Value offering a game changer in real estate

The new India of the 21st century as envisaged by the people, Governments and businessmen is a digital India. Globally there has been a tacit understanding and a justified agreement amongst policymakers across the globe that improved governance and policy practices can only be achieved through providing value offering and interconnecting units through big data by digitizing the infrastructure of services delivery across the governance pyramids. This idea of value adding the services through digitizing and improving the consumer experience has in particular drew attention of the services industry where consumer tangibility is high and streamlining can be done by effectively providing value added services to the consumers. Thereby such changes have also been adopted by the real estate industry globally and more recently in India.

As per investopedia value offering or value proposition is a business of marketing statement that a company uses to summarize why a consumer should buy a product or use a service. This statement convinces the potential consumer that one particular product or service will add more value or better solve a problem than other similar offerings. In a layman term value offering is a selling or attraction point to draw towards itself using tactics and strategies that belong to the marketing front. It should be clear and short as to how it would solve a pain point or an aberration while transacting the business. An ideal value offering is concise and appeals to consumers strong decision making drivers.

Off recently this value offering seems to be a possible game changer for the real estate industry as it embarks upon enhancing consumer experience, forces to alter decision logarithms of the consumer and thereby improving the selling points of the product or commodity (real estate in this case) more radically. Recently Viridian RED which is setting up World Trade Centre (WTC) in Gujarat International Finance Tech-City (GIFT) is using this value proposition strategy to attract global businesses to WTCs and thereby focusing more on customer satisfaction rather than sale of real estate. This has provided Viridian RED an upper edge amongst its contemporaries in the International Finance City of Gujarat. On a much similar line, a particular value offering technique has been narrowed down by real estate giant Emaar MGF, which tied up with PayUmoney to provide consumers and its buyers the ease of paying installments digitally and thereby circumventing the red taped procedure of Public Sector Banks in paying such mortgaged recurring installments. This has advertently placed Emaar at a level where it is perceived as more consumer friendly, approachable and relying unit in the real estate industry.

Succumbing to the demand of the consumers, more and more realtors have to embark upon providing value offering services by providing them a value proposition which clears and rectifies glitches created by a pain point in the eyes of a consumer. More prospective models can be similar to Emaar MGF, providing online 3D tours of the property using virtual reality as being used by Supertech for its Lavasa property. Also one can outdo competitors by using the tool of digital marketing and app developing so that real time tangibility with the prospective buyer can be achieved. Hence this is probably not an overstatement to say that such value offering services can be the real deal in the real estate which if embarked upon judiciously can prove to be a shot in the arm for real estate sector altogether.

Indian commercial real estate 2016 vs.2017

India, popularly known for her never ending population and pollution, slapdash politics, democracy and diversity, is emerging as a hotspot for both manufacturing and investment. Our country has risen as a perfect business spot in the rampant global economic turmoil.

Infrastructure and real estate are two very crucial sectors for any developing economy. Stimulated by a number of positive factors, real estate sector has seen massive growth in recent times and proposed to grow further in coming years.

It is the second-largest employment-generating sector after agriculture and has contributed 7.4% to India’s GDP in 2014-15 as per the Economic Survey of 2015-16. According to industry analysts, among other sectors, real estate services (categorized alongside financial, insurance and professional services) registered an annual growth of 9.4%, accounting for about 23% of the quarterly GDP recorded for the period.  

Real estate ownership in India is fragmentary and is divided into organized players, unorganised players and small developers. All the sectors have immensely contributed towards the development of the sector as a whole with commercial sector being the foremost driver.

Assisted by the strong government policies and reforms, commercial sector has seen an upturn in the current year. Recent announcements in the sector such as RERA and the exemption of Dividend Distribution Tax (DDT) has boosted not only investors’ sentiments but also enticed huge foreign investment into the sector.

According to industry reports, here is the quick list of changes that took place in commercial real estate sector in 2016:

•     Office space leasing surpassed the 50 million square feet (msf.) mark in 2015 in the top eight cities
• Total FDI in the construction sector, from April 2000-March 2016 stood at US$ 24.188 billion.
• During April 2000-March 2016, total cumulative inflows in the construction development sector accounted for 8.4 per cent of total inflows into the country.
• This year we all have witnessed that the sector is moving from an investor-driven to an end-user driven cycle.
• Large number of MNCs and blue-chip companies were seen purchasing office space in both ready for fit-outs and under construction buildings in top most cities for self-use and investment purposes.
• Companies such as IT and ITeS, retail, consulting and e-commerce have also seen registering high demand for office space in recent times
• Private Equity (PE) investments from foreign funds in the Indian realty market increased at a Compound Annual Growth Rate (CAGR) of 33 per cent to US$2,220 million in year ending December 2015.
• Transaction sizes have improved in 2016, and commercial projects have attracted a substantial amount of capital.
• Delhi-NCR remained the biggest office market occupiers with 88 million sqft out of 110 million sqft of land.
• The Make in India initiative has helped to accelerate leasing of commercial property by the manufacturing sector, which has outpaced the Information Technology (IT) sector by registering two-fold increase in office transacted space in the first six months of 2016.
• The introduction of 100% FDI under the automatic route has attracted large number of foreign investors in to the sector
• With the introduction of the Real Estate Regulatory Act (RERA) and Benami Transactions bill in place, the risk factor formerly associated with the sector has been reduced up to a greater limit.
• The much awaited the Goods and Services Tax (GST) is all set to be implemented and the recent demonetization move to clamp down black money hoarders from the sector has brought transparency and correction in real estate valuations

India being accounted for half of Asia’s total office leasing itself substantiates the enormous growth of the commercial sector in the country. Commercial real estate is growing significantly, providing the much-needed infrastructure for India’s growing needs. The segment is expected to witness an upswing in 2017 with leasing activity improving in the country. The recent government’s policy announcements are believed to play strategic role in coming years (2017 ahead) in removing major inconsistencies from the system. The Indian real estate market is expected to touch US$ 180 billion by 2020.

Last but not the least, with demonetization move, the sector is proposed to see transparent dealings, leading to a very strong foundation for long-term growth. The organized segment is expected to gain strength with more emphasis on cashless transactions. Real Estate Investment Trusts (REITs) are likely to maintain positive earnings growth in the coming year. Hence we can see that, the government’s incessant focus to upsurge the comfort of doing business in India by introducing investor- friendly policies will definitely going to unravel the development potential of commercial real estate sector in 2017.

What’s so unique about GIFT City, Gujarat

In early 2015 when Mr. Modi, the Prime Minister of India, announced his ambitious project of developing 100 Smart Cities, he was criticized by many. Experts estimated that it would require around $20 billion to develop one Smart City, an amount impossible for the government to allocate. On the other hand, Mr. Modi was confident of what he was proposing. Well, he knew what a smart City means and how that can be developed! After all, he was one of the masterminds who conceptualized GIFT City in Gandhinagar, Gujarat.

Not only being the first entrant to the list of 100 Smart Cities, Gujarat International Finance Tec-City, or GIFT is also a role model for many. GIFT City was initially conceptualized as a Central Business District between Gandhinagar and Ahmedabad. It then soon got converted into International Finance Tec-City. It is being developed on 886 acres of land. It will provide high-quality physical infrastructure to its occupants. Services like 24 hours electricity, water, gas, district cooling, roads, telecoms and broadband would encourage finance and tech firms to establish their operations there. GIFT City will have a special economic zone, international education zone, integrated townships, an entertainment zone, hotels, a convention center, an international techno park, Software Technology Parks of India (STPI) units, shopping malls, stock exchanges and service units.

GIFT city will provide a new lease of life to the now quiet state capital, Gandhinagar, a 20-minute drive away. Eventually, there will be bus and metro service connecting GIFT City to Ahmedabad and Gandhinagar and will gradually become the focal point of all business activities.

World class office and retail complexes at GIFT City will help create more than one million direct and indirect jobs. The city will also have residential complexes which will allow employees to walk to work, and social infrastructures like a school, hospital, and malls. GIFT City’s administration plans central air-conditioning in all buildings, filtered tap water and municipal waste collection system. These facilities would make GIFT City far more advanced than existing Indian cities.

The Indian Government, its Prime Minister, in particular, is very optimistic about this city. It has roped in state-run banks and global financial institutions to fund the project. The first phase of the planned city is expected to get completed by the end of the year 2016. Once fully operational, GIFT City will redefine the meaning of ‘Urban’ and will surely encourage many more cities.