Fast Forward Future - Sumant Kachru

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Real Surat Development Seminar 2011
Sumant Kachru, Director
ACT Co. Pvt. Ltd.

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  • 1. FAST FORWARD FUTUREof SURAT REAL ESTATE- Sumant Kachru Director, ACT Co.Pvt.Ltd.
  • 2. Sumant Kachru, Director, ACT Company Pvt. Ltd., Surat• B.E. (Construction), CEPT Ahmedabad• MBA (Real Estate), University of Cincinnati, USA• Development Manager, Creative Choice Homes, Florida, USA• Vice President Real Estate, JHM Hotels, Surat• Selected Landmark Projects: • Crossroads Mall, Tardeo, Mumbai • Manatee Springs Apartments, Chiefland, Florida, USA • Buena Vista Villas, Las Vegas, USA • Hickory Hills Apartments, Tallahassee, Florida, USA • Ambassador North Apartments, Houston, Texas, USA • Silas Oaks, Suwannee County, Florida, USA • Luxury Resort & Residences, Singer Island, USA • Anderson Terrace, Spring Hills, USA • The Gateway Taj Hotel - Expansion & Renovation, Surat • AURO University, Surat• Real Estate Expertise: • Turnkey Real Estate Development • Deal Structuring & Negotiation • Land Development Strategy (Colonizing) • Socio-Economic Development (Revitalization) • Innovation - New Product/Market Creation
  • 3. FAST FORWARD FUTURE1. Visualize the Future2. Understand the Present3. Draw a roadmap for reaching the Future4. Build the road – Fast5. Start the journey – Forward
  • 4. 1. NICHE HOUSING PRODUCTS– Active Adult (Empty Nesters)– DINKS (Double Income No Kids)– Affordable Housing (combined with TOD)– Service Apartments– Condo-Hotel– Working women housing
  • 5. Active Adult CommunityTarget: 60+ Empty NestersModel:• Smaller Units• Maintenance Free• Several Hobby/Activity Centers• Age appropriate amenities• Guest house for visiting family• Common Services: – Laundry – Housekeeping – Doctor on call – Security – Car Hire – Shuttle Bus to nearby shopping, city center – 24/7 Paramedics for medical emergency – Food & beverage (dining, eat-in)
  • 6. HOUSING FOR ELDERS . . . A niche product with growing demandThe sharp rise in human life expectancy over the years has resulted in a very substantialincrease in the number of older persons. The demographic profile depicts that in theyears 2000-2050, the overall population in India will grow by 55 per cent whereaspopulation of people in the age bracket 60 years and above will increase by 326 per centand those in the age group of 80 plus by 700 per cent — the fastest growing group. Love at 50: Never too old for a live-in! Ankur Jain & Parth Shastri, TNN | Nov 21, 2011, 08.37AM IST AHMEDABAD: The Mehndi Nawaz Jung Hall, one of the oldest auditoriums in Ahmedabad, could well become the ground zero of a social revolution in India. Such was the success of the countrys first live-in mela for 50-plus people here on Sunday that the organizers have now decided to hold it in Bhopal, Pune, Delhi, Kolkata and Mumbai in the next six months. At least seven couples from as far away as Assam, Karnataka and Gujarat found prospective live-in partners during the event. Many of them are planning to go on dates for a few days before they finally start living in. "Some call our event radical, but we see it as the new thought," said Natubhai Patel, founder of Vina Mulya Amulya Seva, the NGO which organized the mela. Patel will take the live-in couples to Rajpipla on a picnic next month, where they can spend some private time.
  • 7. DINKS (Double Income No Kids)Target: 25-35 young married professionalsModel:• Smaller Units• Maintenance Free• Several Hobby/Activity Centers• Club style amenities• Guest house for visiting family• Common Services: – Laundry – Housekeeping – Security – Food & beverage (dining, eat-in)
  • 8. Affordable Housing (Transit Oriented)• Target: Workforce (LIG & MIG)• Affordable: – To buy: upto Rs.10 Lacs per unit – To rent: upto Rs.3,000 per month• Location: – Close to BRTS, Metro, or Railway station that connects to City Center, Industrial or commercial hub• Why is it needed? – Industry & commerce needs manpower and if they have decent accommodation with less commute time then productivity increases & attrition decreases. Success of industry & commerce directly enhances real estate demand.
  • 9. Service ApartmentsTarget: Corporates/Professionals looking for monthly rentalsModel: Same as DINKS + FurnitureFinancial Options:• Developer can keep ownership for long term rental income & appreciation• Developer can sell the units to corporates/investors while retaining the ownership of common elements
  • 10. Condo-HotelTarget: HNI, Executives, NRIModel: Ultra Luxury Service Apartment with all amenities of Luxury HotelFinancial Options:• Developer sells ownership of individual Units• Buyers use the unit whenever they feel like and rest of the time give it back to the Hotel to rent out• Buyer get a Luxury Property with hassle free rental income• Developer gets upfront unit-sale proceeds, revenue share from rental income of these units and revenue from all the Hotel Amenities like SPA, Gym, Restaurants, etc..
  • 11. Working Women Housing• Target: Single Working Woman• Model: – Studio or 1BHK apartments – Security with Access Management system – Women centric Amenities & Activity center – Centralized common services like Laundry, etc..Why is it needed:• Educated women as part of overall qualified workforce is increasing rapidly and hence becoming an important part of corporate HR policy• Lack of proper housing discourages their in-migration and in turn reduces companies likeness to expand in such city
  • 12. 12 NOV, 2011, 12.29PM IST, ANSHUL DHAMIJA & SHRABONTI BAGCHI,TNNSingle women in India are investing in real estate for stabilityBANGALORE: Single young women in India have earthier tastes and believe in serious asset-creation, which perhaps explains why an increasingnumber of those below 35 are investing in their own homes before marriage in a trend that many believe is a reflection of our changing socio-economic landscape.For 33-year-old Shalini Natraj, "investment and stability" were the prime reasons for buying a 1,300-sqft 2BHK apartment in Jakkur, a suburb ofBangalore, for Rs 50 lakh. "Id been living on rent for some time and I wanted to own a space. I didnt enjoy the idea of someone coming up to meand asking me to vacate or being told not to make any changes to the house," Shalini, a senior HR manager at American retailer TargetsBangalore office, says. "Owning a flat gives me an immense sense of pride and achievement. It feels great to have used my money in a goodway. I feel in control of things."
  • 13. 2. Much Needed Concepts• Title Insurance• Association Rules & Regulations• Multiple Listing System (MLS)• Fair Housing• Collective Purchasing Power
  • 14. • Title Insurance: Insurance that covers the loss of an interest in a property due to legal defects• Types: – Lender Policy – Owner Policy• Why is it needed? To decrease the financial risk of a legal challenge to the property’s title.
  • 15. Association Rules & Regulations (Standardized)Association Rules and Regulations are adopted for the benefit of the Unit Owners andTenants of Apartments. They are intended to contribute to preserving aclean, attractive and peaceful environment. They are not intended to unduly restrictor burden the use of property.The essence of these regulations, rules and recommendations is for each Unit Ownerand Tenant to treat each other with respect and courtesy and exercise commonsense, so Apartment community can be an outstanding place to live.Why is it needed?With increase in buildings per apartment community there needs to a standardizedset of rules that the Association adopts while taking over from the developer. TheOwner’s Association can make changes that suits them in due course but theDeveloper’s standardized set of rules will provide an excellent reference point. Thelong term success of Developer lies in how successful his previous built communitiesare and such a set of Association Rules will help in that.
  • 16. Multiple Listing System (MLS):• Owner intending to sell gives exclusive “Listing” to broker• Listing Broker enters the property data in MLS• Other Brokers seeking property for their clients search the MLS• Buyer Broker contacts seller Broker if the property data matches their Client’s requirementWhy is it needed?• There is no formal system to exchange property “for-sale” information• Without exclusive listing Brokers hesitate to share specific/detailed information on for-sale properties• Without specific/detailed information, Buyer’s brokers have hard time shortlisting for their Clients• MLS provides organized, validated and faster exchange of information regarding sale/rent properties
  • 17. Fair Housing• Equal opportunity to rent & buy real estate• No discrimination based on: – Race/Religion/Faith – Eating Habits – Marital Status – Native Region/State Why is it needed? – Cohesive Social Set up increases real estate demand
  • 18. Collective Purchasing Power• Consolidated demand for basic materials: Cement, Steel, Bricks, Aggregates, etc..• Much higher negotiation power with manufacturers & suppliers to derive: – Lower Cost – Timely Delivery – Higher Quality – Trend awareness• Why is it Needed: – Cost (Saving=Earning) – Quality Control – Time (avoiding delay due to shortage) Example
  • 19. 3. STRATEGIC OUTLOOK - 5 Forces - Power of Association
  • 20. 5 Forces Model (Porter) Entrants NewBargaining Bargaining Power of Internal Power of Competition Suppliers Customers Substitute Products
  • 21. STRATEGIC POSITION With more power, better Entrants technology, organized & New efficientBargaining Bargaining Power of Internal Power of Competition Suppliers Customers Substitute Products
  • 22. Travelling Tower Crane Standardized Shuttering BIGGER FASTER EFFICIENT COMPETITIVE Organized LABOR
  • 23. STRATEGIC POSITION With more power, better Entrants technology, organized & New efficient IT enabled collective power to buyer groups. More aware & demanding clientele.Bargaining Bargaining Power of Internal Power of Competition Suppliers Customers Substitute Products
  • 24. Buying in Groups for Deep Discounts – Collective Purchase Power
  • 25. Buyers can find and interact with each other ONLINE- Collective Power
  • 26. STRATEGIC POSITION With more power, better Entrants technology, organized & New efficient IT enabled collective power to buyer groups. More aware & demanding clientele.Bargaining Bargaining Power of Internal Power of Competition Suppliers Customers Substitute Products Changes is business models need new-products. Changes in life-style will require new housing products.
  • 27. Bungalow Shops Apartments Malls
  • 28. STRATEGIC POSITION With more power, better Entrants technology, organized & New efficient IT enabled collective power to buyer groups. More aware & demanding clientele. Bargaining Bargaining Power of Internal Power of Competition Suppliers CustomersDirectly impactsinput cost andhence profitability.Artificial Shortagescan delay projects Substitute Productsand create Clientattrition risk Changes is business models for retail or office will need new-products. Changes in life-style will require new housing products.
  • 29. Price rise, labour scarcity hit Gujarat realty sectorPRESS TRUST OF INDIASHARE · PRINT · T+NEW DELHI, NOV. 22:A steady rise in the price of construction material such as cement, steel andbricks, coupled with a shortage of skilled labourers, has hurt the realtysector in Gujarat, a senior officer-bearer of the States real estatedevelopers association has said.Soaring raw material prices, shortage of labour and other factors are leadingto delays or cancellation of projects across Gujarat, Mr Vipul Thakkar, theVice-President of the Gujarat wing of the Confederation of Real EstateDevelopers Associations of India (CREDAI), said.Mr Thakkar said the realty business in big cities, such asAhmedabad, Vadodara, Rajkot, Surat, Jamnagar and Bhavnagar, has been hitas a result.He said cement prices had been hiked four times during the past year. “Thishas made construction of a housing project a very costly affair. The cost ofcement per bag has gone up to Rs 270 from Rs 170 over the past one year,”he said.
  • 30. OTHER FORCES REGULATIONS ECONOMY INFRASTRUCTURE
  • 31. POWER OF ASSOCIATION• United Influence: • Regulations • Suppliers • Buyers • Utility/Infrastructure providers• Awareness: • Research • Seminars • Trade-shows • Image building• Ombudsman: • Dispute resolution within members • Upholding Codes of Conduct• Representation: • National & International Groups • Government
  • 32. FUTURE QUESTIONS