We are reinventing our residential portfolio by migrating towards the premium segment.

Aditya Virwani, Chief Operating Officer, Embassy Group

How do you view the transformation of India's real estate sector?
Indian real estate has experienced a prominent transformation over the last few years, with stricter regulatory measures, increased transparency, and consolidation in the industry creating greater demand and an inflow of institutional investments.
We have seen costs going up due to increased levels of inflation, leading to challenges in getting financing for real estate projects. This has been exacerbated by the void in financing brought about by the NBFC crisis and bank consolidation. However, we are currently in the midst of a healthy residential cycle, as too much financing means oversupply down the line. In addition, mortgage rates have peaked, and we don't anticipate them going up further. India is still economical as compared to the rest of the world, where housing markets are going through an affordability crisis.
We can expect to see further consolidation in residential real estate over the next two to three years as well, as homebuyers lean more towards large listed developers. Ready-to-move-in homes, completed inventory, and developers with a proven track record of on-time project completion are driving sales.
Reports predict that India will have 2,400 Global Capability Centres (GCCs) by 2030, and potentially even hit 2,550. Despite the slowdown in the IT industry, we have seen MNCs cementing India as a hub for GCCs, transformation, and innovation. The ensuing job growth has had a complementary effect on housing. Cost pressures in the west and India's skilled talent have enabled the real estate sector, including the key segments of residential and commercial, to continue its upswing.
The past few years have seen institutional investors look positively at India's property market as compared to its peers in the Asia Pacific, driven by its post-Covid bounce-back, considerable structural overhauls, favourable economic outlook, better valuations, higher yields, affordable mortgage rates, and a promising growth forecast. We can further expect to see more Real Estate Investment Trusts (REITs) in the future. The successful introduction of REITs in India has been a game changer, allowing retail investors to participate in the commercial real estate market and unlocking its immense potential. Moreover, institutional investors are attracted to the better return-on-investments and the reliability and transparency these assets provide.

What are the latest trends in the premium and luxury segments?
India's luxury and premium housing markets, having withstood the onslaught of the Covid-19 pandemic, have seen a dramatic bounce back and remarkable uptick in sales in 2023. Factors including the evolution of first-time homebuyers, larger numbers of HNIs investing in luxury properties, and India's resilient economy (with its projected growth rate of 6.1% this year) have contributed to the growth of luxury real estate across the country. According to a recent report, we saw the share of luxury and mid-segment in overall housing sales increase from 14% and 36%, respectively, in FY20 to 16% and 42% across the top seven cities in the first three quarters of FY23.
Trends in the luxury segment include:
The growing power of HNIs and NRIs: A recent study shows that up to 74% of high-net-worth individuals believe that real estate is a vital hedge against inflation, with 61% of them planning to invest in it in FY 2023-24. Further, NRIs have a higher purchasing power due to the falling rupee. The sense of security associated with owning a home in one's own country of origin has contributed to the growth in NRI investments as well.
Changing consumer preferences: The pandemic has reiterated the importance of owning a home. The rise of work-from-home and hybrid work has driven homebuyers to seek bigger villas, villaments, and expansive condominiums with flexible layouts, designated work areas, more natural light and ventilation, outdoor spaces, and other features that cater to their overall wellbeing. Upgrading one's lifestyle remains a primary motivation for investing in luxury property. Above all, today's luxury buyers are interested in a more cosmopolitan and aspirational way of life, which has been a key growth driver for the segment.
Evolution of the millennial homebuyer: The luxury segment has expanded from being solely reserved for UHNIs, HNIs, or NRIs. It now appeals to aspirational young millennials who value tech-enabled, efficient designs. Their growing purchasing power and global exposure have driven them to seek higher standards of living. With India home to several start-up unicorns, we have seen a younger population that is eager to invest in luxury properties.
Some of the trends gaining traction in the premium segment include:
The adoption of green and sustainable building practices: Millennials and Gen-Z, who now form a substantial part of the homebuyer market, tend to be more environmentally conscious and place a higher value on sustainability. They recognise the value of choosing homes that reduce their living costs and carbon footprints.
Rising demand for plotted and integrated developments: The long hours spent indoors have inspired a greater appreciation for integrated 'live-work-play' communities. Ready-to-move-in properties, branded plots, and independent villas have witnessed significant interest, along with the '15 Minute City'—homes in urban, self-sustaining environments.
Development of Tier 2 and Tier 3 cities: These cities are likely to experience an acceleration in their economic and social development as a result of the allocation of resources and activities directed at them. Further, increased urbanisation and the availability of land banks are factors supporting an upsurge in launches in the premium segment.

What is the importance of properties dedicated to senior citizens in the country? What is the potential for such projects in the future?
Studies show that by 2050, one-fifth of India's population will be 60 years of age or older. The senior living segment has immense growth potential in India, as it comprises less than 1% of the real estate market in India, compared to 12% in the US and 5-6% in Australia.
The post-Covid world has seen demand for community living that ensures the physical and mental wellbeing of seniors, even in times of crisis. While senior care services in India are still in their nascent stages, the demand for these kinds of services is increasing rapidly. Some conventional real estate assets may be witnessing sluggish growth; however, this sunrise sector can challenge existing market trends due to its high demand and low supply.
Embassy Group recently launched Serene Amara by Columbia Pacific at Embassy Springs, our first senior living community in Bengaluru. We forayed into this largely untapped segment with the aim of meeting international standards and offering a supportive and nurturing environment that enhances the well-being, independence, and social engagement of seniors in India. We partnered with Columbia Pacific Communities, who bring with them 40 years of experience in senior living and care. Seniors will be able to benefit from the city-within-a-city of Embassy Springs, which offers over 100 amenities all within walking distance.

How is Embassy Group responding to the latest requirements for real estate properties? What are the new projects in the hospitality, commercial, and residential segments?
India's position as a preferred global investment destination and pipeline of multinationals seeking to capitalise on India's skilled talent pool by setting up GCCs, along with encouraging macroeconomic and demographic tailwinds, have bolstered India's business landscape. Our total business ecosystems are well-positioned to capture the increased demand for Grade A office space. We plan to add to our growing hospitality portfolio within our business parks with the launch of a Hilton Hotel and Hilton Garden Inn at Embassy TechVillage. Over the next two years, we will deliver over 6.5 million sq ft of Grade A office space, including Embassy Zenith, located in Bengaluru's CBD district, and Parcel 8 in Embassy Tech Village, comprising 2.5 million sq ft.
With market opportunities pivoting to residential real estate, we are concentrating on what we do the best: delivering world-class projects. A fast-rising premium real estate consumer base will be the core of who we build our projects for, but we will continue to be bullish on the niche but rapidly flourishing luxury market. We plan to launch 4 million sq ft of residential portfolio within FY 2023-24, including a 0.5 million sq ft project in Whitefield and a one million sq ft project in Embassy Springs. We also recently forayed into the senior living asset class with the launch of Serene Amara by Columbia Pacific at Embassy Springs.

How do you look at market opportunities? What are your expansion plans?
Overall, our efforts have been focused on bolstering our residential and commercial businesses in equal measure by delivering high-conviction, high-return living spaces and large-scale total business ecosystems in our core markets.
We anticipate a continued upcycle in the residential market. To meet the current demand for homeownership, we are reinventing our residential portfolio by migrating towards the premium segment. With over Rs 2,000 crore of OC-compliant projects ready for possession this year, we are targeting unlocking our existing inventories, as well as launching new projects and activating our land bank.
We are extremely positive on office in our core market in Bengaluru; according to a recent report, Bengaluru saw the highest office absorption among Indian cities in January-March 2023. We have seen tenant demand for quality, engaging, and sustainable work environments with ancillary amenities. To meet this need, we will strengthen our commercial real estate portfolio, underpinned by our total business ecosystem philosophy.

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