COMMERCIAL REAL ESTATE IN INDIA: ADAPTING TO THE CHANGING TRENDS AND PREFERENCES

February, 2020

Office spaces are gradually transforming from mere physical spaces for the workforce and assets, to spaces that are dynamic and act as enablers for an organisation’s growth. We look at the changing dynamics in the commercial segment and what lies ahead

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Over the last decade, the commercial real estate market has transformed and matured, in the backdrop of policy reforms, institutional investments, foreign partnerships and growth in the services sector.

The average demand pan-India, is expected to increase to 46 million sq ft during 2018-2021, as compared to 41 million sq ft noted in 2014-2017. Keeping up with the pace of demand, new supply has also seen an increase of 48 per cent during the said period.

Changing preferences of occupiers and how it impacts commercial real estate developments

However, the decision making process for office space developers has become tough, with regulations like the sunset clause, technological advancements, new corridors being connected with infrastructure developments in the suburbs and shrinking availability of quality assets in core locations, in the backdrop of rising rents.

Factors such as the changing dynamics of the workforce, alternate workplace strategies, co-working spaces and technological advancements, among others, need to be accounted for, while designing a suitable real estate or location strategy. There has also been a sea change among occupiers in the past few years, in their approach towards renting. Occupiers are looking for professionally-managed spaces, improved efficiency and agility to resize the office, with respect to headcount changes.

Impact of co-working spaces on office leasing

The influx of co-working spaces has altered traditional leasing, with occupiers adapting to both flexible office space and fixed office concepts for core operations. Employees continue to be at the centre of decision making, as collaboration and synergies become essential elements of the work culture and wellness is given high importance. Flexible workplace providers and corporates are even organising fitness programs and events, offering healthy food choices at the workplace or providing gym and break-out zones for relaxation, aiming at a stress-free work environment to improve productivity.

Office spaces undergo a transformation

Such disruptors have forced companies to refurbish existing offices and adopt agile workplaces, to attract new talent and retain the existing employee base.

It is not only the physical aspect of the workplace that has witnessed changes but also the mind-set, with corporates offering flexible timings and recreation activities such as a gaming stations, or indoor games. The workplace is no longer seen as a place for ‘only work’ but as an ‘enabler’, to achieve the common goal of contributing to the organisation’s growth. Companies are striving to inculcate a feeling of belongingness, which will only improve as the battle for talent intensifies in the coming years.

Role of technology in the commercial real estate segment

As the fourth industrial revolution sets in, with advances in technology altering the way we live, work, shop and interact, daily routines have become dependent on technology.

Drones, blockchain and data analysis are changing the way the real estate sector operates and has helped to increase interaction with stakeholders, thus, resulting in faster decision making and smarter concepts. The concept of ‘smart’ has caught, up with ‘smart offices’, ‘smart homes’, ‘smart buildings’, etc., in the past few years.

While technology has increased and needs to be adopted, to stay ahead of the curve, it should be embraced with caution. As systems get automated and artificial intelligence as well as robotics are adopted, incremental space take-up can be a challenge in the long-term.

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CO-WORKING SPACES: A PILLAR OF THE COMMERCIAL REAL ESTATE SECTOR’S SUCCESS IN INDIA

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From sprawling business parks and office spaces, to enormous malls with more than a hundred brands, commercial real estate in India has witnessed tremendous growth over the past decade. The sector continues to lure Indian and global investors alike. From office spaces to malls to warehouses, the commercial real estate segment has registered a 40% jump in 2019, as compared to 2018, according to the JLL Pulse – Monthly Real Estate Monitor. Backed by optimistic economic fundamentals, healthy demand and quality supply infusion across sectors, India’s real estate sector is poised for strong growth in the coming years, as well.

The past few years have seen an upsurge in the demand for co-working spaces. There has been a considerable shift, from traditional office set-ups towards an increasing inclination for plug-n-play office spaces. These spaces are seen as a solution to the ever-evolving needs of SMEs, freelancers, startups and multi-nationals alike.

Nearly 12 million sq ft of Grade A office space was completed and 11 million sq ft absorbed during the last three months, as per JLL’s Real Estate Market Update for Q3. This is expected to grow three times, over the next three to five years, leading to massive opportunities for this business, in India. Co-working has now established itself as a mainstream segment, playing an integral role in the growth of commercial real estate leasing activity.

Co-working spaces are changing the dynamics of commercial real estate

Shared workspaces are slowly replacing conventional office spaces, with corporates and MNCs opting out of traditional office spaces and choosing modern day spaces with Grade ‘A’ amenities, at affordable rates. As corporates continue to assess flexible space combinations in India, co-working players in the segment continue to enlarge their footprint across the country.

Today, India has one of the biggest markets for flexible space in Asia-Pacific and will continue to go from strength to strength. Since its inception, co-working spaces have come a long way. Earlier, landlords were wary of leasing out spaces to operators, due to lack of knowledge pertaining to the co-working business model and unwillingness in making changes to the leasing space.

Furthermore, high leasing rents were a hurdle for many operators and prevented them from expanding their business. The scenario has drastically changed as operators leased about 4.6 million sq ft of space in H1 2019, an increase of about 52% on a y-o-y basis, says Colliers’ The Flexible Workspace Outlook Report 2019.

Shorter leases on collaborative, flexible workspaces are rapidly becoming the norm across major markets. It is emerging as an effective long-term prospect, posing as a lucrative landlord-tenant relationship that resembles traditional arrangements. Flexible spaces not only provide respite to landlords, they are also a haven for startups and SMEs. Viewed as the most suited choice for millennials, collaborative spaces attract working professionals from all fields and professions. It saves them from the hassle of paying huge rents, setting up office spaces during their early years and providing a collaborative environment.

Round-the-clock amenities like 24X7 cafeteria, meeting rooms, collaborative zones, etc., at nominal prices, makes co-working spaces the optimal choice for most working professionals. As the corporate world adapts to technology and design trends, it is vital to keep in mind the employees’ needs. Many people value a space that encourages the growth of a community. A community at workplace promotes an open culture, which is beyond hierarchies. A co-working culture solidifies bonds amongst employees and breaks traditional stereotypes of formality and protocol.

The future of co-working spaces in India

As the co-working trend continues, more and more real estate investors are choosing to include co-working spaces in their portfolios. In terms of community members, it is safe to say that co-working spaces serve as the ideal workplace, by bridging the gap between the needs and wants of the community members, by providing optimum infrastructure that promotes work-life balance at affordable prices.

According to JLL’s report on ‘Emerging Trends in India’s office sector’, the total amount of space taken up by co-working space providers, in the seven major cities, has tripled from 1.1 million sq ft to 3.4 million sq ft, over a period of one year. Moreover, the number is slated to only increase in the coming years.

From leasing models to world-class technology, co-working is the fastest growing segment and will definitely prove to be a game changer for the commercial real estate business in India.

Also read: HOME FINANCING OPTIONS FOR NRI BUYERS

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HOME SECURITY SYSTEMS: EASY TO USE, EASY ON THE POCKET

Do you think that home security systems and apps are expensive and complicated to use? Think again. We take you through home security systems that are easy on the pocket and easy to use.

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Motion sensors that dial your number; lockers that send an SMS to your phone and door locks that wake up your neighbours in the dead of the night – components of new-age home security systems, these devices marry technology with innovation, to make your home as safe as safe can be.

The market for home security

“The demand for security systems in India, has grown significantly in the last few years. Currently, the market is witnessing a compound annual growth rate of around 18%,” shares Mehernosh Pithawalla, head – marketing, sales and innovation, Godrej Security Solutions.

Product options

• Inexpensive motion detectors (cost: Rs 800-1,000) that track every movement in an empty house and send real-time alerts to phone numbers of your choice.


• Biometric locks (approximately Rs 20,000), which scan your fingerprint and/or your face, to allow access to your home.


• Advanced burglar and fire alarms (Rs 15,000) that are remotely controlled and can be activated or deactivated, through a phone call or SMS. You can also opt for traditional wireless burglar alarms that cost just Rs 250, on your doors and windows.


• Even more basic? You could try a simple door stop alarm that prevents your door from opening and emits a loud alarm when anyone tries to enter your house. Priced at Rs 225, this one is for those who worry about leaving elderly people or young kids alone at home.


• An anti-theft padlock (Rs 500) can also be used on the door or gate, which raises an alarm if someone tries to tamper with it.


• “Video door phones that are connected to the internet are now available, so that you can speak to your visitor, even when you are not at home,” says Pithawalla. Prices start at Rs 5,000 and can go right up to Rs 40,000, depending on the brand and the features they offer.


• For valuables, try Goldilocks (Rs 5,200) – a compact locker, which includes a tamper alarm and can be linked with a laptop, so that you can set a laptop password to access the safe.

Apps to the rescue

There are plenty of services, too, and often, they cost nothing at all. “All you need, is an old smartphone or tablet with a working camera,”explains Radhesh Jhangiani, who built his own security system at his residence in Bangalore, “I downloaded the Salient Eye app on my phone. It functions as a burglar alarm and sends SMS and email alerts, as soon as it detects any activity at home. You can even get photographs, to know what exactly is going on.”

Along similar lines, is the At Home Camera, through which you can watch a live feed via Wi-Fi or mobile networks, get alerts through the motion detector, pick a time when you would like to start/stop recording and even control the camera angle remotely.

Safety door versus burglar alarm?

“While advances in technology enable us to have more control, vis-à-vis home security, traditional methods are still here to stay. Typically, they deny intrusion, whereas, the technologically advanced systems either deter/detect or offer post-event analysis of the intrusion,” explains Pithawalla.

Before you buy

Pithawalla offers a quick checklist:

• Identify the location where the system will be installed.


• Check for prerequisites, like electricity supply, GSM network connectivity, Wi-Fi connectivity, etc.


• Choose a professional company to do the installation.

Installation

Most home security systems are a bit complex and installing them, will require the aid of your local electrician. You can also check with the electronics store or the brand you’re buying from, on whether they offer installation services. In some cases, this may even be free.

Also read: THINGS TO CONSIDER WHEN CHOOSING OFFICE SPACE 

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THINGS TO CONSIDER WHEN CHOOSING OFFICE SPACE

The decision of buying or leasing out an office space is even more challenging than starting the business itself. A single wrong turn,from choosing a wrong locality to investing in a space without keeping the future of the company into consideration, can have unamendable repercussions on your business.

Considering the fact that a usual lease period can go from three to five years, it is unquestionable how important it is for entrepreneurs to consider following factors before signing the office space deal.

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Type of office

This one factor changes every equation of the things that you need to consider. From co-working space, executive or an office suite to virtual office, there are a number of options available for modern entrepreneurs. It is imperative for you to decide on the arrangement that you wish to enter in, even before worrying about cost, locality and space.

For example, in case of a virtual office, the need of space and locality becomes secondary while a space that is technologically independent takes the driver’s seat. Likewise, in case of an executive office suite, space and locality become more important factors when compared to the amenities’ considerations.

The right locality

The first and foremost thing that comes into mind when looking for an office space in a city is the locality. The area where your office space is located sends out more signals than you can guess. If in a posh locality, it gives the impression of a financially sound company and when in a developing vicinity, the question of growth potential and longevity comes into the mind of the key stakeholders.

When we talk about the locality, the decision should be taken from three perspectives –employees – in terms of commutation, and clients - how accessible it is for them and other stake holders to visit the establishment.

If you are blessed with the choice of having an office space in Chennai, for example, the Indian city known for its entrepreneur friendly offerings, the worry of finding the right locality automatically lessens with the planned connectivity and localities growing with an equal pace.

Total cost of the space

The total cost includes both the lump sum amount it took to buy or lease the space and the various costs that comes attached with it. Some of those costs that comes over and above the X amount that goes into buying/ leasing the establishment are –construction cost, moving expense, restoration costs, parking, electricity, food and beverage expenses etc.

Make a list of all those factors along with their subsequent expenses that you will need to have in place before the employees move in to get the actual picture of the cost that you will need to bear.

Room for your company to grow

When looking for an office space it is very important to see whether it has enough space to accommodate your present manpower and the technologies needed to carry on the business or not. Also, see if the space is sufficient tooccupy the demands a growing business has – both in terms of physical and technical additions.

These factors play a major role in considering what image your company is projecting to the key stakeholders. Over the lifetime of the company the signals that both employees and clients get from the locality, the office space, and even the interiors, is what the company starts getting known for in the market.

For an entrepreneur to have a long-term gig, it is important that these factors or questions are answered well in advance.

Also read: DÉCOR TIPS FOR COMPACT HOMES 

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DÉCOR TIPS FOR COMPACT HOMES

A small home should not dampen your enthusiasm to decorate it. There are many creative ways to make one’s home comfortable and appear spacious. Here are some useful tips

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Due to the high cost of living, soaring property rates and growing number of nuclear families, the demand for compact homes is on the rise. However, the main challenge, vis-à-vis compact homes, is to ensure that the small space is designed aesthetically. The trick lies in optimising the available space, for a comfortable home.

“The interiors should be designed in such a way that the house doesn’t look overdone or cramped with various elements. A minimalistic design approach, will not only give a subtler look to the house, but also make it appear spacious,” says architect Ricky Doshi of ARD Studio, Mumbai.

Keep the decor simple to make the home look bigger

The various spaces in the house, should be well-defined and serve the intended purpose. “Simplicity doesn’t mean that one must adopt only contemporary design concepts. Even classical designs can be achieved with simplicity,” maintains Doshi, adding that home owners should avoid filling their homes with a lot of furniture and only use pieces that are unobtrusive and leave ample floor space.

Multi-functional furniture

Furniture that can be folded away and multi-functional units, such as a wardrobe-cum-study unit, are ideal for small homes, points out Gita Ramanan, founder and chief designer, Design Café, Bengaluru. “One can also choose sofa-cum-beds or Murphy beds that fold into the walls or a trundle bed below a single bed, in place of traditional beds,” Ramanan advises.

Compact storage

“Every home needs adequate storage space but it should not be an eyesore. One can try innovative ways to add storage – for example, the four inches of space below wardrobes, which is left as a skirting, can be converted into drawers to add 15% more space,” suggests Ramanan.

Use mirrors and glass

“Glass is one material, which not only adds a sleek look to the décor but is also ideal for a minimalistic design. One can use glass on wardrobe shutters and bathroom doors. Smaller spaces can also be made to look larger, by simply positioning a mirror in the right place,”adds Doshi.

Light and colours

Light shades and soft textures give depth to a small space. In a small home, the entire interior will be visible in a single sweep of the eye. Hence, home owners should be careful, to select the right colour scheme for their home’s interiors and also plan the home’s lighting, accordingly.

This can be achieved through a combination of direct and indirect lighting, mood lighting, backlit wall panels and lamp, to create an interesting effect.

Tips, to make a small home appear large

• Choose one colour that is repetitive in the room (for example, in artifacts and furnishings) and introduce a contrast colour in one striking piece.


• Opt for bunk beds that include a study table, wardrobe or storage space for books. You can also choose models where the lower bed can be folded away, to create space for the children to play.


• While selecting important furniture pieces like dining tables or sofa sets, choose models that have built-in storage options. If there is no space for side tables, opt for beds that have storage in headboards.


• Make maximum use of the vertical space in the house, with shelves that stretch from the floor to the ceiling.


• Foyer partitions can work as concealed shoe storage spaces.


• Keep one or two walls free and add quirky items that reveal your personality, such as posters, quotes from personalities, etc. This will create a unique focal point and take one’s attention away from the lack of space.


• Integrate electrical points into drawers, so that appliances can be plugged in and stored easily.


• Full-length mirrors can be concealed in a wardrobe.


• Storage units can be made above WC units for towels, cosmetics, etc.

Also read: WHAT IS TITLE INSURANCE AND WHY DO HOUSING SOCIETIES NEED IT? 

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WHAT IS TITLE INSURANCE AND WHY DO HOUSING SOCIETIES NEED IT?

The RERA has mandated that all developers obtain title insurance for their projects. We examine how this will impact under-construction and completed projects and the benefits that title insurance offers, to home owners

In order to protect the buyer of the property – whether a flat, or land, or even a developer who is buying a land – an insurance company promises to indemnify the buyer against any loss caused, due to any defect in the title of the seller in the property. Under title insurance, the insurance company pays you for any loss in the market value of the property, for expenses which you may incur due to the defect in the title of the property acquired by you.

The defect in the title may be present at the time of buying the title insurance and which, neither the insurer nor the insured are aware of.

Why title insurance is gaining importance

Section 16 of the Real Estate (Regulation and Development) Act, 2016 (RERA), requires all developers to buy title insurance, for the project to be undertaken afresh, as well as for projects that are incomplete as on the date of enactment of the law. This requirement will help mitigate the hardship caused to innocent flat buyers, in case any defect is detected in the title of the land on which the building was constructed.

Title insurance for completed buildings

With prices of residential houses skyrocketing, it is important for the buyer to have an assurance about the validity of the title. As per the provisions of the RERA, the developer is required to buy insurance for title of the land and building, before he transfers the project to the housing society or association of allottees. The developer is also required to hand over the documents of such insurance to the society/association. Hence, buyers of flats which are completed after the enactment of RERA will get the insurance for title, while flat owners who have purchased the flats before enactment of this law, do not have any title insurance. 

As the land is normally owned by the housing society and not by the individual flat owner, the society should buy title insurance immediately, to safeguard the interest of its members. Since the cost of construction of a flat is a smaller portion, as compared to the cost of land, in the total cost of the property, it is more important for housing societies to buy title insurance, with respect to the land owned by the society.

Title insurance products in India

In the absence of historical and reliable data on property titles, the level of risk borne by an insurance company in underwriting a title insurance was not known and thus, insurance companies were unwilling to jump into this segment. With the RERA mandating title insurance for all new and incomplete projects, the IRDA must have prevailed upon insurance companies, to provide title insurance products in India.

The first and the only title insurance provider, as of today in India, is HDFC Ergo Limited. The title insurance policy of HDFC Ergo covers the person buying the title insurance, against the loss caused due to any defect in the title, existing on the date on which the policy is purchased. 

It also covers the expenses, which the insured part may have to incur, in order to defend his title in any legal proceedings. However, any defect in the title, which occurs after the date of purchase of the title insurance policy, is not covered. Likewise, any defect in the title which the person buying was aware of, at the time of purchase of the policy, is also not covered under this policy. 

The policy covers the amount of loss or damage, which the insured may have to pay in pursuance to a final order of any court of competent jurisdiction, as well as any damage payable to a third party under a written settlement. Besides the owner of the property, even a lender, who lends against the title of the borrower, can cover himself against any defect in the title of the borrower. In due course, other insurance companies are likely to enter this insurance segment, leading to better and more refined products.

Also read: VASTU TIPS FOR CHOOSING A NEW APARTMENT 

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VASTU TIPS FOR CHOOSING A NEW APARTMENT

If you are about to buy a new home or an apartment, there are several Vastu aspects of the property that you must check. Here’s a quick guide.

The Indian architectural science of Vastu Shastra, has been a basis for identifying and developing the best living spaces. Vastu-compliant plots and homes, help the inhabitants to live their lives with more happiness, wealth, health and prosperity. This ancient practice has gained popularity in the real estate space, for identifying the best places, plots and structures for residential, as well as commercial purposes.

​​Vastu compliant entrance

While evaluating the design plan or layout of a plot or a construction (flat or apartment), the first consideration should always be for a good entrance. The entrance holds the key to ushering in positivity and happiness for the entire family.

Each living space has 32 possible locations that can function as an entrance of a building. Each of these 32 locations, has their own significance and affects our lives accordingly. For instance, an entrance in the south-east zone, the Vastu zone of cash, results in delayed payments. A south-west entrance is among the least Vastu-compliant entrances and families living in such homes, can face monetary and relationship issues to a great extent.

On the contrary, if you have an entrance in the north, you can expect great success in monetary and business matters, as well as opportunities in your career. If your chosen property or apartment does not have a Vastu-compliant entrance, you can still buy the property and apply certain simple Vastu remedies.

Vastu compliant room direction

The correct location for a room, ensures that you benefit the most from that room. Each room has a positive or negative effect, on the lives of inhabitants of the house, depending on the zone in which it is located.

For instance, a living room in the east zone, is ideal for developing and strengthening social connections. On the other hand, a bedroom between the east and south-east should be avoided as per Vastu. Sleeping in these zones, results in increased anxiety and disagreements with one’s spouse.

One should avoid building a toilet between the north and the north-east zones in the house. It can severely affect the immunity and health of the members of the family living in the house. For kitchens, the south-east is an ideal zone. One should avoid having a kitchen in the north-east and south-west zones.

Panchtattava or the analysis of the five elements

A living space is divided into 16 zones or directions in space. Each zone has a corresponding main element that affects different aspects of our life. For example, the north zone has water as the main element. The main attributes of this zone are wealth, growth, career, monetary gains, etc. Consequently, any imbalance in this zone, has a direct impact on the career, business and monetary health of the inhabitants.

Similarly, fire is the main element of the south zone. The main attributes of the south zone are sleep and relaxation.

While purchasing a home, one needs to check the location of different rooms and internal elements that make up the home. These include kitchen, toilets, balcony, slopes, open areas, water tanks, gardens, service lanes, water storage of neighbours, rain water drainage, the building’s height, shafts, etc. It is important to verify that each of the 5 elements or Panchtattava, is present in its respective zone – water in the north, air in the east, fire in the south, earth in the south-west and space in the west.

Modern Vastu and space programming

What if you have already purchased a property or paid the booking amount? In such cases, you can use the fourth check of Vastu – space programming. With modern Vastu applications and techniques, you do not need to deconstruct or demolish your property. Through simple and effective Vastu techniques and remedies, you can balance the elements in a particular zone. The use of colours, shapes, lights, metals and symbols, are highly effective in this regard.

Also read: HOW TO BUY A HOME THAT DELIVERS LONG-TERM ROI 

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