Month: August 2023

With online shopping booming and e-commerce platforms continuing to gather momentum, the warehousing sector keeps growing all the time. As the Indian consumer becomes used to doorstep deliveries for their entire shopping list, from consumer durables to garments to books and music, a failproof supply chain and a robust warehousing backbone with efficient logistics have become absolute necessities.

Under the circumstances, realty experts predict that the warehousing market will grow at a CAGR of over 15% between now and 2027. This is based on the assumption that the Indian e-commerce segment will become a $120-billion behemoth in the next three years. This scenario presents a unique opportunity to invest in the warehousing segment of commercial real estate, both for the individual and institutions.

What are the tailwinds in favour of investment in warehousing?

# Spurt in spending: Rapid urbanization and an ever-expanding middle class have combined to drive consumer spending up and up in recent times, with the main beneficiaries being e-commerce, FMCG and the retail segment. This in turn is fuelling the demand for more warehousing space and infrastructure through the length and breadth of the country.

# Migration to cities: As more and more Indians migrate to cities, the urban consumer base keeps swelling, leading to rising traffic on e-commerce platforms. This shifting dynamic means real estate developers are scrambling for more warehousing space to cater to last-mile connectivity in the vast online retail ecosystem.

# Govt catalyses growth: The authorities have been proactive and taken a clutch of initiatives to promote growth in the warehousing sector by improving ease of doing business. Another shot in the arm for the industry and potential investors has been allowing direct FDI in logistics.

What are the headwinds one should be mindful of?

# Knotty regulations: The regulatory mechanism in our country is extremely convoluted and stipulations can change virtually overnight. This makes it doubly difficult to grasp the full picture pertaining to taxation, labour laws, environmental riders and FDI policies, all of which are crucial to making an informed decision on warehousing investment.

# Acquiring land: Getting hold of the requisite landbank for your warehouse development can be a real tricky proposition here, thanks to a plethora of issues like fragmented holdings, lack of reliable titles, ownership wrangles, etc which could potentially throw a spanner in the works. Hence, before taking the plunge, it is advisable to appoint a reliable lawyer and carry out proper due diligence and verify deeds to avoid needless legal hassles later.

# Crowded space: As more and more potential investors, both domestic and international, enter the market, the competition hots up and the marketplace becomes crowded. In such a highly competitive business scenario, what can give you an edge over the competition is a combination of killer location, hi-tech and customized solutions and walking the extra mile in terms of services.

# Poor infrastructure: The warehousing sector in India is still plagued by inadequate infrastructure in many places, including poor transportation network and last-mile delivery bandwidth. Such challenges can be mitigated by investing in a location with good connectivity to principal transportation channels and the most prominent consumer markets.

To sum up

In the warehousing business, you can either lease out existing warehouses in key locations to third-party operators, or you can develop warehouses from the ground up, customizing facilities and features according to the requirements of the tenant/s. While returns on investment in warehouses would be tied to location, size, construction cost, lease/sale price, etc, rental income in the segment normally varies between 7 and 10%.

A housing cooperative is a membership-based legally registered cooperative or corporation owning real estate comprising one or multiple residential buildings. Based on the core values of self-help, self-responsibility, democracy, equality, equity and solidarity, such societies operate under the auspices of the cooperative legal framework existing at the regional or national level.

One can become a member of such a housing cooperative by buying shares which entitles him to occupying a dwelling unit in the society, an apartment or a bungalow/row house, depending on the format. The spirit of the cooperative society model is an amalgam of voluntary management, shared expenses and community living.

Advantages of living in a cooperative housing society:

# Affordable: Properties in such societies are more affordable than standalone units.

# A fair deal: Since profit-making is not at the core of this model, you usually get a fair deal.

# Safe and secure: Gaining membership into such cooperative housing societies involves painstaking due diligence and hence, unwanted elements are automatically weeded out.

# A tax asset: You are able to deduct your share of property tax/mortgage paid by the society, resulting in substantial tax savings.

# Have a say: Your voice counts in every single decision taken during the creation of the housing cooperative, from design and planning to maintenance charges, etc.

# No meddling: As a member of the society, you don’t face any intervention from the outside and can keep enjoying the security and benefits that come with the membership.

# Community living: You enjoy the benefits and pleasures of community living with an inbuilt social fabric and the bonhomie and support that come with it.

# Efficient maintenance: Aspects of upkeep and preventive maintenance as well as specific owner needs are efficiently met through the cooperative model of voluntary management.

# Reliable: Thanks to the unique legal locus standi of the society, this is a safe and reliable format and has the resilience to sustain itself, making it a great investment as well as dwelling option.

Key principles of a housing society: # Membership is open to all individuals sharing common interests.

# It is a voluntary organization working under the concept of self-help and self-reliance.

# Office-bearers are democratically chosen.

# Legal entities registered under the Cooperative Societies Act.

# Equal contribution in all affairs of the society, from maintenance to capital expenditure.

# Training for members on the benefits of community living and legal compliance.

# A housing society is a welfare model with all members having each other’s backs.

Objectives of housing societies

# Basic necessities like water and power are provided to members.

# The member doesn’t have to worry about maintenance of the property.

# Members can avail loans from the cooperative society for house-building or renovation/expansion.

# The society acquires land, builds the dwelling units and distributes those among members.

# Through mutual cooperation, a healthy-living ecosystem is created.