Month: April 2022

Affordable housing comprises dwelling units which are affordable to those earning wages below the average household income or the median income as quantified by the national or state government or any other appropriate housing affordability index. In our country, affordable housing stocks are set aside for low-income, middle-income and economically weaker sections with extremely low income levels.

The concept of affordable housing is absolutely critical for developing countries like India where buying a house remains a pipe dream for most people who struggle every day simply to make ends meet and can’t think of acquiring their own property at prevailing market prices. Affordable housing policies should be differently oriented to cater to urban and rural areas, considering that the main constraint in urban areas is land.

The government’s role.
While determining affordability, one of the critical factors considered is disposable income, which squarely shifts the onus of providing affordable housing to those who need it, to the government, given our average per capita income. The silver lining is that the Central government has woken up to this burning need and has taken several measures to boost the stocks of affordable dwelling units across the country, including taking private real estate developers on board and working out PPP models.

The Affordable Housing Scheme was rolled out in June 2015, which makes affordable housing units eligible for substantially lower GST, thus lessening the burden on the buyer considerably. The parameters for qualifying as an affordable housing unit in metro cities like Delhi NCR, Mumbai, Kolkata, Bengaluru, Chennai, Hyderabad, etc are a price of or below INR 45 lakh and carpet area of or less than 60 sq m. In non-metro cities, the ceilings are INR 45 lakh and 90 sq m, respectively.

The growing economy in India has triggered a higher demand for better housing facilities, leading to a mismatch between demand and supply of dwelling units, more so in the affordable segment. A report by the Technical Group on Estimation of Urban Housing Shortage in 2012 highlighted the massive demand-supply chasm in both urban and rural segments. The report pegged the contribution of the two low-income categories – the EWS and LIG – to the total housing shortage at a whopping 96%.
Given the rapid pace of urbanization, Pioneer Property Management estimates that more than 40% of India’s population will live in cities by the end of this decade.

The Planning Commission calculates affordable housing needs by putting together:
# Number of households over existing housing stock
# Number of families residing in “unacceptable” dwelling units
# Families living in “unacceptable social conditions” due to congestion
# Number of homeless families

Government initiatives for affordable housing:
The government has introduced a clutch of measures to address the needs of affordable housing, including:
# National Urban Housing and Habitat Policy (NUHHP), 2007
# Pradhan Mantri Awas Yojana or PMAY (Urban), 2015
# Pradhan Mantri Awas Yojana or PMAY (Rural), 2016
# GST on affordable housing whittled down from 8% to 1%
# To combat the impact of Covid-related reverse migration, the Affordable Rental Housing Complex (ARHC) was created under PMAY (U) to provide rental housing at affordable rates at work sites

Sops for real estate developers:
A number of steps have been taken to encourage private developers to enter the affordable housing segment, like
# Subsidies, tax benefits and institutional funding
# Creation of a dedicated Affordable Housing Fund (AHF) in the National Housing Bank
# Exemption of IT levy on notional rent on a second self-occupied house
# TDS threshold on rent increased to INR 2,40,000

What has been the impact of affordable housing on our economy?
# Employment generated for over 6 crore workers across several sectors, upstream and downstream
# Massive boost for steel and cement industries
# Demand surge across ancillary sectors including furniture, transport, iron & steel, electrical, paints, plumbing equipment, etc

The use of technology to speed up building construction has been in vogue for quite some time. However, Covid-19 has hugely accelerated application of latest technology and innovations or ‘contech’ as developers scamper to mitigate the impact of the pandemic. A big trigger towards this sharp tilt towards new tech is the need to cut the delay and deliver projects hitherto frozen by the pandemic.

Hence, virtual walkthroughs, digitalization, 3D printing, artificial intelligence, drone tech and the like have become the construction industry buzzwords of late. Covid had left a raging scar and throttled real estate construction severely. By turning to new tech, developers are able to optimize workforce efficiency, improve quality while speeding up construction with a reduced carbon footprint, even as the real estate industry tries desperately to stay on course to touch the magical $1 trillion figure by 2030.

HERE ARE SOME OF THE NEW TECHNOLOGIES IN CURRENCY NOW:
Digitalization
Digitalization is fast becoming basic hygiene, with both developers and home-seekers able to access a vast ocean of information online. From virtual or video tours of properties to online transactions, the digital platform is offering buyers and sellers a host of handy options, including analyzing new data and digitizing old ones so that anyone can view it in real time.

Aluminium foamwork construction technology
Also referred to as aluminium shuttering, this technology has transformed the real estate construction sector. Using aluminum instead of wood as the mould where the concrete is poured, this technology is swift, cost-effective and very apt for repetitive applications, particularly in large-format residential projects. As against the conventional method, which would take 3 weeks to achieve a slab cycle, using aluminium technology can get that work done in 8 days flat.

Virtual reality & 3D mapping
This expertise which uses computer simulation and drone technology, can create life-like digital walkthrough experiences for the prospective customers so that they can visit and evaluate properties online, sitting at home. Merging images and videos of the project by using 3D mapping technology, it creates a digital space that is as real as the actual property. This is also a real boon for investors who can preview the entire architectural layout of a property and make an informed decision before they reach out for their cheque books.

Prefabricated construction
Constructing components offsite was fast becoming a trend even before Covid struck. Post-pandemic, this trend has only become more pronounced. This process is not only swifter, it guarantees better and uniform quality and is more stable and sturdier vis-à-vis conventional on-site construction. Besides, prefab can be done in large factories, thus ensuring better social distancing and use of precision equipment and components to achieve a better result and cut labour costs.

Building information modeling
BIM is the new buzzword in Contech, providing developers and investors a bird’s-eye-view of the project through the use of 3D computer-generated models of the structure, to which the estimated cost and timelines are added to get the entire picture. So the architecture team can actually delineate with a great degree of accuracy the actual image of the project as it will look after completion.

Building management systems
BMS has become a very critical tool particularly post-pandemic, as data scientists work 24×7 to cull out information from sources like building management systems, swipe cards, feedback of the occupiers, etc so that they can ensure optimization of space and more sustainable and healthier models of commercial real estate, keeping in mind the now-omnipresent needs of touch-less technology and sensors to monitor pollution, programmed cleaning modules, etc.

Artificial intelligence
Artificial intelligence or AI, like in so many other domains in our lives, is now much sought-after by the construction sector as well. Now widely practiced among the developers’ fraternity, AI models can help determine critically important factors like project-completion timelines, probable budgets, risk factors, etc, which is a huge aid for the builders’ community, arming them with the most relevant information they need. Automated construction or drones flown via remote control are all examples of AI.

3D printing
Just like prefab casting, 3D printed materials, which are already a craze in the developed countries, are soon going to be used a lot in the Indian construction sector, particularly where precision finishing is critical. This tech is a massive boon in terms of timeline management and fast replication.

The pandemic has taken a heavy toll on the commercial real estate sector in general over the past 2 years. However, one sole segment, the warehousing market, has not only held its own, but seen burgeoning demand, powered by the e-commerce sector and third-party logistics growth.

In fact, recent data from Pioneer Property shows that annual warehousing transactions across eight major cities in India (Mumbai, Delhi NCR, Bengaluru, Pune, Kolkata, Hyderabad, Chennai and Ahmedabad) are expected to grow at a CAGR of 21% to 78 million sq ft over the next five years. Market watchers predict speed and technology will be key for occupiers, even as e-commerce is set to drive growth in this segment, jacking up its contribution to the cumulative warehousing transactions to 36% in the financial year 2022-23 from 31% in FY 2020-21.

Riding this crest, investors have come flocking in since last year. In the second quarter of last year itself, the Indian warehousing segment has seen an injection of Rs 5,500 crore from investors. Major players like Blackstone have bet big on this segment, pumping in $700 million into a deal with Embassy Industrial Parks. Landmark Capital has also launched its Landmark Warehousing and Logistics Fund, with a target corpus of Rs 500-crore scope. Earlier, Welspun One Logistics Park had introduced another Rs 500-crore alternative investment fund (a privately pooled investment vehicle).

Clearly such blue-chip funds like Landmark and Blackstone have pinned their faith on the Indian warehousing segment to grow big-time, thus infusing a welcome buoyancy in the market. The industry is confident that many more such big-ticket investments are in the pipeline, with Welspun alone hoping to pump in upwards of Rs 2000 crore to create a ballpark leasable area of 7-8 million sq ft by 2025 in high-growth markets like Mumbai, Pune, Bangalore, NCR, Chennai, Kolkata, Lucknow, etc.

Underlining this fresh energy, the Indian warehousing market is slated to grow at 35-40% annually, according to a PwC report. Still, the market, which is highly fragmented, has miles to go before it can close the gap with mature markets like the US, the UK and China. So this new-found confidence shown in Indian warehousing by big investment firms is the propulsion this sector needs to really take off and be counted in the global scenario.

This exponential growth is largely driven by e-commerce and online shopping, which has gained rapid currency during the pandemic, fueling the demand for better supply-chain logistics and storage space. Technology and automation will play a game-changing role in this impending boom, managing every aspect, from inventory management to safety and security to processing orders – the entire warehousing business ecosystem.

A Praxis Global Alliance study predicts e-commerce and retail to catalyze even more propulsive growth in Grade A and Grade B warehouses across India in the period leading up to FY 25, with Tier 2 and 3 cities like Coimbatore, Guwahati, Bhubaneswar, Patna, Ludhiana, Surat, etc also contributing to the momentum, riding on the e-commerce and third-party logistics waves. We expect leasing activities to reach new highs, with warehouse leasing set to break the 120 million sq ft barrier in the next three years.

India’s realty sector is on the cusp of a turnaround, according to market experts. The real estate sector, particularly the residential segment, is already showing signs of “healthy growth” in 2022, according to reports. This buoyancy is vindicated by another report, which says supply in the residential segment jumped 27% between January and September, 2021 when compared to the entire 2020 supply.

This new-found traction has pushed up sales by 5 to 7% and many market watchers feel that new supply and sales quantum could reach pre-pandemic levels this year, marked as the bounce-back year. While interest rates are slated to rise in the second half of the year, prices could go up even further, given the new impetus in the market.

So what are the emerging trends?
The market momentum has surely been driven by cheaper home loans and demand for bigger apartments with a clutch of built-in amenities in gated communities. Much of this new demand is fueled by the WFH (work from home) culture. Young professionals want more space with a touch of sophistication and all the creature comforts they can get to maintain a lifestyle many of them have got used to. An extra room has thus become routine customer preference. Also, the pandemic has taught us the value of community-driven living and the need for safety and peace of mind.

The trend was visible in 2021 itself when there was decent demand in the mid segment (apartments priced between Rs 40 and 80 lakh) and premium units (priced at Rs 80 lakh to 1.5 cr). A consumer survey study has revealed a distinct buyer tilt towards properties north of Rs. 90 lakhs. This uptrend is only expected to get more prominent this year, with a 5% capital value growth” for residential properties projected in calendar 2022.

Increased FDI flow and the comfort and reassurance guaranteed by the RERA have been key contributors to the growth, boosting NRI investments as well. We have also seen the emergence of online buying and selling of homes as a preferred mode in this period, prodding the real estate sector to be agile and adapt to digitization and innovation swiftly. Social media marketing is playing a major role in influencing decision-making, more so among young professionals in the IT/ITeS sector where many companies are on a hiring spree.

Another noteworthy trend emerging is the exponential growth in the demand for warehousing space, as the e-commerce segment continues to scale new heights with game-changing innovations. This sector is projected to grow at a CAGR of 20% in the financial year ’22-’23, with e-commerce contributing a whopping 36% to the total warehousing transaction business. Speed and new tech will play a crucial growth in this warehousing boom.

The pandemic has also underlined the need for flexi workplaces, which could still be a future asset segment. As employers continue to re-strategize workplace dynamics, quite a few co-working players are in the fray, building up inventory, for which they expect takers galore. However, a lot depends on which course the virus takes, going forward, even as we are on the threshold of endemicity, doctors opine. However, Covid has thrown several curve balls at us as soon as we have let our guard down. So perhaps, this is a wait-and-watch segment and the jury is still out.