Author: admin

Buying your dream home is one of the most critical decisions of your life and for many, a once-in-a-lifetime move. There are many factors to be considered before taking the plunge, one of those being whether to go in for a ready-to-move-in (RTMI) home or invest in an under-construction (UC) property.

A sizeable proportion of home-seekers are nowadays prepared to wait for their dream home even if it is under construction. One of the reasons for this preference is that UC properties in India usually come at a lower cost and has great potential to appreciate. Investors in particular, can reap the benefits of this price differential between a UC and an RTMI property, while also being able to leverage the flexi payment options realtors offer.

There are a clutch of advantages working in favour of UC homes, like the flexibility to choose from a plethora of preferred locations, your favourite floor/level and amenities, etc, which all add up to propel your property value. You can also get your apartment customized to suit your specific needs and ideas, which is difficult and sometimes not possible at all to do in an RTMI home. Besides, with RERA compliance now absolutely mandatory, there are very little chances of construction delay.

So, what are the advantages of investing in a UC property?

# Lower prices: The price differential between an RTMI property and a UC one can vary within a band of 10 to 30% if the location, developer, size, etc are the same. Hence, waiting a few months or a year doesn’t really hurt, with the price gap making the wait worth the while. No wonder more and more house-hunters are opting for UC properties.

# Greater appreciation: The construction stage is always the best time to buy into a property, because of the guaranteed appreciation in valuation. As the project nears completion, the ambient infrastructure also organically improves, thus raising the value of your UC home. RTMI properties usually don’t see such a level of value appreciation.

# Flexi payment options: For an under-construction property, you can only pay a token amount as down payment and the rest across comfortably spaced-out instalments till the construction is completed. However, in the case of a ready property, you won’t have that flexibility and will be asked to fork out the whole amount at one go or within a short interval from the signing of the deal.

# Brand-new home: Investing in a UC property means you can move into a brand-new home once the construction is complete and you get the keys. A shiny new property has its own allure and advantages, as opposed to an RTMI home which could be old construction and hence subject to wear and tear. If you have to invest in and carry out repairs immediately after you have moved into your new home, that sheer joy of owning a brand-new entity is somewhat lost.

# Exciting offers: Developers usually offer a variety of lucrative schemes for UC properties, including layered payment plans, freebies and add-ons. However, once the flat/house is complete and ready to move in, these offers are not on the table, more often than not.

# Secure against delays: Earlier, home buyers deemed it safer to buy an RTMI property to guard against possession delays. Now, with the RERA Act in place, customers are insulated against any time overrun, with clearly spelt-out time penalties in the legislation. Of course, you must check if the developer has a RERA number. Most reputed realtors have this. Customers can approach the RERA-established Appellate Tribunal for a prompt resolution of their grievances.

The demand for office spaces has started moving firmly northwards again. Gross leasing across the leading cities of the country in the second quarter of this year almost touched 13 million sq ft, according to market experts, clearly defying international trends and once again underlining the resilience of India’s commercial real estate sector.

With such high absorption rate, the momentum is expected to sustain itself over the rest of the year as well, and Kolkata has been one of the pace-setters in this surge along with Bengaluru and Pune. While average office rents in the city rose by almost 2.8% year-on-year, the spike in the first six months of this year itself has almost touched double digits.

Combined occupancy at the twin tech hubs of Kolkata – Sector V and Rajarhat – has been holding steady over 80% post-pandemic, figures unheard of in the past decade, say property agents. Such is the bullishness in the commercial real estate segment following a clutch of tech biggies making a beeline for these two hubs that some developers fear demand could soon outstrip supply.

While Infosys and ITC Infotech are both building their new campuses in Rajarhat, they have already taken up interim office space and others like Mindtree, Zensar, Calsoft, ArcelorMittal are all checking in, one after another. This buoyancy has pushed up rentals to above Rs 42 per sq ft for just the shell and to nearly Rs 60 per sq ft for furnished and fitted office space lease, as large floorplates are increasingly hard to come by.

In fact, the near-10% jump in rent for office space in Kolkata is the highest among the eight leading office markets in the country, driven by high demand in Sector V and Rajarhat. Interestingly, the traditional office districts of BBD Bag, Chowringhee, Park Street, Camac Street, etc have been left behind in this rent revolution, clearly underlining the slant towards Sector V and Rajarhat.

Experts feel a strong economy, rapid expansion in the IT/ITeS sector, flourishing of Global Capability Centres and a healthy growth in the start-up ecosystem have all combined to propel this demand. Add to that the back-to-office wave and the call for more workstations keeps getting louder.

Also, gleaning out lessons from the pandemic, most employers are now looking to decongest work spaces, budgeting for extra legroom keeping in mind employee health and wellness as they scramble to manage the return-to-work flow. This itself has pushed up demand for new office spaces by up to 30%. Quite a few realtors are even prepared to walk the extra mile in terms of creating healthy and sustainable work spaces by opting for LEED and WELL certification.

Interesting to note, Kolkata has the highest ratio for transaction of smaller office spaces, with over 70% demand for spaces below 50,000 sq ft, followed by Chennai and Mumbai. Small or large, with the country’s GDP projected to grow at 7-8%, this resurgence in demand for office space is expected to sustain itself in the coming years.

India’s pre-eminent perch as the fifth-largest economy in the world is powered by its phenomenal economic remarkable feat growth and resilience in difficult times. While many sectors have chipped in to make this possible, the country’s ever-evolving real estate industry has taken a front-seat role in propelling this growth.

The Indian real estate market is poised to catapult its way to a heady figure upwards of Rs 65,000 crore by 2040 from its present level of around Rs. 13,000 crore, with the sector set to contribute over 13% of India’s GDP by 2025 itself. These are dizzying projections, but the realty sector is well and truly on track to achieve these milestones and further elevate India’s stature on the global stage.

Another very powerful index of India’s rising global standing comes from the global real estate transparency index according to the Global Realty Survey, in which the country has climbed 5 places to 35th from its 40th position in 2014. According to international industry watchers, India has emerged as one of the top 10 countries to register maximum progress in clarity and transparency in the real estate sector over the past few yearsr

This has surely boosted investor confidence both within the country and outside, riding on better market fundamentals, improved infrastructure, easier access to information, greater accuracy of available data, smoothness of transactions and a better regulatory and legal environment. With this enhanced transparency and greater ease of doing business, the real estate sector is set to benefit from a multiplier effect and continue to power the growth of India’s economy.

India’s rise in this global transparency index is also unparalleled by countries with similar-sized markets, for instance, the other BRICS bloc nations – China, South Africa, Brazil and Russia – all failing to make any progress on the global ranking roster. With this improved outlook, the winds are favourable for more FDI to flow into the sector to supplement the domestic gusto.

As per the global survey, the UK ranks first in transparency, followed by Australia and the US. The top 10 list is completed by France, Canada, New Zealand, the Netherlands, Germany, Sweden and Ireland. Venezuela is pinned as the least transparent market, bringing up the rear at 100th.

Improved confidence of international investors has been vindicated by FDI inflow which topped $7.5 billion, according to market estimates. The government’s liberalized policies and regulatory reforms, including the RERA Act, have contributed seriously to this extremely positive outlook. This exponential growth has lifted overall business sentiment by augmenting infrastructure, logistics and connectivity, all contributing to economic growth in the final analysis and promoting India as an attractive investment destination.

This buoyancy is reflected in ground-level figures as well. While net office space absorption during Q1 of 2023 (Jan-Mar) clocked around 8.4 million sq. ft., new launches of real estate projects in the same quarter across the seven big cities in the country accounted for a significant 42%, marking a jump of nearly 27% logged during the same period four years back.

The residential real estate market in the country saw an all-time high of home sales at nearly Rs. 3.5 lakh crore in FY23, a whopping growth of over 48% year-on-year and an almost 37% jump in the number of homes sold. In the luxury residential segment, the YoY growth was an even more striking 151% in Q1, 2023.

While the real estate sector is the second-highest employment generator in India after the farm sector, experts now predict higher investment in this domain by NRIs and HNIs. This segment of buyers has been steadily growing in numbers over the years in the luxury real estate market, riding on factors like back-to-home urge, reliable investment option, evolving demographics, availability of high-end, bespoke properties that suit their sophisticated lifestyle, supportive government policies, etc.

This positive outlook is reflected in a recent report which predicts the Indian real estate sector to swell in size to nearly $6 trillion by 2047, contributing almost 16% to the GDP share, which now hovers around 7.5%. This is a clear indicator of India’s rising stature in the global real estate market as one of the most sought-after investment destinations.

The Durga Puja-Diwali-Navratri season is not only special for the pandal-hopping, magical lights and artistic decorations, scrumptious food and merriment and new dresses. It is also considered an auspicious time to buy a new home. In fact, a recent industry survey revealed that nearly 52% of urban Indians believe the best time to invest in real estate is the festival season.

A clutch of factors combines to make this period a super-busy window for real estate business. While a majority among the salaried class receive their festival bonuses, annual incentives and other benefits, it is also the time for deities and worship. Also, many believe buying a new property symbolizes hope, prosperity and progress. So, it’s often a decision driven by strong socio-cultural nuances.

Let us look at some of the factors driving property sales during the festive period:

# Auspicious window: From Ganesh Chaturthi to Navratri, Durga Puja to Diwali, this is the jam-packed festival season. The unbridled joy and religious fervour of the season is best exemplified in shopping and investment. While gold and other precious metals, even new cars, are a big draw, real estate is often regarded as the safest and least volatile bet when it comes to investment. Hence many invest in new properties during this festive season for a new beginning.

# Launch of new projects: Like new blockbuster movies, the Diwali festive season also heralds a plethora of new real estate project launches. So, there are plenty of projects to choose from, across the gamut of investor budgets. Whether you are looking for a 2 or 3BHK apartment or a duplex or a country house, chances are you will find your dream home among the parade of new launches in various categories.

# Attractive deals: Most real estate developers roll out attractive offers during the festive season to woo customers, particularly for residential projects. Such deals could include substantial discounts, low interest rates/easy payment schedule/cashback in collaboration with lending banks, free parking slot/club membership, free gifts like appliances or gold coins and much more.

# Great time for housewarming: The festive season is a great time to throw a gala housewarming party and welcome guests for the first time. The mood all around is joyful, people have time on their hands and are stress-free, while there is widespread belief that Lord Ganpati and Goddess Laxmi will usher in prosperity and good fortune. With Diwali discounts on an entire gamut of articles, this is an opportune window to decorate and dress up your new home as well ahead of the housewarming.

In this heady ambience of merrymaking, don’t forget to guard yourself against potential fraudsters who might be lurking just to take advantage of the festive-season euphoria by making false promises and painting a misleading rosy picture of the deal.

Carry out this simple exercise of checks:

# Due diligence: Do a background check on the developer’s credentials and history of timely delivery of quality projects. Talk to existing customers for their objective feedback, don’t just rely on marketing materials.

# Verify discounts: The promise of Diwali discounts could be enticing, but it is absolutely imperative to carry out a thorough check. Go through your deed with a toothcomb, if possible, with the help of an expert and make sure all discounts promised are given in writing. You must also check your contract for hidden penalty clauses to be doubly sure.

# Title verification: Seek legal advice to verify ownership of the property and validity of all relevant documents.

# Clarify exact quantum of outgoings: These will comprise common area maintenance charges, utility bills, etc.

The real estate market is buoyant once again since the dark clouds of the pandemic have passed. The demand for residential real estate has now shot up to pre-Covid levels and Kolkata is very much in the forefront of this fresh housing wave. As the clamouring for new homes continues to rise, the city has organically started expanding in different directions.

Let us look at some of the emerging hotspots for residential real estate:

# New Town: Over the past decade, New Town has come up as one of India’s finest modern integrated townships. Having overcome the initial infrastructure hiccups, it has become one of the most coveted housing zones in Kolkata. From international-standard schools and colleges to well-equipped hospitals, large shopping malls with ample dining and entertainment options, amusement parks including the vast expanses of Eco Park, New Town has it all. Add to that the European-style cycling tracks, energy-saving illumination, multimodal transportation hubs and the proliferation of cutting-edge tech companies, it is undoubtedly one of the most attractive residential locations.

# Southern Bypass corridor: Not long ago the EM Bypass used to end at Garia in the south for all practical purposes. Now, with the West Bengal government’s defined thrust on developing the Sonarpur-Rajpur-Baruipur stretch as a new administrative hub, the extended Bypass corridor has become a strong growth area for new housing, with developers making a beeline for large-format residential projects. The stretch from the Ruby intersection was already a healthcare hub with a number of multispecialty hospitals. Now, there is a fresh focus on education as quite a few international-standard schools have come up in the region, while a few sought-after city schools are opening new campuses there, raising the equity of the area.

# Joka: If you are looking for a great, new address without breaking the bank, Joka might be exactly what you have in mind. With the upcoming Joka-Esplanade Metro line (already open up to Taratala) offering superfast connectivity to the city centre apart from the excellent road link with countless bus services already available, Joka is all set to become one of the most accessible fringe areas of Kolkata. There are a clutch of world-class educational institutions including IIM, Calcutta, DPS Joka, Gems Akademia International School, Pailan World School, M.P. Birla Foundation Higher Secondary School, Vivekananda Mission School, Vidya Bharti, RP Goenka International School, Pailan College of Management and Technology, and many more. Thanks to the Metro to Taratala and the Taratala flyover, there is easy connectivity to landmark hospitals like CMRI, Woodlands Hospital, BM Birla Heart Research Centre, Kothari Medical Centre and Narayan Memorial Hospital, besides Bharat Sevashram Hospital, Thakurpukur Cancer Hospital and ESI Hospital, Joka.

# Madhyamgram/BT Road: Towards the northern fringes, the Madhyamgram four-point crossing and the BT Road corridor are fast becoming another new growth area, with a proliferation of modern, yet affordable residential complexes. Close to the airport, the area is well connected to the heart of the city by road and suburban rail links. A number of good schools like Madhyamgram Girls School, Nabanalanda Shishu Vidyapith and Monalisa English School offer excellent education options, while there are quite a few existing hospitals like the Government Hospital of Madhyamgram and Netaji Subhas Chandra Bose Hospital and Research Centre, with some more coming up. Shopping centres in the locality include Ozone Mall, Swadha Plaza and Nisha Plaza, among others.

# Rajarhat: In terms of the number of offerings, Rajarhat, once a nondescript, lonely neighbourhood, is one of the leading new real estate hotspots. Situated between the airport and the city centre, this emerging township is now a coveted destination for NRI buyers, with investment by this segment climbing by over 36% over the past five years. Many people residing in other Indian cities but with roots in Kolkata, are also opting to buy apartments in one of the numerous upcoming projects in Rajarhat. Both civic as well as social infrastructure have improved immensely of late, making life much easier for present and future residents.

The real estate market in China, among the largest in the world, has been in free fall for a while, with property sales dropping by 60 per cent at a conservative estimate. The crisis was exacerbated by the Chinese authorities clamping down on excessive borrowing by developers, coupled with the pandemic-induced slump.

On the flip side, the Beijing’s enormous stimulus to prop up the economy also found its way to the real estate market, leading to a serious supply overhang, corroborated by an IMF (International Monetary Fund) report. This has forced many investors to turn to overseas markets instead.

China’s loss is India’s gain

China’s loss could well be India’s gain. A large number of these investors are in fact looking at the Indian market, which is sure to have an incremental effect on the Indian real estate market. With increasing consumer spending leading to further augmentation in urbanization and infrastructure, the demand for both residential and commercial real estate in India is on the rise, as opposed to the China scenario.

The fundamentals of the Indian real estate market are intrinsically stronger than those of China. India is only second to China in the quantum of steel production. Besides, with the Chinese realty market crumbling, commodity prices will slide, boosting the Indian market, which is anyway more resilient and stands to benefit massively from the Chinese meltdown.

While there is a definite buoyancy in the Indian real estate market at this juncture, the government must work in tandem with the developers to ensure a right balance between growth and sustainability so that the market doesn’t become overheated. There should be some semblance of equilibrium between the demand and supply sides.

Lessons from China

For the Indian real estate developers’ fraternity, it’s important to take heed of the China syndrome and shore up strategies so that they can cut financial risks substantially and thus, steer clear of potential pitfalls.

The movement of property prices in the two countries is another indicator of the widening chasm in market health. While the average price of a new property in China’s 70 largest cities fell by 1.6% annually in October last year according to the National Bureau of Statistics of China, a Reuters poll confirms that real estate prices in India will look north by 6% this year and next year. Market analysts predict the demand for real estate to spike by 15 to 18 million sq ft by 2025.

A leading industry expert feels the fall in prices of steel, aluminum and copper would work in favour of the Indian realtors. He adds that India has witnessed significant rise in the demand for housing, data centres and warehousing space in the wake of the pandemic. This is sure to lure big investors away from China to the Indian real estate market, he is confident, resulting in “billions of dollars of fresh investments”.

Yet another market analyst feels, rules and regulations governing the real estate industry as well as investment instruments should be nimble and not shaped by “mindless social norms” so that that the developers and investors are not scalded and the market doesn’t collapse. Also, in today’s VUCA (volatile, uncertain, complex and ambiguous) world, it is prudent to be patient and not take needless risks that could plunge the market into a crisis.

What was proposed back in 2010 during the erstwhile Left Front regime, is fast taking shape now as the international financial hub planned in New Town gathers momentum. The second such financial hub in the country after the Bandra-Kurla Complex in Mumbai, it will showcase fintech at its sparkling best, further elevating New Town’s growing stature as a vibrant, modern township.

The project that was relaunched by the ruling party in 2017, laid a sharp focus on the financial technology industry, as more than 24 financial institutions are already present in New Town, with others casting admiring glances. The relaunch has cleared the decks for sustained activity towards developing the township as one of the most sought-after destinations for fintech businesses.

Fintech is one of the fastest-growing domains in the financial services sector which has majorly disrupted the traditional value chain of this sector. Consequently, investments have come pouring in and both the state government and WBHIDCO are buoyant that New Town won’t be any different.

“If Mumbai is geographically close to New York and London, Kolkata is even closer to Singapore and Hong Kong – the two international financial and business centres in Asia,” Debashis Sen, Managing Director, WBHIDCO, had told a CII event. The financial hub is eyeing business from South-East Asia using Kolkata as the eastern gateway for trade and financial institutions, it is understood.

A study by McKinsey Global Institute had predicted that Kolkata would emerge as one of the epicentres of global financial activities. The New Town fintech hub certainly augers well for that forecast. The township has already become the preferred hotspot for businesses, national and MNCs, to set up shop as support infrastructure continues to develop and attractive incentives offered.

The New Town advantage

There’s a lot going for New Town. From proximity to the airport and Sector V, the IT district, to existing and upcoming Metro connectivity, wide roads and ample modern residential accommodation, the pluses are plenty.

Add to that swank shopping malls like Axis Mall, City Centre 2, Reliance Central and DLF Galleria, besides luxury business hotels like Novotel, Fairfield by Marriot, Pride, Ibis, The Westin, Vedic Village and more, and we are talking about more reasons to embrace New Town.

The township also offers a plethora of quality educational and healthcare institutions, including DPS New Town, DPS Megacity, New Town School, Narayana School, Techno India College, Amity University, St. Xavier’s University, the Tata Medical Center, Sankara Nethralaya, Bhagirathi Neotia Hospital, Ohio Hospital, Apollo Clinic New Town, Glocal Hospital, among others. Then there is the international-standard Biswa Bangla Convention Center, the Mother’s Wax Museum and the sprawling campus of the Eco Park with its emerald golf course to add further value to New Town.

The infrastructure for the fintech hub is being developed by the government and the project is being executed by WBHIDCO. The financial hub is blessed with dedicated power supply and bandwidth. Overseas institutions like the Brooklyn National Laboratory and the Bureau of Energy Efficiency have been consulted to ensure a uniformly environment-sensitive development through the green-building concept.

WBHIDCO officials estimate that the New Town financial hub, once fully functional, can generate over 200,000 jobs. The clamour for commercial and residential real estate space is already rising in sync with this scenario as fintech companies rush to grab a slice of the New Town pie. The financial hub is expected to become a potent energizer to take the township’s development to another trajectory altogether.

Buying a property is more often than not your life’s most critical investment decision. And you don’t want to leave any stone unturned to ensure that the investment is safe. Once you have zeroed in on your dream home in your favourite neighbourhood, the next and a very important step is to scrutinize all the documents with a toothcomb to rule out any legal loopholes before you sign on the dotted lines.

Legal verification of your property papers is absolutely imperative, no matter how alluring your new home looks, so that you don’t face any litigation in future and your investment is safe. If any document is doctored or deliberately misleading, it can make life difficult for you. So, do seek professional legal assistance if you deem fit. However, you can also do this verification on your own. In any case, it is crucial that you take the initiative to study the documents properly and establish their veracity.

What are the documents to be verified?

With or without the help of a lawyer, you should collate these following documents for legal verification:

# Seller’s details: Even before you start scrutinizing the documents, find out more about the seller. Establish his/her credentials through PAN, Aadhaar, passport, etc. Then you must check his professional track record, either through media exposure or by taking feedback from previous customers. Once you are armed with these inputs, you can make an informed choice.

# Title deeds: This is the most crucial one in your bunch of documents you need to confirm and verify. The task is to establish that the person is the genuine owner of the property and has unfettered authority to sell it. You would do well to check the transaction chain to find out how many times the property has changed hands. Seek an encumbrance certificate (EC) from the Sub-registrar’s office to make sure the house/property is not shackled by mortgage, loan or debt.

# Property tax receipts: Ask to see receipts for property tax which is payable to the civic body every year. By scanning the details in the property tax receipts, you can make sure that tax payment is up to date and there are no statutory dues pending which could needlessly burden you.

# Necessary approvals: It is important to look into clearances of the building plan/layout by appropriate authorities if you are buying a land parcel. Construction can legally commence only after the land parcel is converted for residential use. In case you are buying a built property, make sure there aren’t any serious departures from the sanctioned plans. You will also need the occupancy certificate granted by the local civic body, certifying that the constructed structure is fit to be occupied, besides all the relevant NOCs.

# Sale deed: This document is essentially the bridge that transfers ownership of the property from the owner to the buyer. To avert needless hassles in the future, please ensure that this sale deed is expertly drafted and details all relevant points pertaining to both the parties. The sale deed must contain all the necessary information about the transacted property, including location, dimensions, land survey number, amount of transaction, etc.

# Possession certificate: While buying a property, you will need this document from the developer/seller, listing down the payment details as well as specifying the date of handover to the buyer. It is a must-have legal document giving the buyer the right to move into or make use of the property, as it denotes that the said property has officially changed hands.

Buying a home is your life’s biggest investment and you would obviously like to keep it safe with the cover of insurance. A home insurance policy offers you financial security on your residential apartment or house and can also cover you against natural or manmade disasters, burglary or other losses including jewellery, appliances, etc precipitated by damage to your property.

When you are buying your first home, it might feel like an added burden, but home insurance is absolutely essential to safeguard your home and valuables, and in the process, insulate your financial stability against any unforeseen catastrophe. It is peace of mind.

While the need for home insurance is a no-brainer, the home-buyer has to figure out whether to go for a structure or contents insurance policy. A structure insurance covers you against losses incurred in natural disasters resulting in structural damage to the house, while a content insurance safeguards against losses or damage to household items including fixtures and furniture, jewellery and electronic appliances.

Points to ponder for a first-time home-buyer:

# Figure out the ambit of coverage: It is absolutely imperative to comprehend the extent of the home insurance cover before you opt for one. You will always find a policy tailored to your needs. Usually, a home insurance should offer you coverage for the home structure, personal belongings, liability, etc, besides providing you with additional expenses to get by if your home is rendered unliveable due to any covered event.

# Fix a price to your home: You must find out the real value of your house keeping in mind factors like built area, age of the property, materials used in construction and of course, location, among others. This would help you fix a price in case you have to rebuild your house following a total loss due to any event covered by your home insurance.

# Compare before you buy: Before settling for a particular home insurance package, you should compare a number of policies from various providers so that you can look at the rates vis-à-vis coverage. This should enable you to land the best coverage at the most competitive price point.

# Bundling is a good option: It could be a profitable exercise to combine or bundle your home insurance with other existing insurance policies like car insurance, etc. You could end up saving a tidy sum.

# Be comfortable with your deductible: The out-of-pocket expenditure that you incur before the insurance policy kicks in, is your deductible amount. You must be comfortable with this quantum, since it will affect your premium payout. So, choose the right deductible after dialogue with your provider.

# Review policy at regular intervals: Your home insurance policy should be flexible to address your evolving needs. For instance, you might choose to carry out major upgrades or changes or renovation work that would necessitate updating your policy accordingly. Hence, you must review your policy details periodically, so that you are on your toes.

# Seek discounts: Remember, it is a highly competitive market and insurance providers are falling over one another to expand their footprint. So, they are usually open to cutting a little slack in terms of discounts. Don’t hesitate to ask for discounts on certain points.

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%.