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8/11/2019 India Real Estate - New Asset Classes Emerging
http://slidepdf.com/reader/full/india-real-estate-new-asset-classes-emerging 1/31
India Rising ?
8/11/2019 India Real Estate - New Asset Classes Emerging
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Favourable DemographicsThe Young & Strong
8/11/2019 India Real Estate - New Asset Classes Emerging
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India trumps China as most populous country by 20302013-2050 population growth rate
2050 Population
Bubble size represents 2013 P
…urban population to grow to52% compared to 31% currently
Source: UN World Population Prospects 2012 Revision
8/11/2019 India Real Estate - New Asset Classes Emerging
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777
1032998
967
933
808
686
202
156
2 0 1 5
2 0 2 0
2 0 3 0
2 0 4 0
2 0 5 0
2 0 6 0
2 0 7 0
2 0 8 0
India China US 26
31
35
42
47
37
40
44
28
33
45
25
30
35
40
45
50
2 0 1 3
2 0 1 5
2 0 2 0
2 0 3 0
2 0 5 0
2 0 7 5
2 1 0 0
IndiaChinaUSIndonesia
Median age in India will continue to be 10Years lower compared to the US and China...
Median Age (years) Population in 18-64 years age group (Millions)
...resulting in significant increase inemployable population, +33% growth be2015- 2050
+33%
-16%
Source: UN World Population Prospects 2012 Revision
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…Today’s Young is Tomorrow’s Old
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8
40
66
81
60
65
70
75
80
85
5
10
15
20
25
30
35
40
45
2 0 1 5
2 0 2 0
2 0 3 0
2 0 4 0
2 0 5 0
2 0 6 0
2 0 7 0
2 0 8 0
2 0 9 0
2 1 0 0
Old age dependency ratioLife expectancy
People will live longer onaccount of improved healthcare
40%
4747%
42%
2 0 0 1
Rural Urban
5%6%
8%
10%
13%
16%
18%
20%
22%
24%
0%
5%
10%
15%
20%
25%
30%
0
100
200
300
400
500
600
2 0 1 5
2 0 2 0
2 0 3 0
2 0 4 0
2 0 5 0
2 0 6 0
2 0 7 0
2 0 8 0
2 0 9 0
2 1 0 0
65+ years % of total
65+ years population to exceed 10%of total population by 2040
Millions
Preference for nuclear farise 70% of households married couple
% Households with <=4 mem
Source: UN World Population Prospects 2012 Revision, Census of India
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The Demographic“Dividend”
Increased Wealth
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6.4
60.7
137.4
111.8
3.2
32.2
114.3
128.6
78.6
7.2Globals
>US$ 22000
Household Income
StriversUS$ 11000-22000
SeekersUS$ 4400-11000
Deprived<2000
AspirersUS$ 2000-4400
Total Households, million
GDP per capita has almost tripled in last decade; expected to grow@ 9% CAGR in next 4 y
2015 2025
1009
1583
2226
0
500
1,000
1,500
2,000
2,500
2 0 0 0
2 0 0 1
2 0 0 2
2 0 0 3
2 0 0 4
2 0 0 5
2 0 0 6
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
2 0 1 2
2 0 1 3
2 0 1 4
2 0 1 5
2 0 1 6
2 0 1 7
USD
CAGR12%
CAGR8%
CAGR9%
Source: IMF WEO, MGI India’s Urban Awakening Report
#w
lit
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..The Money Magnets – Indian HNI population on the Ri
US$ 589 bn
31-55 years Age bracket to which most HNWIs in AP b
Compared to 46-65 globally
156,000
HNWIs in IndiaRanks 16 th in HNWI population
Expected to cross 4,00,000 by 2017
HNI Wealth distribution in IndiaGrowth of 23% yoy
Expected to reach UD$ 2.5 tn by 2
*HNI – Net Investible
27% Allocation to real estate assets – largeCompared to 19% globally; Residential sh
96% HNWIs exhibiting confidence in abili
generate wealth over the next yearCompared to ~75% globally
Source: Capgemini RBC Wealth Management World and APAC Wealth Report 2013
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Impact on Indian REstate Market
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0-17 yrs 18-25 yrs 25-35 yrs 35-45 yrs 45-55 yrs 55+ y
New Asset Classes…
Student HousingWorking Women Hostel
Young Executive’s Housing
+ Emergence of New Ownership and Service Mod
Luxury HousingVacation Homes
Re
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Tapping the Untapped, Youth Housing
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India to be one of the youngest nations in the world with a median age of 28 by2020 and being looked as the future stock of skilled talent
QuantityYoung and Larg
WorkforceQuality
Education andSkills
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QuantityYoung and Large Workfo
QualityEducation and Skills
India’s currently the third largest education systemglobally, after China and the U.S.,
GER far below global average of 26% however …
Target investments of USD 190 bn in next 6-7 years+ Need for 800 more universities and 35,000 more colleges to achieve GER target (30%)
Estimated 142 mn college going population in India in 2020
Higher education sector in India is expected to grow@ CAGR of 25% to $57 billion by 2015
22 47
18%
30%
0%
5%
10%
15%
20%
25%
30%
35%
0
10
20
30
40
50
60
2012 2020
Enrollements (Mn)GER (Higher Education)
India’s workforce to grow by 20% to 933 mWith a surplus of 47 million
47
-10
India China
Labour Force Surplus/
8/11/2019 India Real Estate - New Asset Classes Emerging
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USD 200 bn market globallyReturns in the range of 11-
15%
SafetyManageable Spaces –
Minimalistic & Contemporary
Studio/1RK/CompaUp-market, Lifestyle
High Demand &Absorption Ra
StudentHousing
Working WomenHostels
Bachelor/ Young Housing
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Living Life King Size, Luxury Housing
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Fastest growing segment; accounts for not more than 5% of total residential market in India
Expected to grow at a CAGR of 26% - 9,000 luxury housing units slated to be launched over n2-4 years
Fastest growth seen in super luxury residential segment, with unit areas >5,000 sq ft and pricesin the range of Rs 5-30 Crs, sometimes more
Growth mainly owing to the growing number of HNIs that have RE comprising >1/4 t
investment portfolio & having surplus funds available to invest
Prevalent in Tier I cities – demand in Tier II gaining traction
Differentiators: Branded residences, evolved amenities, exclusivity, superior projectmanagement (by global hospitality), expansive living spaces, sophisticated design and value
added services the key to success
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Away from the Mainstream, Vacation Hom
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Some Initial Trends
NRIs and HNIs (Celebrities, Politicians)considered to be the most potential custom
for vacation properties
~ 54% of second homes in India are boughtparticularly for recreational use like holidays and
vacations
Second home sales increased by up to 50%during 2002 – 07 & expected to grow by 20% yoy
Still in nascent stage in India, however, has growntremendously during the last 15 years
Second Homes account make about 3-4%home sales per year
Vacation Home market is growing @ 9.7% worldwide & @ 14% in U.SVacation Homes constitute 13% of total residential sales in US
25% of the population has a second home globally
Prices could be as high as Rs 10-12 Crorelow as Rs 5-10 lakh - skewed towards hig
Globally
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The Connoisseurs The Money Churners
Purely look at luxury and do not mind spending Rs 3 Crs &
above. Property should have a prestige value attached to it
People who will probably invest and then look
at flipping over if he made a return 2-3 times
Socio Cultural
Life Enrichment
Self Reward & Hedonism
Sense of Elitism & Social Superiority
Retirement Option – Second home a first
home after 5 - 20 years
Capital Appreciation
Rentals
Family Retreat
Retirement – for self/ parents
Fun Finances Future Family
Motivators for purchasing a Vacation Homes
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Second Home Buyer Trends – US vs India
33%
27%
40%
0% 10% 20% 30% 40%
55 orolder
45-54
Under45
Buyer Age
22%
47%
7%
11%
13%
0% 10% 20%
Not Sure
>=11years
<11 years
<6 years
< 3 years
Length of Owne
30%
11%
27%
11%
20%
0% 10% 20% 30% 40%
>1001
501-1000
101-500
51-100
<50
Distance from PrimaryResidence (Miles)
Preference for homes at 2-3 hoursdriving distance from primary home In India, ownership vari5 – 20 yearMost people coming in are in the agebracket of 35-45 years
Charts represent US statistics
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Defying a longstanding Taboo, Senior “Li
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•
Operate mostly on non-profit basis• Provide care to the destitute old people• Basic shelter, food, clothing and medical care• Primarily for individuals who need physical or financial assistance
Type of Retirement Homes
Outright Sale M
Lease Depos
Model
Pure Rental Mo
Prevalent Models
Institutions or Trusts
• Located mainly on the outskirts with a cluster of beautiful cottages
where residents are almost fully independent• Primarily for relatively independent and physically fit individuals• Targeted towards the affluent class of the society• Also rich individuals with old parents can be prospective buyers
Gated Communities / Retirement Townships or Resorts
V/S
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50 – 65 yearsHealthy adult, able to
take care of self
1 – 3 Bed RoomIndependent apartment/
villa
Basic PM, common,
recreation facilities
65 – 75 yearsNeed some support
1 – 2 Bed RoomWith larger toilet and a
pantry
Focus on availability ofready assistance for
carrying out daily chores
>75 yearsNeed continuouattention & care
Studio, 1 Bed Rooequipped with all nu
facilities
Focus on round the c
medical facilitie
Unlike Vacation Homes, preferred formats include smaller spaces (500-2500 sft) in 1-3 BHK configura
Types of Retirement Homes
IndependentLiving
AssistedLiving
Nursin
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Urban FringeHomes
New residential projects / commindependent farm houses in subuareas
The Palm SGurgaon, EMGF
Closer to NatureIncludes residence options along beaches,hill-side homes, riverside resorts and inother natural surroundings
Amby Valley, Lonavala,Sahara India
PilgrimageCentres
Second homes in pilgrimage centrips to such places tend to be pe
Homage, Dev Bhoo
Theme based Includes residences based on certainthemes such as community farming,golfing etc
Nirvana Farms,Wada, MokshanaSpaces
Typology – Vacation & Retirement Communities
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Going Beyond the Hygiene,Value Added Services
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Membership Fee of INR 50,000 – 7,50,000 pa
Complementary 1 year membership offered withLuxury Homes
Companies moving to In house Concierge verticals tocater to Luxe customers
Lux ury Con cierge Serv ices – Conv enienc e on Cal lIncreasingly becoming hygiene for Cash Rich, Time Poor HNI clientele
Branded Living Amenities/ Services of a Hotel in a Residential Sett
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Branded Living – Amenities/ Services of a Hotel in a Residential Sett
• Tie ups with celebrities, international luxury hospitality and lifestyle brands• Increased project visibility and acceptability: 20-60% premium over similar products • Particular Rooms/ Units/ Common Area / Themed Projects• License fee or 10-15% revenue share to the brand owner for the tag• Key is to maintain Exclusivity – should be offered to discerning few
Ph
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Adopting Global practicesEmerging Ownership Models
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Owing a piece of Paradise…for a fraction of a price Condo Hotel Traditional Fractional Private Residence C
BuyerMotivation
Rental/Investment + VacationTime
Rentals + Vacation Time Vacation Time
Typical FractionSize
21-60 days 1/4 th to 1/8 th 1/6 th to 1/12 th
PredominantProduct Type
1 - 2 Bed Suites and Studio HotelRooms
2-3 BHK; increasingdemand for 4 BHK units
High end luxury, fifurnished 3 BHK+
Services* Variable 3-4 star service 5 star, personalised se
Ownership “Ownership” based; Deededinterest
“Ownership” based; Deeded interest Shares sold in a particular property in a particular lo
Remarks
• Idle time used as part of HotelRental Program
• Rental proceeds split betweenthe owner and the hotel chain
Although shares bought in a single second home, a nof PRCs also offer to swap time and location with otlocations within their company portfolio
*Managed by well reputedhospitality companies
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Thank You
!
?
#@