Opinion
Shankar: Land will never decline in value over the long term
“So if you look at it over a long period of time, I don't think land will ever decline in value.”
Insight
Shankar: Indian Real Estate Expansion Is Capped at Six or Seven Cities
“We look at real estate as a very regional game because I feel like the further away you move away from home base, more leakages, harder to sort of monitor, harder to sort of oversee. And also each state in India is like a different country. The rules are diffe…”
Assertion Partly supported
Shankar: Almost 60% of smaller Indian developers closed post-COVID
“So I don't think it's, it can be like monopol, monopolistic or duopolistic just because of how the scale of where things are. But there has been a huge consolidation in the market, especially post COVID. We saw almost 60% of smaller guys Like shut shop.”
Insight
Shankar: Passion cannot be your job
“Passion cannot be your job.”
Assertion Supported
Shankar: India Urban Population to Reach 600M by 2030 Amid Supply Deficit
“Right now, urban cities are at 35% urbanized. Like, 35% of the population lives in urban cities, which is about four hundred and eighty million people. This is expected to go up to 40% by some 20, 30 or so, which is 600, which is, sorry, yeah, about six hundre…”
Prediction Held up
Shankar: India office leasing will probably hit 70M sq ft in 2024
“India is going to have its probably most successful year of office leasing. I think just in the first half of this year, some thirty four million square feet of office space has been transacted. And that's half the year. Second half of the year is usually more…”
Assertion Not checkable as stated
Shankar: Prefab construction cuts time by a third but costs 3-4x
“While you can cut your time, the timelines by almost a third, the cost was also like three to four X higher.”
Assertion Supported
Shankar: GCCs account for 28% to 30% of Indian office leasing
“The reason why GCCs keep coming up is because from the commercial office take-up, they're taking up almost 28 to 30% of your office space. I think now, co-working was at 25, 26%. It's come down to 21%. IT has actually come down to maybe 10 to 15% from new spac…”
Assertion Supported
Shankar: Only 4% of family businesses survive into fourth generation
“So only, I think, I was reading somewhere that 36% of businesses get into second gen, and then maybe about 11 or 15% get into third gen, and maybe only four percent get into fourth gen.”
Assertion Supported
Shankar: Bengaluru Housing Inventory Overhang Sits at Only Nine Months
“Bangalore has an overhang of, what, three and a half quarters, which is nine months or so, and just to get projects approved, it takes nine to 12 months.”
Assertion Contradicted
Shankar: Listed Indian Real Estate Developers Operate at Slim PAT Margins
“Actually, if you look at the listed entities, the margins, like you said, profit after tax is very slim. It's very slim. That's it. That's in a, yeah, in a good year. Otherwise, sometimes it's a high single digits also. Pat, I'm talking about.”
Insight
Shankar: Plotted land development yields the highest returns for new entrepreneurs
“I'll tell you, highest return is, if you ask me, you take that 10 crores, invest in land, do some plotted development, develop it yourself and sell it. I think you'll get the highest return.”
Insight
Shankar: Escalating land prices make affordable housing development unviable
“With the way land prices are going, it's really hard to do affordable housing.”
Assertion Partly supported
Shankar: Brigade Towers land delivered a 250x to 300x return
“When we started Brigade Towers on Brigade Road, it was 200 rupees a square foot. Today, that same area could be 55,000 rupees a square foot or even, you know, 60,000 rupees a square foot. And that's like a 250 to three, 300 X jump. You know, and if you look at…”
Assertion Supported
Shankar: Bangalore adds 800,000 people every two years
“Every two years, Bangalore adds about 800,000 people, like which is the size of like a Seattle or something.”
Assertion Not checkable as stated
Shankar: Office development returns in India have compressed to high teens
“In office, you, while you get the annual yield of whatever, eight percent or nine percent, between seven to nine percent, you actually make your money when you sell it also, or you put a capital value to it. So then you have a cap rate of, say, eight percent, …”
Insight
Shankar: A property developer's primary function is project management
“I feel like the role of a builder is to be like a project manager. So we're just managing everything, but we subcontracting the laborers while we have architects to oversee the whole design development, you're outsourcing the actual drawings, et cetera, to oth…”
Disclosure
Shankar: Brigade Group earns 60% revenue from residential, 35-40% from annuity
“60% of our top line comes from residential, and about 40, 35 to 40%, depending on where we are in the cycle, comes from the annuity income portfolio, as we like to call it.”
Assertion Contradicted
Shankar: One Billion Square Feet of US Grade A Office Sits Empty
“In the US, of course, There is about one billion square feet of grade A office space that is lying empty.”
Assertion Partly supported
Shankar: Real estate and construction spend under 1% of revenue on IT
“Real estate and construction spend less than one percent of their top line on IT, which includes your laptops and SAP licenses and Microsoft licenses.”
