Shubhankar Dongre, Co-Founder, Propstack
Indian Commercial Real Estate has not been ailing in recent times, but it’s been no party either over the past seven to eight years. It’s been through a recovery cycle since the dramatic global collapse of 2008, but fortunately it has gone nowhere close to the dizzying statistics of the pre Lehman era. It’s been through a round of much required cleansing and now has set itself up on a platform for an upswing on every level. This would not only include the economics of the industry, but also focus on quality assets, corporate governance and a much required disruption and enabling by technology.
Policy reforms by the Government including those in favor of the highly anticipated REITs (Real Estate Investment Trust) is not only going to bring in liquidity to Commercial Real Estate, but also focus on bringing more transparency for investors and end users. We’ve already witnessed a host of FDI (Foreign Direct Investment) Real Estate funds ramp up activity in India over the last 24 months. Majority of this traction has been in Commercial Real Estate with marquee funds like Blackstone, GIC, Brookfield and CPPIB among others aggressively assessing and acquiring assets. To add to that, the Real Estate (Regulation and Development) Bill passed recently by both the houses of parliament is expected to facilitate more foreign direct investments in the sector.
2016 should continue to be active year for global real estate investment. Demand for the commercial real estate in 2015 was steady with approximately 32 million being absorbed. Vacancy, however, averaged at close to 17% and looks set to drop further this year, prompting the demand for new construction and launch of quality commercial supply. Demand for office space will continue to be driven by IT/ ITeS, BFSI, Manufacturing, Pharma and the ever burgeoning internet economy. Indian Commercial Real estate is poised well now with policy and technology support to fulfill the promise it has always shown.
Globally, Real Estate is perhaps the largest asset class that has dawdled behind in technology innovation; more than ever in our part of the world. Real Estate, however, has created enormous wealth without any changes to workflows or processes. One can only imagine how this industry could be with the efficiencies technology would bring in. Residential Real Estate has already witnessed tech action with online marketplaces, broking services and marketing platforms jostling for space. Commercial Real Estate on the other hand remains an intriguing area begging for tech disruption. First thoughts straight away point towards areas like transaction management, project management and property management. Stakes are higher due to higher values and volumes and customization will be key as regulations across markets dictate the functioning of commercial real estate. Adoption of technology will provide competitive advantages to all stakeholders involved. Any technology that is able to integrate opportunities across markets and verticals will emerge as highly valuable to the industry.
“It doesn’t make sense to hire smart people and then tell them what to do; we hire smart people so they can tell us what to do.” – Steve Jobs
This ethos applies to any organization looking to disrupt incumbent ways of doing business with technology or otherwise. We’ve already seen global tech giants like Apple and Google demonstrate this on a massive scale. Surely Commercial Real Estate technology can take a cue. If we’re to seriously disrupt Commercial Real Estate with technology, logically, we’re looking for the smartest and sharpest out there; those who can conceptualize visualize and implement technology, product, operations, sales, marketing, analytics and everything Commercial Real Estate technology. Steve Jobs’ quote may have become a cliché in the form of a graphic wall poster at an upcoming tech startups’ office, but I can vouch for the benefits we continue to reap on that philosophy. What we as leaders have, is experience – the catalyst to bringing out the best in our teams. The most obvious being industry experience in CRE, Technology and Analytics. However, that combined with vision, effective communication, perception and strong work ethics makes for a serious concoction. Add to that a free reign in creative thinking, heaps of responsibility & ownership and appreciation - and you have a winner of a team.
The Commercial Real Estate industry is thirsting to solve its everyday business issues and maximize profitability in the most efficient manner - technology aims to bring composure, enlightenment and much required order to Indian CRE.