Kochi: Owners willing to rent out flats for quarantine purposes – ET RealEstate

KOCHI: At a time when apartment owners’ associations come up with stiff resistance over quarantining people in apartment complexes, a section of flat owners have come forward offering their flats on rental basis for quarantine purposes. It is mainly flat owners who live abroad are taking the bold step of giving their flat to someone who needs assistance.

Harry V S, a resident of an apartment complex at Petta said: “My son who is in Delhi is returning to Kochi next day and he has to go under home quarantine. There are vacant apartments on the same floor of our complex. When we contacted the owner, she agreed to rent out her flat for one month.” The one-month rent comes to Rs 18,000 and Harry has to pay two-month rent as advance.

The owner stipulated that the tenant should pay electricity and other expenses and “also disinfect the entire flat in case my son tests Covid positive”, which Harry considers a fair deal. Neither the apartment owners’ association nor the other people living on the same floor of the building raised an objection to it.

Many flat owners especially those returning from abroad and other states view the situation as a humanitarian crisis. They have seen tragedies unfolding before their eyes in foreign lands, and they understand the yearning to get back home in a better way. Quarantining family members or friends in another flat will be of help to those who take care of them. They can move around in the building and go out and it will in no way cause harm to others.

“I am more than willing to accommodate friends or even provide the flat on rent for those in need. However, some members of the apartment owners’ association are reluctant to allow even flat owners to go under quarantine in the building. I think it’s elitism or display of privilege,” said Aravind Retnakar, owner of an apartment at Jawahar Nagar.

It is mainly senior citizens and their family members or families having small kids who are too anxious and worried about people being quarantined in the apartment complexes. However, it should be noted that they are the same people who generally raise objection against reverse quarantine.

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Revenue share emerges as preferred structure for co-living operators, property owners – ET RealEstate

MUMBAI: The ongoing Covid-19 pandemic has started to prompt changes in business models of co-living operators as most of the new deal conclusions and negotiations for prospective transactions are focusing on revenue share structures with landlords.

While the model existed even earlier, most deals were then concluded with fixed lease commitments and minimum guarantees assured by the operators. In the new business environment, revenue share structure has emerged as the most favored as indicated by all the deals that are concluding with this clause.

“There’s certainly a change in mindset post Covid-19. Pure revenue share structures are on the rise as none of us are acting as a buyer or seller in the deal anymore, we are partners now,” said Jitendra Jagadev, CEO of The Hello World, a subsidiary of NestAway Technologies that counts Goldman Sachs and Tiger Global among its investors.

The company has acquired around 5,000 beds in the last 2.5 month taking its portfolio to 20,000 beds and according to Jagdev, all of this new capacity has been added through pure revenue share structure.

In the current environment, many landlords found out the hard way that fixed lease commitments and minimum assurance of payout clauses are as good as the balance sheet of the underwriter and therefore are keen on revenue share deals.

“The right way forward for the asset light co-living operator is the revenue share with no guarantees that will become common practice but landlords will partner with brands that can deliver on their promises. This will be a new normal and sustainable model,” said Kahraman Yigit, CEO of Olive by Embassy.

Yigit highlighted an example of the hospitality industry, where international hotel brands never lease buildings, but instead prefer either management agreement or license their brand as franchise and nobody guarantees anything.

The profitability of a co-living operator also varies based on the type of business model adopted. While few operators followed a fixed rental arrangement earlier, now all of them prefer an asset-light revenue sharing arrangement.

In India, shared rental accommodations including co-living and student housing are still in their early stages and have seen several operators mushrooming over the last few years to tap the demand. In the absence of a regulatory framework, various business models have emerged in the market.

Most co-living operators in India have so far adopted the strategy of leasing residential units or an entire block from a property owner, and sub-leasing individual rooms to end-users.

This allows them to scale up fast, without any assurance of the continued availability of the premises, as most such properties are taken up on fixed term lease.

Apart from this, management contract model, franchisee model and hybrid structure that combines some of these options have also been prevalent in this segment.

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Uber closes its office in Mumbai as part of restructuring efforts – ET RealEstate

Ride hailing platform Uber has shut down its Mumbai office as part of its restructuring efforts, but it will continue to provide services in the city, according to sources.

The company’s services in the city, however, would remain unaffected.

When contacted, an Uber spokesperson said, “Uber continues to provide a high level of service to all its riders in Mumbai”.

The sources said the decision to close the Mumbai office was part of the global restructuring exercise. in May, Uber CEO Dara Khosrowshai had written to employees informing them of the decision to close 45 offices globally.

One of the persons said many of the employees are expected to continue working from home to support the services as is being done currently in view of the COVID-19 pandemic.

It could not be immediately ascertained if the closure of the Mumbai office would include reduction in jobs as well.

Uber has a large office in Gurugram, and tech centres in Bengaluru and Hyderabad. It also has smaller support offices in multiple cities.

In May, Uber had said it is laying off about 600 employees (including its driver and rider support operations) in India – about a quarter of its staff in the country – as business has taken a major hit amid COVID pandemic.

Globally, it had announced a reduction of customer support and recruiting teams by approximately 6,700 full-time employee roles and attributed the move to lower trip volumes and current hiring freeze.

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Covid-19 pummels commercial realty market in Jaipur – ET RealEstate

JAIPUR: Following the prolonged demand downfall in residential real estate sector, many developers had turned to commercial projects where the returns were higher. But the Covid-19 pandemic has now upended the trend.

Many builders TOI spoke to said prices of commercial real estate in the last three months have witnessed deep corrections about about 25%, mirroring the plunge in rental income and uncertain outlook.

Rajesh Dukiya, director of a real estate firm, who had bought a piece of land on Shipra Path in an auction by JDA last December, said he has now changed plans for the project, which was to be a commercial complex.

“It would be like shooting my own feet if I persist with the idea of building a complex for offices and outlets. That was the idea when I bought it. But after the outbreak of the pandemic, the whole dynamics has changed. Housing is where the hope lies even though the demand environment is not very encouraging,” said Dukiya.

Dukiya said some of those who bought commercial plots in New Aatish market in the auction held just before the outbreak of the pandemic from the Rajasthan Housing Board are not even depositing the money, even though they have the risk of losing their earnest amount.

Some said the demand for reducing rental rates are rising. Even banks, offices, and companies operating from these complexes are asking to lower the rates despite waiving off their rents during the lockdown period.0

“There is a limit to which you can accommodate their demands. After all, we have our financial obligations and need to pay back banks. The loan moratorium on EMI payments was effectively for five months and we still don’t know what happens to the interest part. The developers are in a bigger distress situation and don’t know how long the pandemic will continue,” said Abhishek Mishra, director of a real estate firm.

While RERA has provided deadline relaxation of six months for the ongoing projects for completion, the industry expects execution delays could overshoot by more than year. Many companies or brands which had entered into deals for renting space are unlikely to honour the commitments, said Mishra.

“We cannot compel them if they want to renege on the contracts signed. If there is no revenue visibility, certainly the projects will face delays,” added Mishra.

Office tenants could also encourage their staff to work from reducing the demand for renting spaces. Some businesses which had expanded recently could also think of scrapping the plans.

“All these will add to the pressure on rates. The commercial project rates are linked to rentals, which if go down, will cause huge losses to investors,” said Mishra.

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