital appreciation, better tenant retention and higher rents. Buildings with LEED gold or platinum ratings, more elevators, higher ceiling heights, better views and nicer looking lobbies have more rental value. One can look for multinational tenants who look for quality and are even ready to pay premium for that. It is also good to keep in mind that such properties are more liquid and quickly saleable.

 

  • Analysing demand versus supply dynamics

Investor needs to analyse the area before deciding to invest in commercial real estate property. Every city has its own micro-market such as Mumbai has BKC, Parel and Nariman Point while Bengaluru has Electronic City, ORR and Whitefield. Each of these has their own stock and upcoming supply. If the annual supply over the next couple of years exceeds the previous demand, then the rents would come down. The higher supply would affect both old and new buildings. While tenants in the old buildings will renegotiate rents and clauses, the new buildings will have lower rents.

 

  • Diversification of investment

Having a diversified portfolio of investments reduces risks. Investors should be mindful of locking all their savings into one property that may stop yielding rental revenue once a tenant vacates. If your corpus allows, diversify your investments across different properties so that even if one of your assets do not generate desired returns, you have other properties to make up for it.

 

These above points help you out in invest in commercial real estate easily.

points-before-invest-in-commercial-real-estate

Author’s Profile: Ashish Bhutani

Ashish is a young and dynamic corporate leader spearheading the Bhutani Group’s success story. Having completed MBA from the University of Cardiff, UK and graduation from University of Sheffield, UK, he brings a global outlook towards commercial real estate development in India. He has travelled extensively across the world and is applying all of his know-how on global best practices in his projects.

Ashish is a thorough management professional who believes in fulfilling commitments to his company’s clients, partners and employees. Under his leadership, the Group is achieving tremendous success and their flagship project Alphathum has been sold by more than 90% in a short span of 2 years, making it the fastest selling commercial real estate project in India today. The project is under full-swing in Sector 90, Noida.

He is not only a corporate captain focused on project conceptualization and delivery, but also a thought leader who contributes to various social causes, from rural development and healthcare to education. He firmly believes that all the children in our country as well as the entire world should be empowered with quality education so that they can make a difference in their own lives and to their families and the society at large.

For more information, visit: http://www.bhutanigroup.com/

 

Why India needs more green buildings?

By Ashish Bhutani, CEO,Bhutani Group

With urbanization enveloping India, the growth of the commercial real estate projects is bound to be dogged by higher energy demands, sooner than later.

Given the fact that buildings avail about 40% of the energy consumption reported worldwide, commercial real estate projects developers have now shifted the focus to developing and designing real estate that incorporates energy-efficient features that reduce power consumption. Sustainable practices for energy consumption is the driving force behind this trend in the real estate projects.

Energy-efficient real estate property does not come at a cheap price. It requires higher capital investment initially and that is why most companies avoid it. However, in the long run, there are tremendous benefits in terms of operational costs, energy saving and environment.

The Energy and Resources Institute (TERI) has reported that the cost of erecting a ‘green –building’ can be recovered within 2-3 years.

As opposed to this, the buildings which fail to conserve energy are bound to increase operation costs. The cost-benefit ratio works better in case of projects under development, as compared to a developed building which is being retro-fitted with energy-efficiency means.

Generally buildings rely on multiple systems for lighting, heating and other functions that consume huge amounts of electricity whereas green buildings smartly interlink these services to reduce operational costs and energy consumption.

Energy is conserved with the help of simple design plans that optimize use of natural lighting. This includes strategically placed sunshades, size and location of doors and windows, etc. Ventilation and space-conditioning helps in regulating the temperature within the premises, preventing over-heating and over-cooling especially during peak summer and winter seasons. Thus minimising the use of energy to a great extent.

The architecture of the building may also be planned in such a way that it is not directly under the influence of the Sun during summers, and even traps heat in winter! It is estimated that such green building practices could result in as much as 30% savings for the consumers.

Energy-efficient buildings all have a common feature of having a compact structural blueprint. This principle is followed in its surface area to volume ratio. The lesser the value of the ratio, the lesser the heat conduction. Green buildings are ideal for locations that have a perennial hot and dry weather for the major part.

However, the practice of erecting any commercial real estate projects as a green building, is not as mainstream in the Indian market. Even as of now, majority of the real estate property coming up are not green buildings, and only about 1% of India’s current real estate footprint, can be labelled as Eco-friendly.

The rating systems such as Indian Green Building Council or IGBC, and Green Rating for Integrated Habitat Assessment or GRIHA are there to evaluate the energy-efficiency of buildings, and these organisations are doing a great job in promoting environment-friendly practices in the country.

However, the primary reason behind low traction in building Eco-friendly buildings is that developers do not yet see any monetary gain from building a real estate projects as per green compliance norms. The additional attribute of having to invest capital in constructing a building as per energy conservation norms does not provide real estate developers the incentive to contribute to the large-scale adoption of energy-efficiency in the construction industry. This scenario calls for policies that incentivize incorporation of Eco-friendly practices in the projects.

Eco-friendly commercial real estate projects by bhutani group

Author’s Profile: Ashish Bhutani

Ashish is a young and dynamic corporate leader spearheading the Bhutani Group’s success story. Having completed MBA from the University of Cardiff, UK and graduation from University of Sheffield, UK, he brings a global outlook towards commercial real estate development in India. He has travelled extensively across the world and is applying all of his know-how on global best practices in his projects.

Ashish is a thorough management professional who believes in fulfilling commitments to his company’s clients, partners and employees.

Under his leadership, the Group is achieving tremendous success and their flagship project Alphathum has been sold by more than 90% in a short span of 2 years, making it the fastest selling commercial real estate projects in India today. The project is under full-swing in Sector 90, Noida.

He is not only a corporate captain focused on project conceptualisation and delivery, but also a thought leader who contributes to various social causes, from rural development and healthcare to education. He firmly believes that all the children in our country as well as the entire world should be empowered with quality education so that they can make a difference in their own lives and to their families and the society at large.

For more information, Visit : http://www.bhutanigroup.com/