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India GRI 2019 - Well-performing assets bring optimism

4 MIN READSeptember 26, 2019

India GRI 2019 gathered the regions most senior developers, investors and lenders in Mumbai for a series of provocative discussions on the years hottest topics in real estate on 18th-19th September in Mumbai. The event was a great opportunity for GRI Club members and delegates to network with each other, sharing market insight and building meaningful relationships.

The event opened with a talk show moderated by GRI Club’s chairman, Henri Alster. Joined by other leading voices in the real estate industry, the atmosphere was a mix of optimism and cautiousness. They spoke about how the industry became volatile very quickly, and the best way to react. The key takeaway came from Brookfield, which concluded the discussion by saying that real estate should not be viewed as a wealth creator; it should grow with the economy. 

The keynote was followed by a series of behind closed door discussions on key topics impacting real estate market in India today. These discussions adopt the unique GRI format, which fosters collegial debates in a ‘living-room’ atmosphere, where everyone is encouraged to contribute. 

India GRI 2019 saw participation from key developers, investors, operators, lenders and advisers. The players discussed a range of topics including the future of real estate funding, technology, the Indian budget, coliving, coworking, logistics, owner/operator dynamics, retail, mixed use and the introduction of REITs into the market, amongst others. The topic on everyone’s lips was how commercial real estate is booming in India as it continues to focus on investment returns, providing flexibility and promoting the wellbeing of the real estate industry.

One leader claimed real estate should not be viewed as a wealth creator, it should grow with the economy - an idea which was echoed by leading investment bankers and financial service executives. Capital will be available for developers who have performed well and kept the promise of delivering homes. Funds are easily available for commercial assets in comparison to residential asset, because of differences in business model, stage of the cycle and yield returns. 

Previous residential projects had problems with high levels of debt - some even single digit % equity. This pattern is now changing, as residential projects are beginning to move towards becoming more balanced with a growing amount of equity financing to become more sustainable. What was cash flow discounting has now become a mutual understanding on whether the projects with be lucrative. 

The real estate players present at the event expected significant growth in the logistics sector, being driven by increasing consumption and huge growth in e-commerce (27-30%). Uniquely, India’s logistics sector is still at a very high number of 13% of GDP. Going forward we’re likely to see this slowdown due to GST, reforms, and growth in the infrastructure sector.

India is one of the biggest tech startup countries in the world, and over two thirds of real estate companies are employing some sort of tech in their central business strategy. Some believe that there is much to be done tech-wise in the construction industry, as there is lots of room for optimisation and big data usage to cut costs. However, tech developers say there are many solutions in the market, but customers are not willing to pay the right price. 

The attendees at India GRI talked about how real estate is an industry for people with nerves of steel - the amount of people investing in real estate is currently growing faster than the population. The players remained optimistic for the immediate future, as the better-performing asset classes and forward thinking legislative decisions from the government may just paint a bright future for Indian real estate. 

 

For deeper insight into the Indian real estate markets and discussions with the leading real estate players from around the world, GRI India Real Estate Leaders Forum & Week 2019 takes place on 19-21 November in London. 

Article by Matt Harris 

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