☕ The other side

Good morning, today it's all about finding balance. Between optimistic industry reports and tough questions that make us relook at all the numbers and trends doing the rounds. 

Then, there are days of high calorie eating looming on the radar, meaning salads, fresh juices and exercise have to be a part of our lives right now in order to create some balance. 

And let's not forget about the mother-of-all, income vs. expenditure balance and no matter how many times someone from the Ginger Chai crew tells you that such a balance doesn't exist, you've got this.

Cheers to a brand new week. 


The Changing Face Of Warehousing

The warehousing market in India was valued at INR 1,050 billion in 2020 and is now expected to grow at a CAGR of 15% till 2025. 

From being mere weather proof storage for goods of all kinds, warehouses today are hubs of innovation, both in terms of technology and evolution of the business model itself.

Trends Dominating Warehousing

  • More than ever before, consumers are making buying decisions based on delivery speed. Shiprocket, which currently operates out of 13 warehouses across India sees the need to set up 400-500 smaller, city-centric warehouses to accelerate the speed of delivery. 
  • On-demand warehousing is in, meaning outsourcing of operations will be the new normal – to reduce costs, brands will choose not to own warehouses separately. Instead they will opt for custom sized storage and distribution services. 
  • Technology is now at the forefront of integration. Ecommerce firms today are using multiple warehousing services and the challenge is to integrate all the warehouses on a single platform to enable visibility across multiple locations and cut costs. 
  • With new sectors like home decor, pharmaceuticals, FMCG, beauty, and personal care coming into prominence, there is a need for more comprehensive solutions to solve sector-specific problems. 
  • Warehousing users are increasingly adopting a hybrid model - which means leveraging fulfilment providers as well as creating their own supply chain based on geography and demography. 
  • Warehousing is a compelling option for portfolios today and has received a record INR 5,500 crore from investors in Q2, 2021 - the most active quarter for the sector since 2018-19. 

A Reel From The Past

The Regal Cinema, Delhi, 1959. [Indian History Pics]


Diffusing Ticking Bombs

The Kolkata Municipal Corporation (KMC) has finally woken up to numerous calls from its residents complaining about buildings that are dangerously close to losing their battle with gravity. 

It's Not Ageing Well

Like all big cities across the world, Kolkata too has an old city centre, with many buildings that are close to a century old and then some that are even older.

A survey conducted over 5 years ago had unearthed that there are around 3000 old and dilapidated buildings in the city, mostly in north Kolkata, that often collapse causing deaths and injuries.

Once in a while, the occupants of such death traps move court against owners who are not eager to repair such buildings, as tenants living there do so at unbelievably low rents. In other cases, an owner can't even be traced.

This means that in reality, repairs never take place and these ticking time bombs get closer to taking lives with each passing season.

The Need For A New Law

According to existing laws, authorities can only stick a notice to a building, warning that it is dangerous to live in but cannot force its occupants to leave.

However, last week the civic body officially sought permission to take over identified dilapidated buildings, vacate and reconstruct them, and then hand the possession over to the existing tenants again.

The final proposal to this effect was prepared by the KMC and has been accepted by the board of administrators, meaning it is now on its way to be evaluated by the legislature to be turned into a state-wide law.

The Process Is Underway

While the legislative journey is in action, KMC engineers are concurrently in the process of compiling a list of buildings that are at alarming levels of decay.

Residents living in such structures are breathing a sigh of relief and have also offered to contribute whatever is possible financially, to complete the reconstruction process. 

So far, even if there was a will, tenants could not carry out reconstruction work as the law does not give tenants or civic bodies this right.

Other cities need to a take a page out of this story and evaluate their own ageing and life threatening structures. 


Half A Cup Extra

  • Chennai's metro rail phase - 2 construction work is on schedule
  • G20 offers little new on climate, leaving uphill task for COP26 starting this week. 
  • Australia eased its international border restrictions today for the first time in the pandemic, allowing vaccinated citizens to travel freely and many families to reunite.

Both Sides Of The Story

While reading through major recent reports on housing and realty - which are all brimming with positivity and signs of big time resurgence - we found a questioning voice with reasonable substance and realised that we must bring it to your notice. 

Alright, Fire Away

👍 In a recent press release, HDFC Chairman Deepak Parekh expressed that in his 50-plus years of work life, he had not seen better housing affordability in the country than now.

He went on to elaborate that today's concoction of easy liquidity conditions, record low interest rates, and a “burning desire” to be a homeowner has never been brewed before.

The Flip Side

However, another perspective on the current state of affairs reduces all the sector's positivity to a mere sales pitch.

👎 It argues that in a market where the on-ground reality is job losses and salary cuts, a market where an average Indian is reeling under hyper-inflation, homebuyers are unmoved by reports of the real estate market beating all sales records.

This you cannot disagree with - most trending surveys today claim that consumer sentiment is at an all-time high following two waves of COVID-19.

In India, a home is an aspirational product, so much so that ask any Indian and the reply would be that she needs a house. However, the true ask here is not to aspire for a home but to be able to afford one - a difference of night and day.

The Best of Times Has Begun

Deepak Parekh stresses that India is fortunate not to have a housing bubble and that the inherent demand for housing remains immense, leading to efforts to ensure right-priced housing supply to meet the needs of all income groups.

Also, sales aside, new project launches can be seen as “the greatest mark of confidence for the future”.

Or Has It?

The other side clarifies that most reports today are about real estate sales patterns in the Top 10 cities only, which does not reflect the truth. 

Also, comparing Q3, 2021 sales to pandemic hit Q3, 2020 to declare 80-90% recovery or 60% growth makes no logical sense.

It emphasises that in a country where income to property prices are highly skewed, the majority of homebuyers fall under the top 10% of the demographic profile and this is the segment that is under the most amount of pressure post Covid-19, due to job losses and salary cuts.

Demand, thus, is only notional.

Ravi Sinha points out that since the lifecycle of an average real estate project is at least five years, sales benchmarking should also use the same time frame.

The sales statistics will remain biased unless it is collated on the scale of average sales in the last five years.

🎙 - "But then real estate reports conceal more than they reveal."


More cool blurbs tomorrow morning. 

Have a great day. 💚

☕ The Crew@Ginger Chai

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