Good morning, we are already nudging the middle of December and it seems 2021 passed by faster than every tech firm's pivot to the metaverse.
With 2022 almost here, investors are tweaking resource allocations, and a within-expected-range of retail inflation could keep interest rates low.
However, with Omicron Overall, the good vibes continue.
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2022: What's Changing For The Investor?
The disruption brought about by the pandemic has investors looking to future-proof their portfolios or recalibrate their strategy towards real estate assets that are performing best today.
Rapid investment being allocated towards housing, increasing development of data centres, and a red hot warehousing and industrial segment tell stories of a slight shift.
2022 APAC Real Estate Outlook - Colliers
🏗 Overall, industrial and warehousing assets will be the highest-in-demand real estate assets in the APAC region, with over 20% of investors expecting capital value gains of between 10%-20%.
🏢 Core Plus Offices will be a favourite asset class for regional investors in Tier 1 cities like Singapore, Sydney, and Tokyo. 63% of the respondents in the survey indicated a willingness to invest in these assets, versus 54% last year.
📌 A Core Plus strategy seeks real estate with high-quality tenants, in good, not great locations. Core plus properties tend to be of slightly lower quality than Core properties and are purchased more aggressively, with more debt.
🛒 Investors see significant potential for the appreciation and repurposing of retail assets, and around a third of the investors planning retail allocations are targeting opportunistic (including change of use) investments.
📌 Opportunistic investing and ground-up development are synonymous. This is the riskiest category and often presents a classic boom/bust return profile. These investments are made with as much debt that a bank will allow.
The India Story
Per the report, Indian real estate has been resilient in the face of the pandemic. For the nine months ended September 2021, investments were recorded to the tune of $3.5 billion, almost 75% of the quantum seen in 2020.
Within Expected Range
They say it’s never a great sign when economic data makes headlines, and that’s certainly the case this morning.
India's retail inflation accelerated in November, led by a rise in food prices, but remained within the medium-term target of the central bank.
😅 This could mean that the RBI could keep interest rates on hold at its next meeting in February.
November Vs. October
- Consumer prices increase 4.91% y/y in Nov vs Oct's 4.48%
- Consumer food inflation up 1.87%y/y in Nov vs Oct's 0.85%
- Core inflation estimated at 6.08%-6.2% in Nov vs Oct's 6%-6.1%
Ooh! That's A Swanky Office
Sample this:
The professionally crafted on-site sales office is still a fairly new phenomenon in India. Before expert agencies began to perfect the art of 'mega-conversion' sales offices, housing sales in India used to take place from Portacabins or sample flats.
This story on the quintessential real estate site office is a must read for those of you who have seen the transition first hand.
Increasing Flood Damages Worrying Real Estate
Increasing instances of flooding are taking a toll on real estate in two ways - one, the cost of repairing the flood damage, and two, the fall in building valuations over time due to increased wear.
Science Vouches For It
By matching an area's flooding trends with professional knowledge of structure and architecture, analysts are now beginning to quantify the impact of flood risk on each specific type of building.
With that data handy, the economic consequences of a flooding event can be calculated with grim accuracy.
This data is now being used by real estate investors to understand the long term costs of owning flood prone assets.
Are Our Coasts Clear?
Hardly. In Kerala alone, INR 2,450 crore has been spent under the 'Punargeham' project to rehabilitate over 18,000 families living in coastal areas, where climate changes and tidal attacks pose a continuous threat to their lives.
As climate change continues to accelerate, flood risk will pose an economic threat to properties across the country.
CRE Takes A Direct Hit
In USA alone, structural damage to Commercial Real Estate (CRE) from flooding, is projected to cost USD13.5 billion in 2022, increasing to over USD16.9 billion by 2052, according to the First Street Foundation.
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Just over two centuries ago, Ada Lovelace was born.
She’s considered to be the first-ever computer programmer— she wrote out instructions for how inventor Charles Babbage’s then also (mostly) theoretical computer could be programmed to perform certain calculations.
Today's blurbs were not written by computers though.
See you tomorrow. 💚
☕ The Crew@Ginger Chai