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Construction Technologies

Building in Sustainability…Modular Construction has long-term answers for the Planet

By Affordable Housing, Construction Technologies, COVID-19, Housing Need, Modular Construction, News

What can you do with a broken brick, clotted with mortar and torn from the heart of a demolished building? Well, you could get more bricks, lay them in a line and offer them to the Tate Gallery as an “Installation”, but short of that (frankly unlikely) option, the brutal answer is “not very much”. And the same goes for all that twisted, rusting steelwork, left scattered behind on the demolition site. Like the broken bricks, it is almost impossible to recycle and will almost certainly end up in a landfill site. And at the other end of its clunking life cycle, traditional on site construction currently accounts for an extraordinary 36% of worldwide energy consumption and 40% of global CO2 emissions: all those trucks belching out exhaust fumes, crawling to and from inner city developments to feed the daily demands of dumpers, drills and jackhammers.

Across the World four billion tonnes of concrete are poured every year, adding 2.8 billion tonnes of CO2 to our precious and fragile atmosphere, which is more than double the 1.04 Billion tonnes of CO2 produced annually by worldwide aviation, even in the years before Pandemic restrictions more or less shut it down (www.ourworldindata.org).

You get the message…Dinosaur Construction isn’t good for the Planet.

Sustainable Construction

On the other hand, Sustainable Construction can put a stop to all that: making use of renewable and recyclable materials, reducing energy consumption and creating a healthy, environmentally friendly environment…not to mention protecting the Planet in the process.

So why, according to the 2018 World Green Building Trends, Smart Market Report (www.worldgbc.org), do more than 50% of construction companies still believe sustainable construction technologies are more expensive? Perhaps they simply prefer laying broken bricks in a line…in which case (to save them looking it up) the contact number for the Tate Gallery is +44 20 7887 8888 (its closed at the moment by the way).

But whatever their business plan, they couldn’t be more wrong…

Less Expensive, More Efficient

Sustainable Construction is not only less expensive than dinosaur construction technologies, it also supports lower operating costs once the building is completed: all of which feeds directly into the bottom-line.

Take Modular Construction for instance: pre-assembled units are manufactured off site in climate controlled conditions, which means fewer trucks choking their way to the site every day and fewer days lost with workers sheltered in huts from the rain. Buildings constructed using advanced Modular systems are 30% lower in price than their conventional equivalents and they typically re-use 80% of their components, which fits in perfectly with the demands of the Circular Economy (www.oecd.org): prolonging the useful lifespan of key components.

That all adds up to annual savings of more than £400 Billion across worldwide markets, added to which waste levels are lower too, so you may not need to contact the Tate after all…

Smart builders are already factoring these costings and efficiency savings into their tenders, offsetting front-end construction costs and reducing environmental impact as part of the new Circular Economy. 

What’s not to like?

Modulex Construction

Modulex Construction (www.modulexglobal.com) is the World’s largest Steel Modular Building Company. It was established by Red Ribbon (www.redribbon.co) to harness the full potential of fast evolving technologies and deliver at pace to meet the evolving needs of the community.

Executive Overview

I don’t think it’s sufficiently understood how energy hungry and polluting conventional construction technologies can be. So given current demands for affordable housing and new infrastructure projects, it really is time to look for some sustainable alternatives.

 Invest in Modulex

Modulex Construction is the World’s largest Steel Modular Building Company. It was established by Red Ribbon to harness the full potential of these fast-evolving technologies and deliver at pace to meet the evolving needs of the community

If you would like to know more about joining our Mainstream Impact Investment journey click here

There’s Nothing New under the Sun…Modular Construction meets the Needs of Public Infrastructure

By Construction Technologies, COVID-19, Mainstream Impact Investment, Modular Construction, News, Productivity

In the Nineteenth Century our forebears used a wood based search engine, called a Catalogue: and, in the days before Amazon, it was surprising what you could get. Farmers in New Zealand (and anywhere else for that matter) could buy a Church in a crate from Isaac Dixon & Co, whose 1896 catalogue offered to box it all up, ship it over (in as little as four months (the Amazon Prime of its day)), and drop it off for collection “at your local railway station”. A top of the range, 500 seat church cost £875 in new money, but you had to dig your own foundations: and if you wanted lights and heat that was an extra £70.  For the more ambitious, you could also buy a School in a crate, a Clubhouse (gin and tonic extra) and even a Billiard Hall (cues and balls included)…all boxed up and delivered to your local station platform.

So there’s nothing new about prefabricating public infrastructure…its all about public need.

Schools and Hospitals

A hundred years ago colonists scattered across the British Empire didn’t have much if anything by way of local builders, never mind materials to build with, but they still needed Schools and Hospitals (perhaps not Billiard Halls but, hey, everyone needs a hobby): and today Public Infrastructure Projects have rarely been so important, think Nightingale Hospitals, COVID Vaccination Facilities and Schools. But, with such unprecedented public pressures currently created by the COVID pandemic, how can we hope to deliver to those needs at the pace required? 

Just Imagine you could construct a fully functioning Intensive Care Unit inside a month. It’s not science fiction… it’s science fact. Modular construction has never been so important as it is now… Building on more than a hundred years’ experience.

Facing up to the Future

Working through the Crown Commercial Service (www.crowncommercial.gov.uk) the UK Government has now introduced a Modular Building Service to provide public sector bodies with facilities to buy or lease pre-designed, pre-fabricated and ready to install modular buildings: everything from Schoolrooms to Hospital Wards as well as Housing, Defence Installations, Commercial Units and Retail Shops. So-called “Framework Prices” are fixed for two years with design minima to help ensure high product quality. Social value and sustainability are important too: customers can ask suppliers to tailor the product to match their individual priorities.

Just like other Governments and private construction companies across the globe, the UK is waking up (again) to the full potential of Modular Construction: a ready-made and more effective alternative to costly and drawn out traditional building techniques.

Low Cost, High Quality

Public Buildings and Facilities created using advanced Modular systems are 30% lower in price than conventional equivalents, delivering space, people and technology at the core of the asset itself: with added inbuilt digital technologies, think life support systems in those new Nightingale Hospitals put together in less than a month. And Modular Construction also typically re-uses 80% of its components, which fits in perfectly with the demands of the Circular Economy (www.oecd.org): prolonging the useful lifespan of materials by combining modularity with durability and reducing embodied energy. 

Executive Overview

To secure the public services we all need in these difficult times, we have to learn to build better, faster and smarter: and that has inevitably increased reliance on Modular Construction technologies by public bodies across the planet. The latest UK design initiative is just part of a much larger process.


Find out more about Modulex

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Modulex is setting up the world’s largest steel modular buildings factory based in India. It was established by Red Ribbon to harness the full potential of fast-evolving technologies and deliver at pace to meet the evolving needs of the community.

If you would like to know more about joining our Mainstream Impact Investment journey click here

New Year, New Horizons… Modular Construction is Flexed for Success

By Affordable Housing, Construction Technologies, Housing policy, Modular Construction, News

It’s called Flex Space: adaptable real estate solutions for the home and workplace, addressing rapidly evolving changes in demand and product standards. No longer is it enough just to build a twelve story concrete block in the centre of town, hoping (praying perhaps) to fill it with residential and commercial tenants: because business owners don’t want (or need) those vast fields of space anymore, and those in housing need can’t wait two years for the monolith to be built up in a field of mud, steel and bricks. In the wake of COVID 19, office workers have become home workers, and there’s a worldwide shortage of affordable housing too. COVID has changed everything…

That’s why some of the world’s leading real estate companies are now re-formatting their platforms and services to embrace new technologies, staying on the front foot to add value and flexibility in these fast changing times.

According to a recent report from JLL (www.us.jll.com), 67% of decision makers in construction are either planning to, or already have, embraced Flex Space as part of their strategic objectives: so for sure, if ever innovative construction was a niche sector, it’s not a niche anymore. Optimising that crucial mix between asset efficiency and speed of delivery has become a priority.

Plug and Play Technology

The next step involves offering a more expansive and responsive product, so technology is predictably part of the equation: digital solutions that radically enhance standards by plugging directly into environmental systems, real time access to value added spaces and critical add ins, like life support systems in those new Nightingale Hospitals. It’s a “plug and play” operating model…and when it comes to Technology, Modular Construction is at the centre of everything: with an operating model that delivers space, people and technology at the core of the asset itself.

Sustainability and Durability

Modular Construction also typically re-uses 80% of its building components, fitting in perfectly with the demands of the Circular Economy (www.oecd.org): prolonging the useful lifespan of materials by combining modularity with durability and reducing embodied energy. A bio-composite exterior panel, for example, can reduce energy levels by up to 50% compared with conventional construction materials.

Speed of Delivery

And as for speed of delivery, modular buildings can be completed three times faster than their conventional counterparts: helping meet the needs of millions of people across the planet who are currently homeless or in housing need.

Affordable Homes

In their snappily titled report, “Build Homes, Build Jobs, Build Innovation”, Cast Consultancy concluded Modular Construction was flexed to deliver up to 75,000 new homes every year in the UK alone (www.cast-consultancy.com): Chief Executive Mark Farmer concluded that, unlike mud, steel and brick alternatives, Modular Technologies not only increase the pace of delivery in these unprecedented times, but also boost productivity, increase quality and significantly reduce carbon emissions. A Paper produced by Herriot Watt University found adoption of Modular technologies reduced emissions by 40% compared with conventional systems.

With COVID clearly in mind, Cast also drew attention to the significant additional benefits of offsite construction, which can be more readily adapted to the demands of lockdown restrictions and social distancing measures.

So all in all, as Mr Farmer said, Modular Construction is “the single biggest game changer when it comes to building more homes”: unsurprisingly the UK Government has taken up the theme and now plans a major new investment programme based on modular construction. The UK Housing Secretary, Robert Jenrick, is publically committed to Modular becoming “a significant part of our future housing investment plans”.

Who can blame him? Modular Technologies are all flexed and ready to go…

Executive Overview

The world is changing beneath our feet; we need to make the most of what we have. Every passing day makes it clearer that when it comes to the future of global housing policy, Modular Construction has the answers: faster, sustainable and better adapted to the needs of our changing world.

We need to build better…we need to do the best for our future

If you would like to know more about joining our Mainstream Impact Investment journey click here

Better Connected than Ever? – How Connectivity boosts Indian Real Estate.

By Affordable Housing, Blackstone, Construction Technologies, COVID-19, Economic Growth, Environmental Policy, Housing Need, Housing policy, India, Natural Capital, News, Real Estate Markets, Sustainable Growth

All roads lead to other roads: a dizzying complexity of cables, rail and road networks have literally girdled the earth, making us better connected than ever before. A hundred years ago it took twenty days to travel by steamship from London to Mumbai, now it takes nine hours by plane.

Subject to lockdown restrictions, you can cross the English Channel in two hours by ferry (plus three more waiting for the driver in front to get back to his cab), or else zip through the Tunnel in 30 minutes; and the electrons that carry your Internet messages travel at 2,200 Km a second, which is probably why Zoom is doing so well at the moment.

But none of this happened by accident: it was all planned, built and delivered to meet economic demand…except, of course, the electron, which does what it does by itself. Economic progress is everywhere driven by connectivity.

And that’s where Big Government comes in: periodic swings in the private funding cycles needed to build all those airports, roads and railways are increasingly being offset by government deficit spending programmes (or quantitative easing as it’s now known: the deficit’s more attractive, younger sister). Only big government is big enough to dampen regular (and inevitable) private sector investment fluctuations, which is why most advanced economies over the last forty years have set fiscal spending targets of up to 20% of GDP.

Nothing less will level out the swings and troughs, and without it the roads, railways and airports won’t get built at all…the Channel Tunnel started out as a private venture, ran out of money and finished up nationalised in all but name. Without Big Government you wouldn’t be able to zip under the Channel …you’d be stuck behind a lorry at Dover.

It’s a lesson India has taken to heart.

Connectivity boosts Indian real estate. How?

Over the next ten years the subcontinent is expected to invest a staggering $715 Billion in its new rail networks, with full electrification expected by 2024 and the entire system becoming carbon neutral by 2030 (www.ibef.org/industry/indian-railways).

By 2050 India’s railways will comprise 40% of rail services across the world, meeting a surge in passenger numbers driven by an increasingly wealthy travelling public. All of this is being powered by Big Government (Prime Minister Modi’s Government to be precise): including a programme to expand investment in new rail terminals, new stations and more extensive container operations across the subcontinent (www.outlookindia.com).

And the picture is pretty much the same on India’s highways where the network has doubled in size (from 71,000 Km to 142,000 Km) in the last ten years. As with rail, the expansion is being driven at pace to meet unprecedented levels of demand from a burgeoning and increasingly wealthy population, in stark contrast with the United Kingdom where road traffic levels have increased by 80% over the last twenty years, but capacity has risen by a sluggish 10% annually: and even that unimpressive figure is falling off year by year.

All of which means India is now better connected than ever before; and in combination with those same (unprecedented) demographic trends on the subcontinent, enhanced connectivity is also having a radical impact on India’s domestic housing markets. New Science parks in Chennai and Bangalore and new railways and highways in Mumbai are pushing prices through the roof as an increasingly urbanised population embraces the opportunities offered by better communication systems.

The improvements to connectivity boosts Indian real estate. So with all roads leading to other roads, it means we’re better connected than ever before…but nowhere is that more apparent at the moment than India.

Invest in Red Ribbon Asset Management

Red Ribbon is committed to identifying and building on investment opportunities that are fully in compliance with its core Planet, People, Profit policy: not only offering above market rate returns for investors but also protecting our Natural Capital through innovative programmes like the Eco Hotels Project.

Executive Overview

I suppose it’s a truism that property values are all about location (and location, location): but what’s interesting in India at the moment is just how radically the location itself is changing.

Taken together with an increasingly wealthy, tech savvy and burgeoning population, the Modi Government’s radical infrastructure programmes are re-shaping the commercial environment and pushing property prices higher than ever before.

A Disruptive Innovator…Modular Construction has become Housing’s Future

By Affordable Housing, Construction Technologies, COVID-19, Economic Growth, Environmental Policy, Housing Need, Housing policy, Modular Construction, News, Productivity, Sustainable Growth

“The arrogance of success is assuming what you did yesterday is enough for tomorrow”: William Pollard wrote that 100 years before Disruptive Innovation theory was formulated in 1955’s Harvard Business Review, but he perfectly captured the essence and importance of understanding disruption innovation in a modern economy.

Think of established companies like Amazon, Google and Uber, business models that have all disrupted existing markets and delivered outcomes that are radically reshaping our future (and our present come to that).

But disruptive innovation is driven as much by market need as invention, and burgeoning housing demand across the planet is currently driving change like never before…so welcome to the world of Modular Construction, and a new future for housing.

Using outmoded technologies, traditional construction companies have become increasingly focused on long-term (high value) projects, where profit margins are high enough to nurture a culture of inefficiency.

All those piles of rusting steel and timber left scattered around when the project finishes, fossilised remnants of yesterday’s world: all those days lost to rain when workers huddle in huts waiting for the sun to come out, and still more days lost waiting for delayed (piecemeal) deliveries, brought slowly to the site by a seemingly endless convoy of lorries.

But, by definition, all that waste matters more if margins are tighter: on lower margin projects, waste and delay on such an industrial scale can turn a viable development into a loss-making disaster.

That’s why traditional developers have (traditionally) paid far less attention to affordable and mid market housing projects, preferring to focus on profitable customers and build yet another penthouse studded glass tower: the inefficiencies of their business model matter less when the client is a Russian oligarch.

Which means more rusting steelwork, more days lost and more time wasted waiting ankle deep in mud for the latest lorry full of bricks to make its way at walking pace through another inner city traffic jam. This outdated model largely ignores speed of delivery, because speed of delivery largely doesn’t matter. Russian Oligarchs have all the time in the world…they can wait.

But the homeless can’t wait: according to Shelter (www.shelter.org.uk) 320,000 people are currently homeless in the United Kingdom (one in 201 of the population), in the United States the figure is 567,000 (a year on year increase of 40% since 2017), and in India 1.77 Million are in housing need despite the Modi Government working to deliver its ambitious Affordable Housing Programme (www.bajajfinserv.in/housing-schemes), striving hard to meet the demands of the fastest growing population on the planet.

And that’s where disruptive innovation comes in…

Adopting smarter and more efficient technologies, smaller construction companies can challenge these dinosaur incumbents: targeting market segments they either can’t or won’t reach, and that means in particular the homeless and those in housing need.

Economic orthodoxy tells us these smaller (disrupter) companies will then move on to gain a progressive foothold in increasingly higher margin segments by delivering better functionality at a lower price.

By making use of their core technological advantage: and finally, the dinosaur developers will also adjust their own business model as disruption takes root: bad news for Russian oligarchs looking for another penthouse, good news for the rest of us.

Modular Construction is a paradigm case in point: units are fabricated off site and delivered in ready to build panels, so no more convoys of lorries delivering materials piecemeal and no more waiting endlessly for them to arrive.

Built to order in a controlled environment, modular units are also higher quality and waste levels are lower, and costs are lower too.

It enables modular platforms to deliver projects at a third of the cost of traditional alternatives, which is why they are moving into (and will eventually take over) lower margin segments in a way traditional developers at the moment find unfathomable.

And it’s why in time dinosaur developers will be forced to change their business model …that’s the power of disruptive innovation.

What we did yesterday is no longer sufficient for tomorrow: Modular Technologies are important for all our futures.

Find out more about Modulex

Modulex modern method of construction

Modulex is setting up the world’s largest steel modular buildings factory based in India. It was established by Red Ribbon to harness the full potential of fast-evolving technologies and deliver at pace to meet the evolving needs of the community.

Modulex is setting up the world’s largest steel modular buildings factory in India.

Executive Overview

According to McKinsey more than 80% of developers are now to a greater or lesser extent committed to modular construction models: that should come as no surprise to anyone. Modular construction delivers faster, at lower cost and with higher quality thresholds than traditional alternatives.

And now, more than ever, we need those benefits to meet the planet’s burgeoning housing need. It’s time for the world to move on…

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What’s Growth got to do with it…as it happens plenty, and Indian Infrastructure is a key driver for Housing Policy

By Affordable Housing, Construction Technologies, COVID-19, Housing policy, Real Estate Markets, Sustainable Growth

Keynes wondered about kick starting an economy, paying people to bury bottles with £10 notes in them, and then paying others to dig them up and spend the cash. Of course, the great man’s tongue was probably firmly in his cheek, but he was making a serious point: modern economies are driven by expansionary policies. That’s what lies at the heart of quantitive easing strategies. But it’s much better to spend those £10 notes on roads that don’t go nowhere, which is why infrastructure policy is so important. And there’s no better example of that at the moment than India, which has seen unprecedented infrastructure spending over the last decade and COVID has done little to slow it down.

This month alone Indian Railways launched 22 new local and 18 main line services in Mumbai (on 10 October); on 12 October the 11 km rail tunnel connecting Howrah to Salt Lake (via Kolkata) was completed (part of a 17 km system including 6km of elevated sections), and the Union Ministry of Road Transport announced 2,921 km of new highways had been completed as part of the Bharatmala Pariyojana Project. All of which are having a knock on effect on expansion across key areas of the Indian economy, including housing and construction, which are growing like never before. Those roads certainly aren’t going nowhere…

Since 24 September The BSE Sensex Index (which tracks stock on the Bombay Exchange), has rallied by nearly 11%: its strongest performance since June, the best of any equity benchmark anywhere in the world. And it’s now within 2% of wiping out its entire losses for the year to date: given the economic shocks of COVID 19, that’s no mean feat. 

Sameer Kaira (of influential, Mumbai based Target Investing) has predicted a third quarter bounce in GDP on the subcontinent, with Sensex likely to hit a record high by December. With a Delphic sense of understatement, Kaira highlighted a key factor as “various steps taken by policy makers”. But what does he mean by that?

Well, for a start Prime Minister Modi’s Government is set to relax COVID restrictions further, allowing schools and entertainment complexes to re-open from October 15, and also loosen restrictions on large gatherings: so that’s certainly one important step from a policy maker. But more expansive policymaking hasn’t gone away either. The Reserve Bank’s Monetary Policy Committee has announced further steps to increase liquidity: leaving the repo rate (the rate at which it lends to other banks) unchanged at 4% and promising to maintain its “accommodation stance” well into the next fiscal year. The Governor of the Bank also announced another round of quantitative easing as part of its Operation Twist initiative, much to the delight of financial markets and external investors (10 year Bond yields fell to 5.9%).

All of which is fuelling the infrastructure boom.

And because all those roads, trains and tunnels aren’t going nowhere, its also giving added impetus to India’s Real Estate Markets: primed to meet the needs of the fastest growing population on the planet and spurred on by the Government’s Affordable Housing Programme. Better infrastructure suddenly makes building projects across the country a much more attractive proposition. 

It’s certainly better than burying cash in a bottle…

Modulex Construction is the World’s largest Steel Modular Building Company. It was established by Red Ribbon to harness the full potential of fast evolving technologies and deliver at pace to meet the subcontinent’s evolving needs.

Find out more about Modulex

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Modulex is setting up the world’s largest steel modular buildings factory based in India. It was established by Red Ribbon to harness the full potential of fast-evolving technologies and deliver at pace to meet the evolving needs of the community.

Modulex is setting up the world’s largest steel modular buildings factory in India.

Executive Overview

With a further easing of lockdowns underway, the subcontinent’s financial markets are starting to move forward: faster than other equity markets across the world. And that has a lot to do with the Central Bank’s Operation Twist Programme, which is fuelling growth across the country.

No surprise then that the impact of these emerging trends will be first felt in Infrastructure policy, something I’m sure will act as a key driver for the rest of the economy.

rrmarticle

Dinosaur Developers have had their day…It’s time to reach for the Moon

By Affordable Housing, Construction Technologies, Housing policy, Modular Construction, Reconstruction

Don’t let them fool you…Kennedy never wanted just to land a man on the Moon and bring him safely back home: his real challenge to Congress, his real purpose, was to land a man on the Moon before the decade was out. And eight years later NASA did just that: by the skin of their teeth perhaps, with two men, not one, tragedy and setbacks along the way and just five short months to spare, but they still did it. And Kennedy’s 1961 speech to Congress has since become a cornerstone of every Business School syllabus from Wharton to Wolverhampton (yes it does have one, look it up), principally because it sums up the essence of all successful project planning: you’ve got to have a big, clear objective but you also need a bold, clear timeline to achieve it. There’s no point thinking big and bold if your clock has no hands: something Boris might care to pay attention to as he struggles with his own COVID Moonshot challenge.

And in essence, back on the ground, that’s the essential dilemma of modern construction: there’s nothing inherently wrong with building knee-deep in mud, with bricks and girders scattered randomly across a field, and the building will probably come out fine in the end, but its way too slow. And the fact is all those dinosaur developers, lumbering around in the mud with the urgency of teenage sweethearts trying to get off the phone, the clock has simply lost its hands. So does any of that matter? Well, yes it does…it matters a lot because the moon we’re all reaching for now is a lot closer to earth.

In the UK, for example, COVID’s ravages created an urgent demand for new hospitals: eight of them in just ten weeks and mud rooted developers would have taken an average of three years to build one. But all were completed on time (in fact ahead of time in some cases), using modular technologies. Shelter reported in December last year that more than 320,000 people were homeless in the UK, sleeping on streets and sofas: that’s a shocking one in 200 of the population, and the National Housing Federation reported this week that 4 million people are living in overcrowded accommodation in the UK: 90,000 affordable homes need to be built every year for the next decade to meet the resulting need. But at the same time, dinosaur developers have been building new social housing at the lowest rate for decades, only a little over 5,000 a year. 

So if ever there was a Moonshot moment, a time to set Kennedy-esque challenges with bold targets and timelines, this is it…we can’t afford the luxury of limitless time any longer, and those dinosaur developers simply aren’t up to the job.

That’s precisely why, according to this years Bradley SmartMarket Report, 90% of Property Developers are now committed to adopting Modular Technologies as part of their project platform, offering radically improved quality and delivery times as well as lower cost and wastage levels. In headline terms, this means on average that a Modular property will be built three times faster than its bricks and mud counterpart and at half the cost. It gives us cause for hope that those big, bold challenges (the challenge of building 90,000 new homes a year) can actually be met.

And as for the remaining 10% of Dinosaur Developers…well, it seems they’ve run out of time.

Find out more about Modulex

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Modulex is the World’s largest Steel Modular Building Company. It was established by Red Ribbon to harness the full potential of fast-evolving technologies and deliver at a pace to meet the evolving needs of the community

Executive Overview

We’re facing an acute and unprecedented shortage of affordable housing across the globe and, like many of us I expect, I just don’t believe conventional construction technologies are capable of rising to the challenge. 

I’m convinced Modular Construction will be important for all our futures: delivering at pace, working off a low-cost platform and incorporating levels of quality conventional methods simply can’t match.

Jaisalmer city and Fort at sunset

Joining the Dots for the Future…A walk around Indian Real Estate Markets

By Blackstone, Construction Technologies, COVID-19, Housing Need, Modular Construction, Real Estate Markets

History doesn’t move in straight lines, we’re much too unpredictable for that: so nobody should be surprised that in the same month as a group of glum beancounters at the Office for National Statistics reported a 20.4% slump in GDP for the UK (the worst ever), their happier colleagues at the Land Registry were trumpeting a 2.6%, year on year increase in UK property prices. There isn’t a straight line between the two: the underlying decisionmaking is just too unpredictable to allow for anything more than a childish squiggle. It’s what practitioners of the dark arts of econometrics call “a random walk”, like a drunk stumbling home from the pub: we know where he started out from and where he ended up, but it’s the bit in the middle that’s a mystery. Why did the catastrophic oil crisis of 1973 barely make a dent on US property prices, having sent the rest of the economy into free fall? Why did an otherwise localised slump in US property prices cause economies across the world to crash in 2008? These are random walks between two points (or pints in the case of our drinker) … the trick is to join the points up. 

Which means searching for medium and long term trends, key drivers that act as a platform for what the future might look like: and there’s no better example right now than India’s Real Estate Markets.

According to an influential IBEF forecast, Indian Real Estate will be worth $1 Trillion within the next ten years (from a base of $120 Billion in 2017), and by 2025 (just five years away in case we forget), the sector as a whole will make up 13% of the subcontinent’s GDP. That’s worth reflecting on: despite the near term, COVID driven shocks, not to mention the pandemic’s catastrophic impact on overall levels of social cohesion, there is no straight line in sight: the subcontinent’s residential and commercial property markets are showing persistent and robust signs of long term growth, and this particular honey pot is proving as attractive as it was when, in 2019, overseas and mostly private equity investors staked no less than $14 Billion in the sector.

Blackstone alone has invested more than $12 Billion in Indian real estate since 2018: including the first of the subcontinent’s newly established REIT’s, which raised $670 Million in 2019 in collaboration with Embassy Group.

In response to (and partly in anticipation of) that inexorable trend, the Indian Government launched a series of property-related initiatives, including the Smart City Mission: delivering more than a hundred better-connected infrastructure and technology centres across the country and offering a prime opportunity for investors. Add to that the recent launch of the Alternative Investment Fund (AIF), which green-lighted investment across 1,600, previously stalled urban housing projects in major conurbations from Mumbai to Chennai and, of course, the continued resurgence of the Affordable Housing Fund. Prime Minister Modi’s Government has also approved the creation of 417 new Special Economic Zones, of which 238 are now live. Impactful as it might be at the moment, COVID 19 has neither the persistence nor potential to stand in the way.

As Blackstone themselves could no doubt testify, Foreign Direct Investment is a key part of this mix: increasingly responding positively to enhanced levels of market transparency on the subcontinent, a transparency that has acted as a powerful nudge to create a more investment-friendly environment increasingly aligned to western markets (and due diligence requirements in particular).

So there’s no straight line to follow in these turbulent (short term) times, only an increasingly less random walk firmly rooted by a long-term compass. And, to repeat the point, there’s no better example of that at the moment than Indian Real Estate Markets.

Find out more about Modulex

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Modulex is setting up the world’s largest steel modular buildings factory based in India. It was established by Red Ribbon to harness the full potential of fast-evolving technologies and deliver at pace to meet the evolving needs of the community.

Executive Overview

Every so often we have to raise our eyes from the papers on the table, and goodness knows we’ve had enough to distract our attention from the bigger picture over recent months: that’s why, as we gradually emerge from global lockdowns, I’m confident longer term trends will be much more important than any of our day to day fixations.

I’m confident, in short, that the future can’t and won’t be navigated by straight lines…

asset mangement

Building Back Better… More than ever before, that means Modular Construction

By Construction Technologies, Housing Need, Modular Construction, Productivity No Comments

Building back after an external shock (like COVID) can present formidable economic difficulties, but housing and public sector programmes present especially complex challenges at the moment.
In this week’s Newswire we examine how technology and market forces are coming together to help us build back better.

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At Red Ribbon we understand that the transition towards a resilient global economy will be led by well-governed businesses in mainstream markets, striving to reduce the environmental impact of their production processes on society at large and on the environment as well.

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