Tag

Invest in Modular Construction Archives - Red Ribbon Asset Management

How to benefit from India’s construction boom

How to benefit from India’s construction boom

By | Archive, India, News | No Comments

India’s construction needs are no secret, nor are the forecasts for impressive growth across the country’s construction industry. When investing in India it makes sense to capitalise on growth markets within the country. Right now, there options for businesses and investors both, to become a part of a construction industry that’s set to be the third largest in the world, just a few years from now.

With India’s general election on the way, Prime Minister Narendra Modi and his government are working hard to re-iterate their promise on housing and infrastructure development across the country. Even if the ambitious targets aren’t quite met, achieving a high percentage of them still requires a significant amount of investment and construction. That’s something that appeals to many investors and companies who wish to grab their part of the potential activity, business and return on investment that’s available.

Looking at the potential for India’s construction sector, according to KPMG, India’s construction sector will be third largest in the world by 2025, behind only China and the US, with a valuation over $1 trillion.

Meanwhile, international construction consultancy Mace Group, estimates that by 2050, India’s urban population will be around 814 million, almost double the 449 million people living in urbanised areas today.

Doing business in India

These forecasts all stem from India’s huge construction, urbanisation, smart city and industrial corridor plans. With so much construction required to achieve even part of those targets, India has also made changes to make it easier for foreign-owned businesses to work and operate in the country.

According to World Bank rankings, India has climbed up its ease of doing business rankings, to 77th, from 100th and 133rd, prior to that. Of course, improvements could still be made, but its certainly moving in the right direction.

Improvements include:

  • Tougher and more standardised regulatory oversight.
  • New foreign direct investment rules that overseas investors can own 100% of an Indian-based business.
  • A clearer tax code.

But, its not all plain sailing, particularly for businesses with no links to, or knowledge of the way business works in India. That remains the case for the construction sector, despite the huge building needs across the sub-continent.

With the potential for growth and profits as high as the country’s needs for every kind of construction specialist, many small Indian businesses, including startups, are working towards securing their own piece of the investment returns that are available.

That means winning those contracts and operating in a way that will secure a future across India, won’t be easy – if you go it alone.

Collaboration and investment

One way for foreign-owned businesses and investors to become part of the construction boom and benefit from the huge government and private investment across the country, is through collaboration with existing Indian-based companies.

Of course, forming a relationship and building enough trust to encourage both parties to make a significant investment and work together, doesn’t come easy. But the end rewards will certainly make the effort of doing this correctly, worthwhile.

If that doesn’t appeal, there is another option: to invest in an existing construction-sector related business. One that has all the connections and capabilities in place to expand in response to the ongoing needs of India’s planned construction and infrastructure projects.

One that not only has a management team experienced in doing business in India and the UK, but has also been created with sustainability at its core.

Modulex is one such prospect. Construction of the first Modulex factory is already underway and set for completion in December 2019.

Providing a modular construction facility in Indapure, Pune District, 250 Kms from Mumbai, Modulex will have an annual capacity to create 200,000 square metres of steel commercial and residential buildings, off-site. And that’s just the beginning.

Demand for modular construction in India is growing and Modulex will become an intrinsic part of fulfilling the demand for every type of building, to support India’s ongoing urbanisation. Why? Because modular construction provides a cost and time-effective answer to India’s huge construction needs.

Modulex can help India achieve its goal of housing for all and the creation of modernising existing cities, while also building new ones. What’s more, it can do so in a sustainable way that doesn’t diminish the natural capital of the country.

Red Ribbon CEO, Suchit Punnose said:

India’s construction goals are no secret and the forecasts for growth across the industry in the next 5 – 15 years are of real interest to investors and business around the world. Doing business in India is easier than its ever been, but for the uninitiated, challenges remain.

Investing in Modulex is something that brings many benefits beyond the potential for a strong return on investment. Modulex is managed by experienced asset managers, with expert knowledge of India and the UK investment and business markets.

Its sustainable and scalable and has been developed to remain a feature of India’s construction industry now, at its hour of need and also well beyond.

Government continues to support technological innovation in construction

Government continues to support technological innovation in construction

By | Archive, India, News | No Comments

The Government continues to strive to achieve its target to house every inhabitant of India by 2022. A new initiative to encourage technological innovation in the construction sector was launched earlier this year and modular construction could benefit from this new push to solve India’s domestic construction needs and also, lift the country’s reputation in the industry.

Ever since Narendra Modi’s Government announced plans to house every inhabitant of India and build millions of new, affordable homes across the country by 2022, there has been a real push to approve and build those properties. As in most countries around the world where more housing is required, a combination of construction techniques are being employed to create an adequate amount of housing.

In recognition of the sheer size of the challenge, some Governments, including India’s, are increasingly supportive of new technologies that can impact on the delivery of those homes:

  • Faster.
  • In a cost-effective manner.
  • With eco-friendly techniques.
  • In a way that can also provide a long-term boost to the economy.

India’s latest push to encourage more technology and efficiency in construction, is the Global Housing Technology Challenge. The idea is to instil new and innovative ideas that can be used to propel India’s construction industry forward, both in the short-term to help achieve its domestic construction targets and in the long-term as an industry on a global scale.

How technology can improve construction methods

Technology is something that now plays a part in most industries, that for many years relied on traditional methods, systems and processes. However, the construction industry is one that has lagged behind in the development and encouragement of change and innovations.

However, there remains a real and still growing need for homes across many countries, not just India. New innovations are urgently required from builders and construction companies. Without that, they will struggle to deliver cost-effective, quickly built but still safe and longstanding, residential and commercial buildings.

Among the construction technology, or ConTech, techniques that could support India’s construction needs are:

  • Drones – which can be used to improve precision and accuracy on building sites.
  • Construction software platforms – supporting real-time collaboration on construction developments of all types and sizes.
  • Robotics – something that can be utilised both in traditional and modular construction sites and factories.
  • Modular construction – where materials and time can be used more effectively, lowering costs and construction time and creating more energy efficient projects.

This represents just a handful of the types of technology and innovation that could become widespread across India’s construction industry, in a matter of just a few years. What’s more, the prefabricated construction industry has already been slowly gaining support in India for some time, making now the perfect time to develop it more vigorously.

Modular construction in India

The modular construction industry is already growing across India and being utilised in different ways. Of course, where housing construction increases, so do thoughts towards luxury homes and higher profit margins.

While there’s no doubt that prefabricated homes can produce unique and beautiful homes – for a price – the industry is also perfectly placed to provide the low-cost, quickly built properties that India so desperately needs.

By encouraging fresh technological innovations to support India’s construction needs, its likely PM Modi is attempting to ensure that the momentum in the low-cost homes market isn’t lost. The timing is poignant, given the March 2019 construction targets don’t appear to have been met. Indeed, it could be considered an inventive ploy to help drive India’s construction industry to become one that gains global recognition.

That’s something that could have a lasting, positive effect on the country’s economy, while also delivering the required homes and buildings across India, right now.

Suchit Punnose, CEO of Red Ribbon said:

The modular construction industry is one that answers many of the requirements of India’s housing needs, including the desire for sustainability and economic benefit, not to mention speed and cost-effectiveness. That why we identified Modulex as the right investment opportunity for us and our clients.

Modulex is India’s first steel modular building factory, which delivers on all three pillars of sustainability – Planet, People and Profit. Modulex is perfectly poised to help answer India’s construction needs and is already an innovative solution within the industry.

Red Ribbon is proud to support the growth of innovative, modular construction across India. Not only because it can be a part of a broader construction solution, it can help deliver a reputation for innovative industry developments and a sustainable economic growth.

Indian Real Estate, Modulex Modular Buildings, Red Ribbon Asset Management Plc

Affordable Housing for India: A Perfect Storm of Opportunity

By | Archive, India, News | No Comments

Affordable Housing for India: A Perfect Storm of Opportunity

Mumbai’s skyline has, of course, been transformed beyond recognition over recent years, but its glass pinnacles are well beyond the reach of all but its wealthiest residents. So you need to look closer to the earth to find the true driver behind the subcontinent’s resurgent real estate sector.

India’s increasingly youthful population is moving out of the countryside at an increasing rate in search of better work, pay and living conditions and this is precisely the demographic the Affordable Housing Policy is designed to appeal to, because the dream of having a home (or a flat) of one’s own resonates like nothing else with this new wave of discriminating voters on the subcontinent…and nobody knows that better than Narendra Modi. His Government has aggressively pursued legacy policies on housing with the introduction of a raft of new tax incentives over the course of the last two Union Budgets, including giving infrastructure status to qualifying affordable housing, offering developers increased tax concessions and providing buyers with a range of fiscal incentives including subsidised interest payments.

And it’s not just voters who are being energised: investors are responding positively too in increasingly ingenious ways. For example, because banks in India aren’t allowed to finance land acquisitions the Private Equity Fund KKR has moved into the sector to offer development funding directly to contractors, taking an equity stake in the completed project. In what might be taken by some as a statement of the obvious, Sanjay Nayar of KKR India pointed out that “with the right project and partners, there’s good money to be made”.

There is indeed Mr Nayar.

Chris Wood of Citic Securities perhaps put it a little more eloquently: “Affordable housing in India remains one of the most straightforward bull stories in Asian equities. There will be an acceleration in economic activity in India in the coming 18 months driven by housing.”

But there is, of course, at least one (more or less hidden) difficulty with all of that. Given such a voracious and burgeoning consumer appetite coupled with capital market ambition and expansionist government policies, where are all these new homes going to come from? As we have noted previously on this site, stoking up such high levels of demand means India is now committed to building 856 new homes every hour between until 2050. Traditional construction technologies simply aren’t up to that kind of challenge, which is why commentators (including KPMG India’s Director of Real Estate Neeraj Bansal) have pinpointed Modular Construction as the single most important innovator in the sector.

By prefabricating units at scale and off site, Modular Construction is capable of delivering affordable housing on the required scale and at a reasonable cost: three times quicker and half as expensive as traditional construction methods. It is perfectly positioned to meet the demands and opportunities being created by this perfect storm in India’s real estate markets.

As Mr Nayer would probably say over at KKR: “there’s good money to be made”.

Modulex Construction is the World’s largest and India’s first Steel Modular Building Company, working to meet the Challenge of India’s urban housing shortages in a practical and focused manner. It was established by Red Ribbon to harness the potential of India’s dynamic and fast evolving markets, delivering exciting opportunities for investors. Because, when it comes to investing on the subcontinent, nobody knows India and its markets better than Red Ribbon.

Modulex Modular Buildings Plc is the World’s largest and India’s first Steel Modular Building Company, working to meet the Challenge of India’s urban housing shortages in a practical and focussed manner. It was established by Red Ribbon to harness the full potential of India’s dynamic and fast evolving markets, delivering exciting opportunities for investors because, when it comes to investing on the subcontinent, nobody knows its markets better than Red Ribbon.

Red Ribbon CEO, Suchit Punnose said:

For me, the key determinant of exponential growth in India’s real estate sector over recent years is the combination of an unprecedented growth in the subcontinent’s population and a rapid trend for its urbanisation: largely, as the article rightly points out, a product of this rapidly expanding population becoming progressively more youthful and more affluent. In time honoured fashion, India’s younger demographic is streaming from village to city with money in its pocket (in the hope of making more).

This is the demographic that Prime Minister Modi has so successfully appealed to through his Government’s re-energised Affordable Housing Programme: the other key factor driving growth in the sector. As with some of his other radical initiatives, the scale and scope of the programme has at times been breathtaking, but in truth it has to be to meet the sheer scale of the challenge.

And when it comes to delivering a workable solution to that challenge it seems to me, as most expert commentators now recognise, that the attraction of Modular Construction is simply inescapable. No other technology offers the pace and scale of delivery needed to meet India’s housing needs. That’s why Red Ribbon was committed to Modulex Construction from the very beginning of the project and we remain committed to it today. I’m convinced it is a vital element in meeting the challenges as well as making the most of the opportunities currently being presented by the subcontinent’s markets.

But none of that should beguile us from forgetting the sheer scale of the housing challenge India currently faces, in common with other leading global economies. Traditional construction technology simply can’t deliver to the scale and pace required by projected demand on existing governmental programmes. No wonder then than Modular Construction is a policy priority for Prime Minister Modi’s Government. It’s only a question of time before others follow suit…

Red Ribbon

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.

Newsletter