Boom and bloom: real estate sees many changes

Over the past decade, emergence of new residential markets on the outskirts of big cities has been one of the most significant changes in the domestic real estate sector. Evolution of new housing formats such as townships, high-rises, green buildings, and customized dwelling solutions, in the form of luxury, branded and smart homes, retirement homes, are a few other key trends that the residential segment has witnessed. Apart from this, developers are turning into formal corporate outfits and deploying modern construction technology, in the form of pre-fabricated, pre-cast and monolithic structures. But only time will tell if these trends will help better living solutions to evolve, and whether evolution of smart cities will further redefine India’s real estate landscape.

Soaring real estate prices and fast-depleting vacant lands triggered several companies to relocate to peripheral locations, within large and mid-sized cities. This created huge residential demand and attracted developers to markets such as Hinjewadi in Pune, Hebbal and Whitefield in Bengaluru and Hitech City in Hyderabad.

Need for self-sustained clusters in far-flung areas gave rise to integrated townships. To further differentiate their offerings, a few developers are offering sewage treatment plants, solar panels, exclusive parking spaces and housekeeping services, in addition to setting up schools, healthcare facilities, malls and food chains. Residents in certain townships also enjoy a “walk-to-work” environment, due to co-existence of commercial and residential properties.

High-rises also emerged as a new phenomenon in crowded cities. Fast-depleting land spaces may have halted horizontal expansion of residential projects, but not vertical expansion. With customers increasingly eyeing elite addresses, the number of high-rise apartments has surged. Besides building apartments with “iconic views”, developers have also geared up for emergencies such as fires, earthquakes, power cuts, and others by using earthquake-resistant building material, earmarking refuge areas and having a power back-up for critical areas.

Developers are also going “green” to improve energy efficiency, and trim operational costs. “Green buildings” leverage upon natural lighting and ventilation and use environment-friendly raw materials such as fly-ash bricks, energy saving electrical fittings and water-efficient plumbing fixtures. The cost of constructing green buildings is 5-15% higher than that of conventional buildings; yet residents save enough on their water and energy bills to make up for this.

Other kinds of concept homes, too, have caught developers’ fancy. A burgeoning population of ultra-high net worth individuals has led to the evolution of branded luxury homes, where domestic developers associate with global fashion brands and international architects. These are typically large-sized apartments, with double height ceilings, sprawling lobbies and waiting spaces and rare views. Apart from mainstream amenities (gymnasiums, jogging tracks, spas and the like), such homes also offer concierge services, mini theatres, dedicated areas for pets, valet parking, helipads, and other features.

But smart homes is the newest kid on the block. In such homes, automation allows residents to control home appliances such as refrigerators, air conditioners and home features such as windows and lighting, via computers or hand-held devices. Some premium projects even offer integrated entertainment systems, automated garages and smoke detectors. However, this segment has seen interest and action only from a handful of developers so far.

Another concept to have gained ground is senior living. Growing nuclearization of families and the economic independence of retirees have given rise to properties aimed at the aged. These properties offer facilities such as common kitchens, housekeeping and healthcare services. This space has generated considerable interest from global healthcare solution providers as well, who have forged agreements with some local developers.

Recognizing the need to build brand value to target buyers, leading developers have created different teams for sales and marketing activities. These include on-site teams to manage the initial booking and dedicated customer relation managers, to act as a point of contact, through the deal cycle.

Developers have specialized teams to manage sales outreach, cater to non-resident Indian clients and run loyalty programmes. They also have their own research teams, which provide data and analytics to aid in project planning.

Developers are also opting for new technologies to save time and cost. Construction technologies that bring operational and cost efficiency are being used, especially in affordable or mass housing projects. Pre-fabricated structures are manufactured in standard sections on an assembly line, where steel is a key raw material. In contrast, pre-cast structures are manufactured in a factory or on the site itself, using concrete. Monolithic structures are built using Mivan formwork/shuttering, which is environment-friendly and can be reused.

A “smart city” represents a mix of commercial and residential properties, social and physical infrastructure and public utilities. These are expected to function as satellite towns to their larger counterparts and will support urbanization, attract investments and propel growth. Moving ahead, the government plans to set up 100 smart cities by modernizing mid-sized cities. Will this herald yet another paradigm shift in the Indian real estate industry, in years to come? We will have to wait for the answer.

Binaifer Jehani is director, Crisil Research.