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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Nearly 50% of unsold residential inventory faces high execution risk – ET RealEstate

MUMBAI: Nearly 50% of unsold housing inventory across India is facing the risk of being delayed or is susceptible to price correction. More than the risk price correction; the risk of default in execution poses a bigger challenge for Indian real estate, showed a stress test conducted by Liases Foras Real Estate Rating & Research.

Around 33% of projects in Mumbai Metropolitan Region (MMR) and 59% of National Capital Region (NCR) projects fall in high and very high execution risk categories. On a region level segmentation, MMR has the highest risk of undergoing a price correction where 10% of projects are expected to undergo high correction of more than 20%.

The stress testing has been carried out across 18,225 ongoing real estate projects across 50 cities in India and covers over 85% of developers’ residential segment supply. However, the test has been conducted based on data available for the quarter ended March and pre-Covid period.

“While this assessment is based on pre-Covid data, the situation would worsen further as both construction and demand has taken a big hit,” said Pankaj Kapoor, managing director of Liases Foras Real Estate Rating & Research.

The all India residential real estate market closed at an inventory of 13.45 lakh units, measuring 1.58 billion sq ft with an overhang of 45 months when the nationwide lockdown was enforced towards the end of March.

The supply side of the market was struggling even before the pandemic had set in. Taking a turn for the worse, COVID-19 and the nationwide lockdown has affected the demand side of the market which is the buyer’s sentiment.

Job losses, salary cuts, reduced savings and uncertainty of a normal world, have induced negativity of the buyer towards home purchase. A distressed market puts the already struggling projects–prior to Covid19–into a tighter position making them susceptible to default and thereby leading to chances of delinquency.

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Hyderabad: Hostel owners ask students to vacate over rent payment – ET RealEstate

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HYDERABAD: Many students and youth, who moved back to their hometown before the lockdown and have not returned to the city fearing a spike in Covid-19 cases, are now worried as private hostels are asking them to vacate the hostel this month over non-payment of rent.

A large number of young people from other districts live in private hostels in areas like Dilsukh Nagar, Ameerpet and Kukatpally among others. At a time when students, especially those from economically backward classes and marginalised sections of the society, are facing hardships to make ends meet, paying hostel rent in their absence for the lockdown period is an additional burden for many.

Prudhvi Mandarapu, a BTech student, is one among many such people who is facing issues. He had vacated the hostel in March after his college declared holidays due to Covid-19 lockdown. Ever since, he has not returned to the city.

“Although I paid the rent for March-April, I had clearly informed the hostel owner that I want to discontinue the hostel facility beginning May. However, since some of my belongings are still there in the hostel, the owner is asking me to pay rent for May-June,” said Mandarapu.

Many others are making distress calls to the police and state information technology minister K Taraka Rama Rao on social media. “@KTRTRS Sir we are still paying hostel/PG rents in Hyderabad during the Covid-19 crisis despite working from hometown. Can you please look into this issue as we are not able to travel and vacate the hostels in the current scenario and also we never know how long this will last,” tweeted Sai.

Hostel owners said that while they had allowed deferred rent payment for three months following government orders, they have not received arrears from many. “We allowed delayed payment to students from March-May. But many did not make the payment even until June end. I am yet to receive almost Rs 1 lakh from students towards rent. Even if students don’t live here, I have property tax and have other payments to make,” said Venkatesh Marri, manager of a private hostel in Dilsukh Nagar.

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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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