There are 5 major trends emerging that will have both real-time and long-term impact on the way real estate is developed, transacted and used in India, according to JLL India.
First is co-working spaces are finding favour with independent consultants and freelancers.
With the growing start-up ecosystem across India and the central government creating an enabling environment for entrepreneurship, demand for office spaces matching such firms’ requirements has gone up in the last few years.
Co-working spaces are popping up across Indian metros as well as tier-II cities, and are helping many start-ups get flexible working options at prices they can afford. These spaces offer desks at cheaper rentals and some also allow a rent-free period to tenants apart from utilities and an office-like look-and-feel to potential start-ups.
Some of the co-working places also work as incubation centres for the urban centres they are based out of. Interestingly, start-ups buying/leasing real estate to sub-lease it to such tenants is also on the rise. At a rough estimate, over a 100 of such players are already active across India. This trend is slowly and surely catching up in India.
Secondly, crowd-funding is beginning to take hold. It helps innovators and inventors raise money for launching their products or services through the Internet. The practice involves raising small amounts of money online, from many people across the globe, to finance a project or venture. While other industries have seen the emergence of a more dynamic crowd-funding scene, real estate’s popularity still has a lot of catching up to do.
In China, the real estate industry is no longer the exclusive preserve of big investors, and property developers have turned to crowdfunding to help finance the construction of commercial and residential projects.
Although in nascent stages in India, crowd-funding can pick up here as well because the financials of many developers are stretched, said Anuj Puri, Chairman and Country Head, JLL India.
Thirdly, transparency will increase and help attract more funding. Two-thirds of the real estate markets globally have shown progress in their levels of transparency over the past two years, according to JLL’s Global Real Estate Transparency Index (GRETI) 2016. India too made improvements in overall transparency scores by moving up four places, and its tier-I cities are expected to break into the transparent category in the 2018 rankings.
Out of 109 countries, the top 10 highly-transparent markets alone corner 75% of global investment into commercial real estate (CRE), highlighting the extent to which transparency drives real estate investment decisions, added Puri.
Fourth, retailers are looking favourably at office-retail complexes. For quite some time now, retailers have been road-blocked by a lack of available quality retail space. At such a time, office-retail complexes (ORCs) are emerging as alternatives to high streets, and even malls, for some categories of retailers such as F&B (quick service restaurants, coffee shops, fine dining, pubs, etc) or BFSI (bank branches, ATMs, broking services, etc).
And, lastly, technology is transforming real estate requirements across the globe. Tech-enabled workplaces are becoming more common across the globe. In the US, research on the budgets of clients’ interior build-outs are showing very interesting results, with IT costs as a proportion of overall construction budgets increasing rapidly. Earlier, they were around 5% of the overall construction budgets over the last decade.
More recent build-out budgets show the expansion of IT services from cabling and wiring to more than a dozen items for technology, including access devices, infrastructure, mobility, connectivity, data security systems, wireless connections and upgrades, business-specific apps, company-specific conferencing and presentation capabilities. All of these items can add up to 35% or more of a budget for a truly technology-focused company.