Good morning, while we were going about our daily lives, 4 amateur astronauts finally made it to space on SpaceX's Inspiration4 mission, making them the first 4 civillians to orbit our blue rock.
Today's chai honours all civillians and attempts to answer some critical questions that have been bothering them. Like, are shopping malls dying? Or, what is the Indian real estate sector doing about reducing its carbon footprint?
With that and some more, we sign off till Monday morning.
Far From Dead
Q. Will shopping malls die due to the pandemic and the surge of e-commerce?
A. Yes. Shopping malls are dying a slow death and there's no way out for them.
Your test score - 0.0
Ever wondered why Amazon hasn't killed a single Apple/Imagine store yet? Why has Flipkart not wiped out every bookstore by now? And why are numerous new brands entering the retail space every year? Certainly not to sell their wares only on e-commerce portals.
But What About JC Penney, Spinach, Sears etc?
We knew those names were coming. Yes, Spinach, JC Penney and numerous other established retailers have wound up and like all other sectors, many more retail businesses will stutter and die, while newer brands will take the sector higher.
Also, before writing off malls, realistic lines of thought can sometimes be enlightening.
Maybe Sears, JC Penney and Spinach in particular had been horribly managed for some time leading to their collapse. Maybe the older locations of mid-market department stores are nestled in communities that are struggling economically. Or maybe, they were in the wrong malls.
💡 Just because your website has stopped getting traffic doesn't signal that the internet is dying.
More Worldly Questions
The mission critical question any retailer or mall owner should ask is, why would someone get in their car and drive to my location, when Flipkart provides millions of items via their mobile app?
Substantial answers will begin to emerge.
Stores need to provide a customer experience that is worth the travel. That could be providing a uniquely curated product assortment, or a unique shopping experience, or capitalizing on the micro market and its needs. Things that will always remain out of scope for virtual shopping platforms.
The malls that have answered these questions through size, efficient design, successful store mix, squeaky clean upkeep and excited manpower only seem to be growing.
Yes, like every business today, Coronavirus has left a scar on the mall business too but going by global cues, footfalls are now regularly exceeding pre pandemic levels in many countries.
Fung Global Retail and Technology had once estimated that 20% of malls generate approximately 75% of mall revenues. This 20% finds it easier to access financing to constantly improve their properties and keep marketing initiatives ahead of the curve.
Look around you. India is full of such successful malls.
Alright! What's Next?
E-commerce giants like Amazon, Flipkart and others opening brick-and-mortar stores to let their numbing customers finally get tactile feedback.
Amazon’s purchase of Whole Foods was a clear admission that the online giant needs brick-and-mortar stores to be successful in the grocery category.
Even with easy return policies, there are some things people simply want to touch and feel.
We are humans after all and no website in the universe can make your companion happier than hearing the words, 'come on baby, let's go shopping'.
Not Just Another Brick In The Wall
While the sector speaks of reducing operational carbon (the result of building operations like lights, air-conditioning and elevators), embodied carbon (the result of construction like steel, concrete, bricks), which accounts for almost 75% of emissions is often ignored.
Not Anymore. Green Bricks Are Here!
Currently, most bricks in India are manufactured either through the process of firing or using high-energy/embodied carbon binders such as Portland cement.
The blessed folks at the Indian Institute of Science (IISc) have recently developed a technology to produce energy-efficient walling materials using construction and demolition waste, and alkali-activated binders.
These low-carbon (low-C) bricks, as they now call it, do not require high-temperature firing or the use of Portland cement.
One Stone = Two Birds
The technology, researchers believe, will also solve the disposal problems associated with construction and demolition waste mitigation.
Prof BV Venkatarama Reddy, who led the research team, quoted to the press that a start-up will be functional within six to nine months, to manufacture low-C bricks and blocks with IISc’s technical help.
“The start-up unit will act as a technology dissemination unit through training, capacity building, and providing technical know-how for establishing such commercial units across India,”, he added.
Bring On The Weather
Like true ships facing ever-changing weather on each voyage, successful real estate businesses know that bad and fair weather are cyclic and quite the norm, rather than being the exception.
Since we keep our ears to the ground when it comes to real estate trends, we found three things top real estate companies are embracing in 2021 to handle rough weather better.
Vertical Integration
The a la carte system of choosing a separate real estate agent, mortgage agent, lawyer, interior designer, insurance provider and home automation company, is slowly dying.
Browse and check the offerings from top real estate players today and you'll find that vertical integration is giving these players the opportunity to create multiple streams of income, which can lead to a more stable bottom line. On the flip side, consumers are delighted with the single window service.
Fractional Ownership
Single serve pastry and pizza slices are not new introductions. Real estate investment trusts (REITs) were introduced in the early 1960s, so the idea behind fractional ownership isn’t new either. The first timeshare unit was sold in 1974, and that certainly doesn't qualify as new.
What is new, is the idea of combining both and redistributing the wealth created through real estate.
Recently, global fund Blackstone sold about 5.7 crore units in Embassy Office Parks REIT for around INR 2,000 crore (USD275 million) as part of its strategy to monetise part of its investment in fractional ownership of real estate.
Blockchain
Blockchain's genetic code of trust makes it the ideal technology for real estate. Whether it is property registration, land records or mortgages, blockchain has the ability to make processes transparent and reliable.
Top real estate companies all over the globe today are using blockchain's smart contracts and ledger abilities to transparently and efficiently facilitate renting, buying, investing and even lending.
Leading Indian players aren't too far behind either. Big blockchain announcements will follow in the future and we promise to break them to you.
Till then these tools could help real estate companies break through the biggest waves with ease.
- Global IT hub Bengaluru continues to be the hot favourite for at least 22% NRIs who are returning to India, followed by Pune with 18%, while Chennai drew 17% of Non Resident Indians.
- SBI recently launched a credit-score-linked home loan starting at 6.70 per cent, irrespective of the loan amount. Earlier a borrower availing a home loan above INR 75 lakh had to pay an interest rate of 7.15 per cent.
- Retirement home projects, which are becoming popular across Kerala, also need to be registered with the Kerala Real Estate Regulatory Authority (K-RERA), officials said. So far, retirement home projects in Kerala have seen very low RERA registrations.
- The Vadodara Municipal Corporation (VMC) will receive Rs 167.60crore from the National High Speed Rail Corporation Ltd (NHSRCL) towards land that needs to be acquired for the bullet train project. VMC is currently cash strapped, per reports.
These days, people are so preoccupied that there is seldom a moment of true attention. All that changes the minute you step into a shopping mall though.
Welcoming stores want to shower you with attention, as they try and make every precious rupee to keep their store, industry and a tiny bit of the economy on that path to recovery.
But you will never know till you make that trip. Have a great and safe weekend.
☕ The Crew@Ginger Chai