india real estate - new asset classes emerging

8/11/2019 India Real Estate - New Asset Classes Emerging

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India Rising ?



Favourable DemographicsThe Young & Strong



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



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



…Today’s Young is Tomorrow’s Old



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



The Demographic“Dividend”

Increased Wealth



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



..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



Impact on Indian REstate Market



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



Tapping the Untapped, Youth Housing



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



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/



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



Living Life King Size, Luxury Housing



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



Away from the Mainstream, Vacation Hom



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



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



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



Defying a longstanding Taboo, Senior “Li



•

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



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



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



Going Beyond the Hygiene,Value Added Services



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



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



Adopting Global practicesEmerging Ownership Models



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



Thank You

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