Indian Real estate sector is one of the hottest in the globe. A lot of critical international investors look at India as a potential to grow even further. A report from Indian Real Estate Industry dated August 2020 states the sector to be valued at 9.3 billion USD in 2040 from 1.72 billion USD in 2019. These are some serious numbers. Hence, it is not surprising that many FDI will come into the real estate market in the coming years.
Go back a few years. The picture was not this rosy. The market size and potential were always there for everyone to see—the approach of the stakeholders needed to change for the Indian Real Estate to be a global brand. The market was plagued with issues such as high volatility, speculative behavior, and a highly unbalanced market. Deregulation was the need of the hour.
Once the Indian markets were open post-liberalization, things changed dramatically for the sector. A new actor was introduced to the scene. The actor was none other than the International Property Consultant. This new actor changed the completely revamped Indian Reality sector completely. The critical change was the structured approach that this new Stakeholder taught to the rest of the stakeholders. Professionalism, scientific approach to problem-solving were the main components of the change brought in the IPC’s in the Indian Reality scene. A quarter of a century has already passed since the IPCs hit the Indian markets, and they have put Indian Real Estate Sector on a global map.
The global economy is based on specialization. IPCs are masters at what they do. The kind of know-how they brought in with them was unprecedented and changed India’s very fabric of the market’s very fabric. They became a one-stop-shop for all the real estate needs of a business. Almost every IPC today has an office or a partner in every metropolitan city of the world. This brings synergies and helps them perform locally while still supporting big data from international trends.
The world-class practices that the IPCs have brought with them have done a world of good to the sector. Data analysis is the heart of everything these days. The expertise that the IPCs have brought got in this aspect alone has been a game-changer. Data analytics done by the IPC’s are a revelation. The decision making based on the quality data makes all the difference. It comes as no surprise that the IPC’s provide the best framework for corporates to take financially prudent decisions. Exposure to multiple business domains and geographies is a major significant factor why developers, institutional landlords, private equity investors, and marquee corporate occupiers prefer working with IPCs.
The innovations brought in by the IPCs have taken the sector to another level. IPCs have been instrumental in looking at areas beyond the normal standard convention. Co-living, student housing, senior living, co-working, data centers are some of the wonderfully crafted solutions for the market in India, and data centers are some of the wonderfully crafted solutions for India’s market. A whole gamut of activities around facilitating private equity investments (from foreign PE majors, sovereign and pension funds – Blackstone, Brookfield, GIC, Xander, to name a few) into various real estate asset classes is another role played by IPCs in a market scenario where traditional avenues of finance for developers have been scarce.
Innovations, improvisations are possible only with solid research behind them. This is where the IPCs are responsible for deriving trends and information from the vast amounts of data that they have from across the globe have worldwide. Not just different branches, the vast extensive network of different other cities or even countries help the research teams leverage this information better. Clients use these researches conducted to understand the trends, current situations & the bigger picture of the relevant market they are looking at.
Some of the critical areas that IPCs have made a difference are highlighted below:
- Leasing: This team guides companies what are on the going rental trends in the markets & where is the best place for the company the company’s best place to go to. Their market intelligence, landlord relationships, negotiation & know-how of the local laws all bring value to the clients looking to invest in rental properties. Both retail & commercial office teams leverage the expertise of these teams to create value for themselves. An IPC generally does much more transactions with large developers & investors than any normal average individual broker. This gives an IPC better relationship & rental negotiation power with these big developers, which can be leveraged by their clients in their Real Estate Transactions. Also, their expertise in a rental renegotiation of current leases & restructuring of portfolios has bought cost & space optimization for their clients recently their expertise in the rental renegotiation of current leases & restructuring of portfolios recently brought cost & space optimization for their clients in these tough times.
- Valuation: They are professionals with expertise in scientifically gaging the value of an asset. They provide great values deals to REITs & investors seeking investment in their assets by using processes like discounting cashflows, Past & Future Trends, forecasting, etc. to come o the value of an asset.
- Consulting: This team has proficiency in deciphering the intrinsic value of an asset, and they are used by the client to understand how to potentially unlock the maximum value from that asset as well. They are used by the client to understand how to unlock the maximum value from that asset potentially. For example, Delhi International Airports Limited had a land parcel, but the idea of a Delhi Aerocity was the solution from a consultancy project with a reputed IPC in India. Similarly, DMRC, Bharti, etc. have been constant customers of the consulting teams in IPCs. They also help with guiding the good right geographical & market location mix for a lot of retail clients.
- Project Management: Project delivery with desired results, Timely delivery of desired results & following of all legal norms & processes was one major problem that a lot of the all legal norms & processes was one major problem that many developers face for their projects. This was when the IPCs came in as third party consultants, with their primary role being overlooking the project so that it can be completed in a streamlined, legally sound & timely manner. Project managers also provided value as external auditors & quality inspectors for the projects.
- Building Management: Real estate is an investment for a lot of companies & individual investors. Many of them think of it as a passive income source with zero involvement from them. They were facing a rude awakening when the building’s security management, upkeep, and maintenance duties started falling in their purview. Many of these landlords had no expertise in this side of the business, and that is when IPCs came into the picture to manage the buildings for these investors. Today almost all grade an asset is managed by an external Agency or as we see in most cases by an IPC.
- Capital Markets/Investment Banking: Raising capital for a real estate project has always been a headache for most investors & developers. They want money but do not know who might be interested in investing in their building while. At the same time, there are many investors who many investors are looking for an opportunity to invest in real estate but are unaware of people seeking investments. The capital markets team comes into the picture here. They help developers raise capital for their projects and deal with transactions just like an investment banker.
- Investment/Sales: This team deals with the sale of ready or upcoming assets. The major significant value addition that IPCs bring here is they have a reach to global funds & Real Estate players, which many times reach global funds & Real Estate players, which are often interested in investing in rent-yielding assets for commercial & retail properties but are not aware of the availability. Premium residential projects are targeted to HNIs & PCs generally are seen to be having a better reach to such clients. Their scientific methods to gauge the investment also provides their customers with extra value that a normal typical broker might not be able to give
- Land Transaction: On the face of it, this seems like a very straightforward and easy type of transaction to deal with but look at the Tata Singur land controversy, and it does not seem so easy now, does it?. A lot of due diligence, feasibility analysis & valuation studies go into the land Transactions of such scale. The IPCs provide value to this ecosystem by being one-stop specialist consultants for such transactions seven. Their pan India Presence & market intelligence keeps them apprised of even the off city land parcel availability, which can be useful to help clients looking for land parcels to set up industries.