By Somendra Sarwal
The day is not far when Indian cities will compete among themselves to have a greater share of productive population and wealth. As India becomes more diverse largely due to change in macro policy stance with the likes of GST, Smart Cities, IFC etc. and socio-economic and demographic shifts, new institutional-grade real estate locations will emerge. While the existing cities will develop fast, new cities will also emerge. These cities shall not only race to dominate service and manufacturing hubs, but create wealth to become prime investment destinations.
What we may witness is a complete transformation of build environment in India. With shifting balance of power towards Asian countries, strengthening GDP, enhanced investments and savings, falling interest rates, specialised manufacturing and service exports, improved physical and virtual connectivity and largest population to serve, Indian real estate will witness a paradigm shift from selling ‘themed residences and offices’ to ‘specialised cities and city centres.’ A successful city will attract more people, thus resulting in rising cost of prime urban real estate (per square feet). Affordability will fall, leading to greater urban density, smaller apartments in mega cities and migration of population to new specialised cities.
Recent studies peg that India needs to support the annual average housing completions between 2012 and 2025 of 1.1 cr units as against 93 lakhs in China and 14.8 lakh in USA. This can only be supported by improved urban infrastructure and connectivity coupled with innovation in financing, design, build and buying real estate technology. Hence, we shall not only see change in how physical real estate is being conceived and built, but also see peripheral services like virtual sales, compliance, consumerism, micro market intelligence platforms, new structures of financing, including REITs/ INVITs, ETFs, CREFs, municipal and social bonds being developed, delivered and connected. Digitisation, artificial intelligence, big data, new construction methods, augmented reality will all become a new reality.
As a nation, we shall witness broader range of opportunities, risks and value drivers, leading to a new augmented reality of real estate.
(The author is Associate Director, Capital Markets and Investment Services, Colliers International India)