Tag: Vimal Nadar

News

Investments in developmental assets set to surge as India marches towards USD 5 Trillion economy

Jun 7, 2024 by Mansi Praharaj 0 Comments #Asia Pacific, #India marches, #Investment, #Piyush Gupta, #Vimal Nadar

Mumbai, 7th June, 2024  – Four of the top five global cross-border capital destinations for land and development site investments in the first quarter of 2024 were in Asia Pacific, according to a new report from Colliers. The report, Asia Pacific Global Capital Flows May 2024, listed China, Singapore, Australia and India within the top five destinations globally for cross-border capital investment in land/development sites in Q1 2024.

In India, the institutional investors are largely drawn to completed and pre-leased income-yielding assets due to their ability to provide immediate & steady returns, low risk profile, compliance assurance and lesser exit-related hassles. However, with majority of the large Grade A projects being already funded, investors are also forging partnerships with local developers and investors, in developmental assets spanning across office, residential and industrial segments. The inflow in developmental assets (mainly in the form of platform deals) includes investments in various phases of developmental activity including land acquisition and asset development, etc.

The inflow into developmental assets includes investments directed toward creating new assets from the ground up. These investments span various phases of development, including the formation of platforms, land acquisition, and construction.

Select transactions in developmental assets (in 2023–Q1 2024):

Quarter/Year Investor Investee Deal Value (in USD million) City Asset Class
Q2 2023 CPPIB RMZ Corp 324.2 Mumbai Office
Q4 2023 Alta Capital Goldman Sachs & Warburg Pincus 320.0 Others/Multi City Alternatives
Q3 2023 HDFC Capital Advisors The house of Abhinandan Lodha 182.0 Others/Multi City Residential
Q1 2023 PAG Credit & Markets M3M 180.9 Delhi NCR Residential
Q1 2024 Ivanhoe Cambridge+LOGOS   132.3 Pune Industrial & Warehousing

Over the last decade, institutional investments across various asset classes in real estate sector have seen promising inflows, bolstered by a wave of infrastructure investments and comprehensive economic reforms. Persistent economic growth, strong demand fundamentals and optimistic business outlook in India relative to its global peers, have enhanced global institutional investor confidence in exploring multiple avenues for investments in India.

“Foreign investors continue to exhibit confidence in India’s real estate sector, infusing USD 3.6 Billion during 2023, driving 67% of the total inflows. The momentum continued in Q1 2024 as well, with foreign investors driving over 55% of the investment inflows at USD0.5 Billion. Their sustained preference for ready assets continues, evident from the 73% investment inflows in such assets during Q1 2024. Simultaneously, India also presents abundant opportunities for investment in developmental sites as the real estate sector is set to reach USD 1 trillion by 2030, accounting for 13-15% of India’s GDP. The preference towards developmental as well as ready to move quality office assets will continue, with visible emphasis on sustainability. The Capital in Indian Real Estate is getting more diversified to sectors such as Residential, Logistics, Alternatives, Credit.” said Piyush Gupta, Managing Director, Capital Markets & Investment Services at Colliers India.

With the GDP set to cross USD 5 trillion soon, India offers burgeoning opportunities for real estate investment, both in ready assets and developmental sites. The real estate growth is likely to extend beyond the top 6 cities, covering multiple smaller cities across the country, backed by infrastructure advancements, increased digital penetration and supportive regulatory framework in these cities, offering an array of opportunities for the investors.

“This is an opportune time for investors to invest in developmental projects in India’s real estate sector backed by stable economic conditions. The past two years have witnessed significant investments in land, particularly for residential projects, with prominent real estate developers keen to strategically acquire large contiguous land parcels. Institutional investments in residential segment, meanwhile have also witnessed a 20% YoY rise during 2023, at USD 0.8 Billion. With robust residential sales momentum across cities, this trend is expected to continue, making it an opportune moment to capitalize on greenfield development opportunities especially in residential real estate,” said Vimal Nadar, Senior Director & Head of Research, Colliers India.

Select land deals (in 2023–Q1 2024):

Quarter/Year Investor Investee Deal Value (in USD million) City Asset Class
Q1 2023 PAG Credit & Markets M3M  180.9 Delhi NCR Residential
Q1 2024 Cholamandalam Investment and Finance Company Limited DLF  88.8 Chennai Mixed use
Q4 2023 ESR Group    54.0 Others/ Multi City Industrial & Warehousing

Chris Pilgrim, Colliers’ Managing Director of Global Capital Markets in Asia Pacific, said “APAC continues to show strong growth with stable forecasts, a factor that is driving the strength of the land and development market in particular. More broadly, investor confidence is returning both in terms of deploying capital and the belief that some economic headwinds have stabilized or are now factored into risk adjusted returns. Strong demand fundamentals are also driving significant investor interest in India, where office assets remain at the core, while industrial and residential assets are seeing heightened activity.”

News

Indian senior living market has the potential to grow 5x times from current levels

May 13, 2024 by Sujata Muguda 0 Comments #Badal Yagnik, #Indian senior living market, #Vimal Nadar

Gurgaon, 13th May 2024  – The median age of the country is likely to gradually increase from about 29 to 38 by 2050. Similarly, the proportion of aged people (above 60 years) is likely to increase from about 11% in 2024 to 21% in 2050. At the global level, over the next three decades (by 2050), of the 2.1 billion people above 60 years, India would account for a 17% share indicating a significant demand growth for senior care including housing in the country.[1]

Trends in India’s population

  India   USA Japan
  2000 2024 E 2030 F 2050 F   2024 E 2024 E
Total population (mn) 1060 1442 1515 1670   342 123
Senior population (mn) 73 159 195 348   83 45
Senior population share (%) 6.9% 11.0% 12.9% 20.8%   24.3% 36.6%
Median age (yrs) 21.6 28.6 30.9 38.1   38.3 49.5

“Like most emerging market economies, the demographic pattern of India is undergoing a steady yet definite shift. The population pyramid of the country will slowly but surely transform from the current expansionary stage to a more stable state in the next few decades. The current nascent senior living market presents a lucrative opportunity for private organised developers to capitalise on the untapped market. With rising interest from institutional players and leading real estate developers, senior housing in the country is set to be almost 5x times by 2030, compared to current levels” said Badal Yagnik, Chief Executive Officer, Colliers India.

India’s senior living market still at a nascent stage

Estimating the demand for senior housing in India

With rise in ageing population, the demand for senior living services including medical, insurance, housing etc. has been steadily increasing. Factors like rising life expectancy, nuclearization of families, higher income levels, increasing importance of a stable post-retirement life and changing lifestyle are driving the demand for senior living especially in urban areas. With increased focus on health and wellness, seniors today are more active and engaged than previous generations – looking for senior living options that offer amenities such as fitness centres, recreational activities, and cultural events to support a vibrant and fulfilling lifestyle. Colliers estimates the current demand for senior housing at 18-20 lakh units, which is likely to increase significantly in the next five-six years. This growing demand creates lucrative opportunities for real estate developers and institutional investors.

Does India have enough supply to accommodate rising senior population in the country?

With close to 20,000 units in the organised sector, current availability of senior housing in India translates into a 1% penetration rate, indicating a huge demand supply gap. In contrast, countries like the US, UK and Australia have established senior living markets with 6-7% penetration rate. Moreover, a lower population base also means significantly less demand supply gap in these matured markets.

“While currently the senior living market size in India is estimated to be about USD 2-3 billion, it is expected to witness a CAGR of more than 30% and reach ~USD 12 billion by 2030. Although the demand supply gap will remain high even in 2030, the penetration in senior living market has the potential to improve significantly in the long-term. All in all, the senior living market in India is likely to witness accelerated growth in the next few years and embark upon an eventual transition into maturity with changing demographics” said Vimal Nadar, Senior Director & Head of Research, Colliers India.

India senior living market landcsape

  2024 2030 F 2030 F vs 2024
Demand (units in lakhs) 18 – 20 28 – 30 ~ 1.6X times
Supply ( units in lakhs) ~ 0.2 ~ 0.9 ~ 5X times
Penetration (%) 1% 3% + 200 bps
Market size (USD bn) 2-3 10-12 ~ 5X times

Rise in targeted offerings for ageing population to meet unique needs

Senior living in India currently is being offered by private developers through apartments ranging from 1 to 3 BHK or villas, in two formats – independent living and assisted living. Independent living facilities are typically preferred by seniors who can manage their daily activities independently but seek the convenience of community living. The average ticket size of independent senior living in India is about INR 1 to 2 crore, largely depending on the city and location. Currently, there are very few developers that focus on the senior living segment in India. Some of the major organised developers include Ashiana, Columbia Pacific, Paranjape, Anatara and Primus Senior Living. A significant portion of the supply side is concentrated in southern cities, leaving substantial room for growth and development in other parts of the country.

At the same time, the concept of assisted living is picking pace, where developers provide additional facilities like housekeeping in individual units, medical coordinators, physiotherapists, on-premise nursing attendants, emergency panic alarm response and professional society maintenance and management services as well.

Road ahead for the senior living segment

Growing traction in tier II and spiritually focussed cities- Senior living has been gaining traction in tier II cities led by preference for slower pace of life, ease of living and lesser population-related infrastructure stress. Cities like Ahmedabad, Surat, Coimbatore, Kochi and Panaji are preferred cities for senior living accommodation. The segment is also witnessing a boom in places of pilgrimage such as Vrindavan, Ayodhya, Dwarka and Rameswaram. According to the Association of Senior Living India (ASLI), currently, about 60% of the senior living demand emancipates from tier II cities. Limited senior housing inventory in these cities presents immense potential for private developers looking to diversify their portfolio across the country.

Potential for low- and mid-income segments within senior living- Currently, organised senior living supply in India mainly caters to upper-mid and high-end segment. Moreover, specific design and construction elements often translate into high construction costs for developers. Amidst rising cost of construction and project profitability targets, developers are unable to cater to low and mid-income senior living projects. Advancements in construction technology such as Building Information Modelling (BIM), 3-D printing, usage of robotics, Artificial Intelligence (AI), Augmented Reality (AR) etc. has the potential to permeate in senior living projects and make them accessible for residents across income categories by reducing labour costs and enhancing efficiency.

Innovative financing schemes can facilitate healthy activity in senior living segment – Due to comparatively high price points, potential end-users often face financing challenges to invest in housing purpose built for senior people. Banks and financial institutions have a critical role in the evolution of senior living products in the country, particularly in mid and affordable segment.  Funding schemes specially curated for older citizens may involve refinancing of loans and revolving credit facilities. Furthermore, lower interest rates can facilitate seniors to purchase age-appropriate dwelling and facilities associated with senior living. Bank tie-ups with senior housing projects can fast-track the entire credit appraisal process in senior living disbursements.   Additionally, insurance players can explore partnerships with developers leading to reduction in fixed component outflow for the cost-sensitive end-user.

Increased assistance from government- Enhanced policy support for development of senior living facilities will provide a thrust to developers and institutional investors to increasingly foray into the particular segment. Existing government schemes like Atal Vayo Abhyuday Yojana (AVYAY), aims at providing financial assistance to eligible organizations for running and maintenance of Senior Citizen Homes to improve the quality of life of senior citizens. Further, provision of tax-based incentives, relaxation in development charges, increased ground coverage and inclusive land use zonal permits will encourage developers to take up more such projects. Moreover, states such as Maharashtra have recently drafted model guidelines for senior living housing projects through MahaRERA to ensure senior living facilities are built as per the needs of senior citizens.

Integration of senior living units in townships- Interestingly few leading developers are considering a portion of apartment towers within townships to be dedicated for senior living housing. Such an integration not only makes senior living more vibrant and livelier for the elderly, but increases feasibility and profitability for developers, creating a win-win situation for everyone. Few branded developers like Wadhwa Group, Adani Realty, Max Estates have already announced their plans to launch integrated senior living projects across major cities in the next few years.

Emerging asset class for institutional investment- Institutional investors in search of opportunities in alternative real estate assets are increasingly realising the untapped potential of senior living asset class. With rising senior population, the demand for senior living will consistently rise across the country. With global players coming into the Indian market, the segment is likely to witness significant innovation in terms of offerings, business models and pricing strategies as well. As and when the senior living market matures in India, alternate models are likely to gain momentum. Operator based model – similar to co-living and coworking spaces, is likely to gain traction in the future.

Real Estate Sector on Repo Rates
Business

In 2021, Indian real estate has gained significant amount of the lost ground: Colliers

Dec 27, 2021 by Gouri Achary 0 Comments #Asia, #Colliers, #Colliers India, #Indian Real Estate, #Ramesh Nair, #real estate, #Vimal Nadar

Occupier confidence has improved in the latter half of 2021 with occupiers closing large office deals, cementing the resilience of the sector and the underlying importance of offices. Occupiers remain focused on enhancing the well-being and experience of their employees as they plan to return to the office, chasing lucrative leases while realigning long-term plans. Developers are determined towards asset enhancement through requisite retrofit to remain relevant and retain tenants.

“The year 2021 was a watershed moment for India’s real estate sector. Even when the going was tough, the sector not only remained resilient but also emerged stronger than expected. India’s office sector is coming out of the woods, with demand back to pre-record levels. The year 2022 will even be better, even if marred by the new Covid-19 variant. We have now learned to live with uncertainty. Gross absorption in 2022 should be about 15-20% higher than this year as occupier confidence is back in the market. In terms of global capital chasing real estate, the office will continue to remain a dominant sector, but residential and industrial & warehousing will strengthen in 2022 aided by strong business fundamentals,” said Ramesh Nair, CEO, India and Managing Director, Market Development, Asia, Colliers.

From the second half of 2021, technology players and flex space operators have been taking large spaces. Occupiers who had earlier focused on renewing deals are now looking at new leases. As employees return to the workplace, next-generation offices replete with health and wellness features are a top draw for occupiers.

Segments that beat market expectations

During the year, some segments surpassed market expectations, led by a tectonic shift in preferences and behaviour of occupiers, homebuyers and investors. We look at some of the segments that have emerged strongly in 2021.

Flex space growing, but not just in top cities

Flex workspaces are leasing spaces backed by occupiers’ back-to-work plans and pre-commitments. Flex spaces have come to the fore after a gap of a year, to occupy a significant share in leasing at 16-18% in 2021. Total flex stock in metro cities is likely to rise to about 40 million sq feet in 2021. Tier-II cities are witnessing increased growth of flex spaces. Flex spaces stock in tier II cities is estimated to have grown more than two-fold this year to 5.5 million sq feet.

Investments in residential make a comeback

The residential segment saw strong recovery gains led by government stimulus, market-led price discovery, new demand. Investment volumes in the residential sector made a comeback in 2021. In the first nine months of the year, investments in the residential sector stood at USD420 million, surpassing the volumes seen in the whole last year. Investors are seeking a buy-in in the asset class, especially in the near-completion stage. Investments are spurred by renewed residential demand, led by a higher inclination to own homes, low home loan rates and steady prices.

Industrial investments inch towards USD1 bn

The industrial segment is likely to see investments inching towards USD1 billion in 2021, led by large global investors buying ready and greenfield warehousing projects. Since last year, investors have been exploring industrial space. While data centres gained traction this year from developers and investors, this year also saw the maiden investments deal in the life sciences sector.

“Despite a devastating second wave, investments into the real estate sector have been unwavering, especially from global investors. Interestingly, investors are also betting on new-age sectors like life sciences and data centres. As per a recent Colliers survey, industrial and logistics assets will be the most sought-after real estate assets in the APAC region, with more than 20% of investors anticipating capital value gains of 10%-20% in value-add assets in 2022, supported by tailwinds and large-scale economic transformation. This shows the immense potential. Moreover, the centre’s new warehousing policy has the potential to transform the warehousing sector to make it more competitive. Overall, the sector’s resilience and growth will give way to more innovation next year, in accordance with the changing times we live in, says Vimal Nadar, Senior Director and Head of Research, Colliers India.

Overall, the real estate sector will see stakeholders pivoting to different models, resetting to the new way we work, live and entertain. Developers, investors and buyers will work towards bringing in sustainability and cutting carbon emissions. The market will also see gains from sectors such as Electric vehicles, solar panel manufacturing, etc in the coming years.

Business

2022 will be an exceptional year for Asia Pacific real estate investments

Dec 13, 2021 by Gouri Achary 0 Comments #APAC, #Asia Pacific, #Asia Pacific real estate investments, #Piyush Gupta, #Ramesh Nair, #real estate investments, #Vimal Nadar

Leading diversified professional services and investment management company Colliers (NASDAQ and TSX: CIGI) has revealed that quality office assets in major metropolitan markets like London, New York, Tokyo, and Sydney, have retained their allure and will be in high demand next year. Core and core-plus office spaces are the top global strategy picks, with 60% of investors stating these assets as their investment preference, while industrial and logistics (I&L) assets will be the most coveted.

Their appeal not only stems from the realisation that office demand is here to stay, particularly in cities supported by strong transport infrastructure and high amenity values, but also the ease of large-scale capital deployment that office assets represent. The rising cost of construction, viewed by four in five (81%) investors as a pain point, could limit new builds, renovations, and retrofit projects, amplifying the demand for existing quality office assets.

“Investments in the Indian real estate sector have remained resilient despite the headwinds triggered by the pandemic, adversely impacting the economy and business climate. For the nine months ended September 2021, investments were recorded to the tune of USD3.5 billion, almost 75% of the quantum seen in 2020. Favourable one-time bulk deals have been keeping the investment momentum strong in the last past few quarters. Interestingly, residential and industrial & warehousing sectors have emerged as major beneficiaries this year garnering a combined 36% of the investments. While the office will continue to remain a dominant sector, investments in residential and industrial & warehousing are likely to strengthen in 2022 aided by strong business fundamentals. Income visibility & stability, attractive valuations and identifying the dark horses will underline the investment ethos in 2022”, said Ramesh Nair, CEO, India and Managing Director, Market Development, Asia, Colliers.

A standout year for Asia Pacific property investments

Across the Asia Pacific (APAC), more investors are prepared to put into action their ambitious plans that have been delayed by COVID-19. Cross-border capital flows are also likely to return, as travel and business activity progressively returns.

Piyush Gupta, Managing Director, Capital Markets and Investment Services, Colliers India, added, “The pandemic has accelerated a number of structural trends and will have lasting changes on the nature of real estate business in India. This presents several opportunities for investors looking to future-proof their portfolios or recalibrate their strategy towards growth sectors. This is already evident in the rapid investment being allocated towards the Residential, increasing development of data centres, Industrial, Office as well as the evolution of the life science sector. Further opportunities exist in identifying locational trends based on changing consumer and work patterns and may also provide investment strategies to new markets in India”.

Overall, I&L assets will be the most sought-after real estate assets in the region, with more than 20% of investors anticipating capital value gains of 10%-20% in value-add I&L assets in 2022, supported by tailwinds and large-scale economic transformation.

Significant interest continues to surround core-plus offices, which remain a popular asset class for regional investors in Tier 1 cities like Singapore, Sydney and Tokyo. 63% of the respondents indicated that they plan to invest in these assets, versus 54% last year.

Multifamily/built-to-rent (BTR) properties are also an increasingly sought-after asset class, with investors targeting both core and development projects. In Japan, this is a sector that is well established and has long attracted foreign core capital, whereas in Australia, it is an emerging asset class with development opportunities.

Retail is for the opportunistic while specialised assets gain favour

Our survey shows that investors see significant potential for the appreciation and repurposing of retail assets. Around a third of the investors mulling retail allocations are targeting opportunistic (including change of use) investments. In addition, hotels are also an opportunistic target, with 38% of investors looking at this sector. Both hotel and retail sectors offer good opportunities in cities with large domestic markets, like Japan, Australia and Korea.

Specialised assets, particularly data centres, life sciences and healthcare, are expected to help boost investment volumes in 2022, with student housing also poised for a comeback as Australia, the region’s main market, opens up to international visitors.

“2021 has seen a strong investor appetite for emerging asset classes such as data centres and life sciences. Global data management firms, developers and alternative asset managers formed strategic joint ventures /platforms to develop and operate data centres in India. Also, investments in retail and mixed-use assets showed up on investors’ radar and formed nearly one-fourth of the total investments during the nine months ended September 2021 as they continue to scout for profitable and stabilized retail assets. Taking cues from Global and Asia-Pacific, green financing is expected to gain steam in the coming years as developers, asset owners and investors sign up for sustainable-led development”, added Vimal Nadar, Senior Director & Head, Research, India at Colliers.

ESG considerations are growing in importance to investors

The report also shows ESG (environmental, social, governance) considerations remain prominent, with nearly three in four investors surveyed globally integrating environmental factors into their strategies. This desire to invest with intent is both a means of future-proofing their assets and responding to the stakeholder and societal pressures requiring them to respond to the climate crisis.

ESG has also become a strong focus in APAC, as it will soon be a priority in the office sector as government and corporate tenants pressure owners to get their ratings up.

Investment Inflows in Indian Realty Touch USD3.6 Bn During Jan-sept 2022, Up 18 percent: Colliers
Business

India’s flex space stock to cross 60 million sq ft by 2023

Nov 23, 2021 by Rekha Nair 0 Comments #CEO (India) and MD (Market Development-Asia), #Colliers, #Colliers India, #Founder & CEO, #Paras Arora, #Qdesq, #Ramesh Nair, #Senior Director and Head of Research, #Vimal Nadar

Gurugram– Colliers forecasts flex workspace stock to cross 60 million sq ft in metro and non-metro cities by 2023, as occupiers embrace agility and flexibility in their work models, mentioned in a recent release by Colliers and Qdesq.

The demand for flex space will be largely driven by Consulting, IT-BPM and E-commerce companies who are establishing multiple satellite offices in suburban locations in metro cities. Metro cities remain the stronghold of flex spaces, accounting for about 88% of the total flex stock as of Q3 2021, mentioned in the report.

“Reverse migration to Tier 2 cities, constant growth of new startups and increased occupier confidence driven by vaccination rates, have helped in overall improvement of the flex industry across the country. The flex market in India is evolving with many enterprises incorporating a flex space component in their portfolio. It is encouraging that flex spaces are currently operating at about 70%, with the trend moving towards pre-pandemic levels. Occupiers are looking at next-generation offices and the future workplaces will be unique to each occupier. Flex workspace operators must continue to focus on customization and providing on-demand workspaces,” said Ramesh Nair, CEO (India) and MD (Market Development-Asia), Colliers.

The flex market in India is evolving with many enterprises incorporating a flex space component in their portfolio. There are currently 3410 flexible centres across major cities, operating at about 70%, with the trend moving towards pre-pandemic levels.

“The next 12-18 months is expected to witness businesses of all sizes reassessing the use of their office. The importance of agility and decentralization has been underlined and highlighted by the pandemic and will become critical to businesses as they adapt to change, impelling the industry forward and that’s what the future looks like for India. Making Flex mainstream”, said Paras Arora, Founder CEO, Qdesq.

Flex space is also emerging in non-metro cities as large enterprises are moving to a decentralised structure focusing on the flexibility and convenience of their employees. The total flex stock in non-metro cities to reach 7.8 mn sq ft by 2023, a 50% increase from current levels.

Major non-metros like Ahmedabad, Coimbatore, Indore, Jaipur, Kochi and Lucknow are witnessing robust activity and are the top 6 emerging non-metro flex locations.

Occupancy levels inching towards pre pandemic levels:

After a dip in occupancy and prices during covid, flex space is reviving in the latter part of 2021 with an average occupancy of 71%. Prices per seat have also seen an improvement by 21% as of September 2021, after falling by about 30% during the pandemic.

“Metro cities are seeing renewed demand from occupiers across the spectrum in the latter part of 2021. Even in non-metro cities, occupiers are taking up seats for their sales and regional offices, leading to higher occupancy. Occupiers are evaluating the concept of ‘work from near-home’ through satellite and hub-and-spoke offices. We foresee that these offices will be an amalgamation of traditional leases and flex spaces,” says Vimal Nadar, Senior Director and Head of Research, Colliers India.

Colliers recommends flex space operators to focus on enhancing occupier experience by digitizing workspaces and providing add-on services, which shall receive more enquiries. As occupiers focus on health and wellness, demand for well managed Grade-A properties with superior infrastructure is ought to increase. Inclusion of digital infrastructure and smart facilities shall also contribute in achieving greater operational efficiency, reduce energy consumption and higher customer retention.