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Affordable housing and slum redevelopment

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Slum dwellings across India’s urbanised areas have been around for as long as many can remember, growing up alongside wealthy parts of the city as the low paid workforce required to keep those cities working, struggled to find somewhere affordable to live. Indeed, in a country with a population of 1.37 billion, according to the latest UN figures, at least around a quarter of the urban population are living in slums, many of whom don’t have reliable access to sanitation, electricity or homes that are safe to live in.

Recent fires in neighbouring Bangladesh, in the capital city and a coastal slum area, highlight the problems of slum dwellings and the dangers they pose to those living in them and the surrounding areas, too.

In recent years, a number of ways to improve or even remove the slums of the Indian sub-continent, have been discussed. One previously popular way to modify India’s – and other countries’ – slums, was to remove them completely, bulldoze them out of existence. However, while this method does eradicate many of the issues that arise with slum developments, it also displaces everyone who lives in them.

After assessing different approaches to solving the problem of slum areas, which has gained in importance amid the increasingly rapid urbanisation of India, two answers have proven popular enough to take forward. They are:

  • Improve existing slum areas, without displacing those existing households and eradicating their investment.
  • Find ways to build affordable housing across India’s cities for lower income households to live in.

With those solutions now being formalised by the Government, the next step is to find a way to finance these methods, in order to achieve the target of creating affordable housing for the entire population by 2022.  

PPP and affordable housing

Among the ways in which India is seeking to provide enough affordable and safe housing for its growing urban populations, is through Public Private Partnerships (PPP). As the value of land is high in cities and nearby urban areas and can account for up to 60% of the total cost of housing developments, the Government has sought a way to lower the cost of urban real estate. They do this by allocating a proportion of publicly owned land to be developed by private companies and investors.

This vehicle has been created to encourage private real-estate investors, who previously have predominantly favoured higher income developments, to take an interest in India’s affordable housing sector. The potential rewards are three-fold:

  • Affordable and safe housing in the right areas, for India’s fast-developing urbanisation.
  • The beginning of the end of the growth of slum areas in urban regions.
  • Reliable and attractive returns for investors.

There are a number of ways in which this works financially for investors, all of which result in a notable increase in affordable housing across the areas of India in which it’s required.

Coupled with the improvements to investing and doing business in the country, the option of affordable housing and real-estate as an investment vehicle is one that is beginning to appeal to a growing proportion of investors. Both from overseas and within the country, too.

How to access India’s affordable real estate investment opportunities

Of course, knowing about and understanding the real-estate opportunities in a country whose population is undergoing a fast and significant change, is one thing. Accessing those opportunities in a secure and moderated fashion is quite another.

However, doing business in India has become easier, more transparent and accessible to all kinds of investors. Among the ways in which investors can benefit from the opportunities in India’s real estate sector, is through Funds specifically created for the purpose.

According to data from JLL, the value of investment grade, real estate projects under construction, has risen from $173.9 billion in the fourth quarter of 2012, to $242.6 billion in the second quarter of 2018. That number doesn’t take into account future options, plans or approved, shovel ready projects.

Red Ribbon will soon launch its own Indian Real-Estate Fund, to bring investment access into the sector to those investors interested in diversifying their portfolios with something that will benefit from Government support and help provide a solution to a real need from the existing and changing population.

As with all of Red Ribbon’s asset management options, sustainability, eco friendly and broadly beneficial outcomes form the basis of most of the assets that make up the Fund. Providing affordable and sustainable properties for the millions of people moving from rural to urban living is a challenge that can be met, provided every investor in Indian real estate takes it into consideration.

 

Red Ribbon CEO, Suchit Punnose said:

India’s Government has shown real willing to support the rapid urbanisation of the country and encourage a country in which investors can feel confident in doing business, both from a transparency and prospective returns, perspective. Red Ribbon is proud to be the forefront of supporting an economy that is of major importance on a global scale, while working to create a country with real prospects that future generations can enjoy and reap the benefits from.

Our Indian Real Estate Fund will help provide affordable and sustainable homes for the millions of people moving from one way of life to another. It also gives investors the chance to create a well-balanced investment portfolio, with exposure to a growing and developing economy.

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Modular Construction

Saving Time, Money and the Environment through Modular Construction

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Saving Time, Money and the Environment through Modular Construction

Modular construction methods are often hailed as a more cost-effective option, but that’s far from the only benefit pre-fabricated buildings can have. We take you through how modular construction firms can save on time, the environment and money, while also delivering a return on investment many would be happy to receive.

It’s no secret that global real-estate related costs are rising. The value of property is broadly on the up. Meanwhile, the cost of materials is also climbing, while skilled construction professionals are becoming more scarce, pushing their value up, too. But there is a solution to this problem: modular construction.

Just like many other countries, across India, many people still have a dream of owning their own home. However, with more people moving into urban areas of the country from the rural regions, that’s not always an easy achievement, even for those with stable, well-paid jobs. Indeed, research suggests some 110 million additional housing units will be required by 2022. That’s a tall order and once that is simply unachievable through traditional construction methods alone.

However, major advances in modular construction techniques mean homes can be built quickly, in an environmentally friendly way, while also proving a more cost-effective option.

Saving you time and money

Much scepticism remains over how reliable and practical modular construction techniques are. Although, there are signs the opinion of the sector is improving as more businesses opt for it over traditional building methods.

One major factor that’s encouraging more businesses and home-buyers to choose a modular property is time. Once you gain permission, finalise plans and pay deposits, the fabrication of a modular building is much quicker than one constructed on site, in a more traditional manner.

That’s because templates and machinery in an established and regulated factory can create the specified shell of your building quickly and to approved safety standards.

Once those elements of the building, be it a home, a commercial office or even a hotel, are created, it’s then checked and verified through a reliable, tech-based system. This ensures all the required parts are there, of the right size and structure and are ready to be transported to the previously prepared building site.

This is where the costs savings come into play. Where a traditionally built property can require up to hundreds of on-site construction professionals to build up walls, ensure measurements are perfect and all the materials are as they should be, a pre-fabricated construction team is typically much smaller. That smaller team will also need much less time on site to construct the unit and ensure its safely in situ as planned, ready for the next step.

Again, with so much of the required works already done, the modular building requires only a little additional work on site, before the owner can get to work on the inside and make it habitable.

This means that while the cost of the materials used to construct a modular building aren’t particularly cheaper than for any other property, costs are saved through the shorter period of time skilled construction professionals are required on site. Meanwhile, the requirement of fewer construction professionals is also a financial benefit.

Environmental benefits

We then move onto the environmental benefits of the modular construction sector. First of all, the question of sustainability is one the massive global construction sector is increasingly being asked to answer:

  • Are the chosen materials sustainable, eco-friendly and long-lasting?
  • Can the pre-fab factories use sustainable energy sources?
  • Are the pre-fab factories sustainable and energy efficient?
  • Can they construct increasingly eco-friendly modular homes off-site?    

These are just a few details that require a positive answer from those modular construction companies who are beginning to gain support, momentum and business across India.

Modulex Modular Buildings PLC is one modular construction firm that can answer in the affirmative to the above questions and many more. It’s the world’s largest and India’s first, steel modular building factory.

Like all Red Ribbon investment projects, Modulex was created with three essential pillars of sustainability in mind:  Planet, People and Profit.

At a time when we need to find more economical ways of providing everything the huge population of India needs, in a way that protects their environment, while also delivering on profit to the investors who support those businesses, Modulex delivers on all three and is well-placed to do so for many years to come.

Red Ribbon CEO, Suchit Punnose said:

India’s Modular Construction market is expected to be worth close to $130 billion by 2023 and at Red Ribbon we think its imperative that as much of the growing industry as possible, is created with sustainability in mind, from the outset.

Providing the answers to India’s housing and construction needs is one thing, but doing it in a way that future generations can benefit from it on multiple levels, is something every investor in the industry should aspire to. That’s why we support Modulex and strive to ensure its green credentials can match its productivity and investor returns.

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Indian Rupee

Broad-based planning supportive of India’s economic ambition

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It may be a New Year, but in many countries, old worries remain. Take the UK, for example. Brexit is as uncertain as ever and that’s unlikely to change any time soon. Not only have forecasts for economic growth in the country been tempered by the lack of a clear path for Brexit, the latest survey data from IHS Markit have served to underscore the worry felt by consumers and businesses, with the country’s dominant services sector close to stagnation during December.

However, the UK isn’t the only country experiencing uncertainty as to how 2019 will unfold.

India has an interesting 12 months ahead as incumbent Prime Minister Narendra Modi must work hard to maintain his position, after recent state election results make the likelihood of a new leader a real possibility. However, Modi has begun 2019 with ideas and a plan to show his support of the large farming industry, which is unhappy with the lack of fiscal support from the Government.

Speaking at the India Science Congress this week, the India PM urged scientists to find low-cost solutions for ‘social good’, including the creation of more affordable and balanced agriculture industry and using big data analytics to improve crop yields for farmers with smaller holdings. Introducing this element to the PM’s broader outlook for India’s economic development may always have been the plan.

Although, there will likely be many who will say its merely a move to encourage more votes in an election year. Regardless of the truth, this latest step is a further sign that Modi’s economic ambitions for the country remain front-and-centre.

Economic outlook

Even before this latest speech, the outlook for growth in the country was upbeat, particularly when compared with global competitors. Despite some GDP forecast downgrades from the likes of Fitch Ratings and the OECD – to a still healthy 7.2% and 7.3% respectively – India is assessed to have outpaced China during 2018 and to do so again in 2019. India’s finance ministry, meanwhile, forecasts economic expansion of 7.8% during 2019, which would likely be similar to the average pace of growth across 2018, despite the slowdown to 7.1% in the third quarter.

Indeed, it appears that the third quarter GDP number is partly behind most of the forecast reductions, although other details also weigh.

They include:

  • Generally weaker global GDP outlook.
  • Global trade worries.
  • Liquidity squeeze.

Modi and his Government, however, are upbeat and standing firm on their positive outlook. Many would say, with good reason.

Despite the difficult global scenario, some developments have been in India’s favour. The high price of crude oil has receded, despite the sanctions against Iran. Meanwhile, the country has moved up the World Bank’s ‘ease of doing business’ rankings. And while there has been some disagreement over the Government’s demands for the Reserve Bank of India to relax some restrictions on weaker banks, inflation has remained under control.

The decision to remain firm on many fiscal elements of governance while creating a more supportive backdrop for businesses and consumers, has been a core driver of the strong level of economic expansion across India. It appears that focus on moving forward with policies designed to encourage start-ups and innovation is very much still in place.

Modi told delegates at the Science Congress that following on from its success of improving its ‘ease of doing business’ score, it must now work to improve the ‘ease of living’ in India. That requires a broad-based plan; working to support businesses across every industry, supporting innovation and new ideas, job creation across every industry and providing a stronger and more reliable infrastructure for consumers.

At Red Ribbon we understand the importance of introducing innovative developments into an existing industry, which is why we believe the Eco Hotel industry is one that can help ensure India’s economic growth ambitions will succeed and even exceed expectations.

Red Ribbon CEO, Suchit Punnose said:

An economy the size of India’s will only flourish if a broad-based outlook is in place that also supports innovation and allows every industry to move in an agile fashion, particularly when it becomes clear that a new approach is required. India’s leisure and tourism industry is a case in point. It draws tourists from within and without the country to its variety of regions and attractions. Introducing a new type of accommodation, such as Eco Hotels, will work to add yet another string to India’s bow as the destination of choice for an even broader range of holiday-makers and business travellers, while supporting jobs growth and industry innovation at the same time. As long as business start-ups and industry innovations are supported and encouraged, they will only have a positive impact on India’s economy, the standard of living and the global environment.

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India Cryptocurrency - Red Ribbon Asset Management Plc

India retains cautious Cryptocurrency stance

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India retains cautious cryptocurrency stance

A raft of recent news reports and blogs posts, suggest that those involved in the cryptocurrency markets are becoming a little impatient with the Indian Government and the Reserve Bank of India’s (RBI) caution relating to that specific financial sub-sector. The reports contain some conflicting views from different members of the two panels that are working to research cryptocurrencies and put a regulatory framework in place. However, despite a lack of real progress it appears the overall, official tone towards the crypto market is less negative than it previously was.

One of the Indian government’s panels currently researching the cryptocurrency markets is set to submit a report on its findings. That keenly awaited report has been delayed from July 2018 and right now, no time line is in place for it to be finalised and published. This detail is the cause of some of that unrest.

With that report being delayed, it’s no surprise that any details on possible virtual currency regulation in India is also taking time to be finalised. Without the approved findings of the official report, it simply doesn’t make any sense for a regulatory framework to be put in place.

Among the most likely reasons behind the slow progress of any official view and policy on cryptocurrencies across India, is the lack of a global steer. Also, and perhaps more importantly, is a lack of detailed knowledge and information on exactly what impact cryptocurrencies can have on the economy, particularly over the medium-to-long-term.

Some support for virtual currencies

While uncertainty over exactly how India will regulate and permit cryptocurrencies to be traded and taxed remains, it does appear that the Indian government is more positive on them becoming a permanent part of its financial landscape, than it was.

The Financial Stability Board (FSB), which India is a part of, has said that virtual currencies are not a threat.

“The FSB has undertaken a review of the financial stability risks posed by the rapid growth of crypto-assets. Its initial assessment is that crypto-assets do not pose risks to global financial stability currently,” the RBI report quoted the FSB as stating.

That’s a positive note and relevant to the discussions and research that are ongoing.

Getting it right

Despite that glimmer of support for crypto-currencies, global governments, central banks and other relevant bodies continue to move slowly with regards to implementing official regulation and plans to regulate Bitcoin, et al. But really, is it any wonder?

After surging in value during 2017, many virtual currencies then lost much of those gains during 2018. And now…? Well, the future for those currencies is very much unknown, particularly coming against a backdrop of so much broad-based uncertainty elsewhere.

Of course, the blockchain system that underpins cryptocurrencies is something that the Indian government and RBI are interested in, as are other countries and industries. But, having regulation and utilising one, is likely impossible without also having the other.

This is without doubt, another major reason why the panels formed to investigate cryptocurrencies are taking their time to collate all the details and submit a detailed and useful report. If blockchain is to become a part of India’s government, business industries and the economy, then it’s essential that any risks relating to supporting a regulated cryptocurrency network is clear, robust and performs the task it was created for.

India as a nation is one that welcomes change and new ways of doing things – provided it’s beneficial for the economy and its population. Even though it’s likely that virtual currencies and blockchain fall under that category, both the government and the RBI are right to be cautious over any policy and regulation that’s created, so they can be certain it’s right for India’s economy and its huge population, with its growing appetite for all things digital.

Nobody understands this market potential quite like Red Ribbon, which has placed India at the heart of its investment strategies since the company was founded more than a decade ago. Drawing on a pool of established expertise on Indian market conditions, Red Ribbon Asset Management offers a unique opportunity to share in that potential.

Red Ribbon CEO, Suchit Punnose said:

India’s appetite to be at the forefront of new technology is continuing to develop. However, even though some countries have begun a light touch regulatory oversight on cryptocurrencies, that doesn’t mean the government or RBI will rush into something that has the potential to impact India’s economy and financial landscape over the longer-term.

Indeed, a cautious outlook doesn’t mean digital currencies have no place, or an insignificant one for India’s economy. In fact, it’s more likely to suggest the opposite and that as a country, the government and central bank want to be sure they get their policy implementation on it, just right.

At Red Ribbon, we have the same attitude to new and developing opportunities. We’re willing to take some risk on new industries and investment opportunities, but only when we know exactly what those new industries have done and have the potential to achieve. With Eco Hotels and Modulex, we’ve worked hard to ensure we understand everything those businesses stand for and what they’re capable of, not only from an investment perspective, but on a global sustainability aspect, too.

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India Economic Evolution - Republic Day - Red Ribbon Asset Management Plc

India’s economic fortunes in the 70 years since gaining independence

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India’s economic fortunes in the 70 years since gaining independence

This year’s Republic Day in India marks the 70th anniversary since it truly became an independent country, with its first elected President after the withdrawal of British rule in 1947. Since then, every year on January 26th, the nation celebrates its hard-won achievement.

India’s first elected President was Dr. Rajendra Prasad, who took his oath at the Durbar Hall in Government House. Since that time, India has proudly voted for its own President during elections and celebrates that independence with joy and jubilation.

Of course, the year is now 2019 and many things have changed since 1950. Ram Nath Kovind is the country’s 14th President, with Narendra Modi serving as Prime Minister. The economic landscape is very different from 70 years ago and it continues to transform further as a combination of financial, digital and ecological developments demand.

Economic output

It’s never easy to gain a true comparison of economic performance between years gone by and any given year in today’s era. However, the available data does give an idea of the make up of economic growth and also the rate at which a country expands – or contracts.

Given India’s size, population, agricultural performance and the more recent growth of eCommerce and finance, you likely won’t be surprised to find that the current pace of GDP growth is superior compared to the rates of growth achieved in 1950.

Data from India’s Central Statistics Office shows that GDP growth in the 1951-52 financial year was 2.3%, with the main contributor to that growth, being the agricultural sector.

Until recently, academics have placed India’s average rate of GDP growth at somewhere between the 3.5% to 4.5% level. But that average is well below the 7.5% rate of GDP growth anticipated for 2018 and also that masks many peaks and changes in the country’s fortunes and chosen paths.

The official data show that after some notable peaks and troughs, GDP has been broadly positive and even prosperous since the 1980s. India’s economic landscape, however, has shown a consistent picture of agriculture losing its place as the major part of the economy, being replaced by the services sector.

Where agriculture made up over half of activity and profits in the 1950s, it now accounts for around 18% of GDP growth, despite employing close to 50% of its population. The services sector, meanwhile, has doubled from a proportion of around 30% of GDP in the 1950’s to the 60% mark, today.

This switch between the dominance of two key industries across India highlights the way technology and digitisation have evolved and been embraced across the country and indeed, the world. While some pain has been felt along the way during that transformation, it also shows that even though it is a huge country with an impressive population, it is able to recognise when change is required and crucially, to implement that change.

Modern economic drivers

Republic Day is a wonderful to day to remember that after 20 years of struggling to gain independence, it was finally achieved. It is also a day to reflect on how, as an independent country, India has chosen to adapt to and even welcome wide-reaching changes, today.

Technology and digitization is something that has affected every industry and by embracing that, the future for India’s economy has become brighter.

Manufacturing has changed thanks to the way technology has enhanced its capabilities and made it a safer environment for its workers. Meanwhile, tourism and eco-hospitality are also examples of where the abilities of technology, combined with the wants of a modern society, can be incorporated to produce something that not only services the needs of consumers, but also the needs of the environment in the name of sustainability.

Red Ribbon CEO, Suchit Punnose said:

Republic Day is a special day, not only because of the celebrations that mark its passing, but also because it underscores that as a country, India is always moving forward, developing and achieving thanks to its own population and ability to embrace change.

Red Ribbon embodies that sentiment and our investment in industries such as modular construction, through Modulex and the eco-hospitality sector, with Eco-Hotels, show that we’re always looking towards supporting a prosperous future for India’s economy and vast population.

We look forward to continuing to play our part in India’s future, participating to the utmost in the opportunities the subcontinent’s explosive growth has to offer and at the same time providing above market rate returns from our investors in what I am convinced will continue to be one of the world’s most exciting markets for many years to come.

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Modular Construction Housing Needs - Red Ribbon Asset Management Plc

Modular Construction: The Answer to Housing Needs

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Modular construction is the answer to housing needs

Modular construction is an option for building homes that’s been available for over a century. Its popularity has ebbed and flowed with various significant events and global developments. However, one thing that remains clear about the system of preparing a property in a factory and then constructing that same building on site, in a matter of a few days or even just hours, is that it’s one that builders and policy makers return to whenever a new crisis or real need for homes arises.

Modular homes quickly gained in popularity in the US when they were developed and then sold by Sears at the end of the 19th century. That was fuelled by increasing wealth and an abundance of land to live and build on. The Great depression which began in 1929 soon put paid to the growth of buy and build your own home. And by 1932, Sears’ modular construction home sales were down by 40%. That was enough for them to put an end to that particular part of the business.

World War II ends

However, it wasn’t so very long from then, until the end of World War II in 1945 when soldiers and Governments could fully take in the sheer size of decimation across the UK and Europe, following years of fighting, destruction and bombing.
Add to that the returning soldiers needing homes to live in with their families and it was clear new homes needed to be built. Quickly. Pre-fabrication proved popular once again, with several areas in the UK benefitting from this fast and economical construction method.
However, once things began to settle, the workforce was back in balance and skilled builders were willing and able to work and modular construction, fell out of favour once more.

Confluence of developments

Fast forward to 2019 and there are a broad array of developments that have combined to once again push modular construction to the forefront of residential home building, but this time on a global scale:

  • The UK’s housing crisis where a lack of building during the credit crisis means there aren’t enough homes for the still growing population – the Government is supporting modular construction options to quickly build suitable housing for Britons across the country.
  • Geo-political unrest and refugees moving from place-to-place with nowhere to live – the RICS recently awarded a young home designer its top prize for his low-cost bamboo home that takes just 4 hours to build, to help with the slum crisis in the Philippines.
  • Economic prosperity and demand for homes and commercial properties in rural and city regions – India’s economy is among the fastest growing in the world and the changing needs of the country for less rural workers, to more city-based jobs, means more urban homes are required, quickly.
  • More and more people have developed an eco-conscience, either through their own nature or the growing number of ecological changes and concerns the global population is faced with – home-buyers and developers around the word are actively seeking green homes that are built with sustainable materials and are also powered that way, too.

Together, these separate crises and changes have led to greater demand for modular homes from a wide variety of consumers and policy makers. Meanwhile, that demand combined with a larger business desire to consider sustainability and green options, has encouraged further investment in the sector, too.

Modulex Construction is the World’s largest and India’s first Steel Modular Building Company, setting out to meet the challenges posed by India’s urban housing shortages in a practical and dynamic manner. The company is at the heart of a project established by Red Ribbon to harness the potential of India’s markets and delivering opportunities for investors. Because, when it comes to investing on the subcontinent, nobody knows India and its markets better than Red Ribbon.

Red Ribbon CEO, Suchit Punnose said:

When we think about how modular construction has time and time again proved the right answer to a crisis, problem or change, it becomes a much simpler decision as to whether or not it’s the right investment choice. Add to that the fast-growing knowledge about the importance of eco options and sustainability and modular construction becomes an even more compelling proposition.

Modular construction is already part of India – and the world’s – property development needs. And that’s something that is only going to increase as it becomes a major element of the construction landscape. Not only due to its speed of delivering the finished, habitable product, but also its cost-effectiveness, green credentials and sustainable factors it brings.  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 not only a vital element in meeting market challenges but will also deliver on the unprecedented opportunities currently presented by the subcontinent’s burgeoning economy.

Modulex is the answer to many of India’s immediate needs and beyond. By creating sustainable, cost-effective homes and buildings across the country, Modulex is part of a growing industry that will remain relevant and profitable for many, years to come.

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India Economic Ambition Planning - Red Ribbon Asset Management Plc

Broad-based planning supportive of India’s economic ambition

By India, News No Comments

Broad-based planning supportive of India’s economic ambition

It may be a New Year, but in many countries, old worries remain.

Take the UK, for example. Brexit is as uncertain as ever and that’s unlikely to change any time soon. Not only have forecasts for economic growth in the country been tempered by the lack of a clear path for Brexit, the latest survey data from IHS Markit have served to underscore the worry felt by consumers and businesses, with the country’s dominant services sector close to stagnation during December

However, the UK isn’t the only country experiencing uncertainty as to how 2019 will unfold.

India has an interesting 12 months ahead as incumbent Prime Minister Narendra Modi must work hard to maintain his position, after recent state election results make the likelihood of a new leader a real possibility. However, Modi has begun 2019 with ideas and a plan to show his support of the large farming industry, which is unhappy with the lack of fiscal support from the Government.

Speaking at the India Science Congress this week, the India PM urged scientists to find low-cost solutions for ‘social good’, including the creation of a more affordable and balanced agriculture industry and using big data analytics to improve crop yields for farmers with smaller holdings.

Introducing this element to the PM’s broader outlook for India’s economic development may always have been the plan. Although, there will likely be many who will say its merely a move to encourage more votes in an election year.

Regardless of the truth, this latest step is a further sign that Modi’s economic ambitions for the country remain front-and-centre.

Economic outlook

Even before this latest speech, the outlook for growth in the country was upbeat, particularly when compared with global competitors.

Despite some GDP forecast downgrades from the likes of Fitch Ratings and the OECD – to a still healthy 7.2% and 7.3% respectively – India is assessed to have outpaced China during 2018 and to do so again in 2019. India’s finance ministry, meanwhile, forecasts economic expansion of 7.8% during 2019, which would likely be similar to the average pace of growth across 2018, despite the slowdown to 7.1% in the third quarter.

Indeed, it appears that the third quarter GDP number is partly behind most of the forecast reductions, although other details also weigh. They include:

  • Generally weaker global GDP outlook.
  • Global trade worries.
  • Liquidity squeeze.

Modi and his Government, however, are upbeat and standing firm on their positive outlook. Many would say, with good reason.

Despite the difficult global scenario, some developments have been in India’s favour. The high price of crude oil has receded, despite the sanctions against Iran. Meanwhile, the country has moved up the World Bank’s ‘ease of doing business’ rankings. And while there has been some disagreement over the Government’s demands for the Reserve Bank of India to relax some restrictions on weaker banks, inflation has remained under control.

The decision to remain firm on many fiscal elements of governance while creating a more supportive backdrop for businesses and consumers, has been a core driver of the strong level of economic expansion across India. It appears that focus on moving forward with policies designed to encourage start-ups and innovation is very much still in place.

Modi told delegates at the Science Congress that following on from its success of improving its ‘ease of doing business’ score, it must now work to improve the ‘ease of living’ in India. That requires a broad-based plan; working to support businesses across every industry, supporting innovation and new ideas, job creation across every industry and providing a stronger and more reliable infrastructure for consumers.

At Red Ribbon we understand the importance of introducing innovative developments into an existing industry, which is why we believe the Eco Hotel industry is one that can help ensure India’s economic growth ambitions will succeed and even exceed expectations.

Red Ribbon CEO, Suchit Punnose said:

An economy the size of India’s will only flourish if a broad-based outlook is in place that also supports innovation and allows every industry to move in an agile fashion, particularly when it becomes clear that a new approach is required.

India’s leisure and tourism industry is a case in point. It draws tourists from within and without the country to its variety of regions and attractions. Introducing a new type of accommodation, such as Eco Hotels, will work to add yet another string to India’s bow as the destination of choice for an even broader range of holiday-makers and business travellers, while supporting jobs growth and industry innovation at the same time.

As long as business start-ups and industry innovations are supported and encouraged, they will only have a positive impact on India’s economy, the standard of living and the global environment.

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Key Benefits Modular Construction - Red Ribbon Asset Management Plc

Key Benefits of Modular Construction

By Archive, India, News No Comments

Right now, the demand and requirement for residential and commercial property across India remains elevated. And, true to form, the relevant industries are supporting that need in the best way they can – constructing buildings. However, having relied upon mainly traditional methods for so long, that’s the go to option in many cases.

Enter modern, modular construction.

Modular construction techniques have come a long way since the first attempts in the 1800s. Indeed, they’ve even evolved and improved vastly in the past 10 years. That’s part of what makes it a big part of the answer to India’s requirement for homes and business premises. Add to that the easier property construction regulation under forward thinking Prime Minister Modi’s RERA act and modular construction is most definitely an option drawing increased interest. Not only across India, but globally, too.

There are many reasons why that should be the case and is now becoming so.

Why modular construction is an essential part of the solution to India’s housing needs

Because modular construction is an excellent way to create housing and commercial properties of all shapes and sizes, quickly and relatively affordably. This has helped encourage thought and investment into the industry, with extremely positive results.

That’s not to say it should completely take over traditional property construction methods. There’s absolutely room for all kinds of skills and ways of building. However, modular construction is no longer a final thought or last option. It’s right up front with all the other property construction methods, which is exactly where it should be.

Its cost-effective

When it comes to building property, its not something that could ever realistically be described as ‘cheap’. One thing that makes modular construction a more cost-effective building option is the use of set, factory-based methods.

This is particularly relevant for apartment blocks, or developments where properties will feature the same internal layout. Having a set pattern for the off-site, factory construction, means fewer plans, designs and templates are required. This also helps support a more efficient work-rate. In addition, among the various ‘major costs’ of on-site construction, is the wages of builders, supervisors and other professionals, who need to be there. With modular construction, many of the builders only need to be on the actual building site for between a quarter and half of the time they would on traditional build.

Eco-credentials

Building property will always have pros and cons. Among the cons is the amount of waste and also the often-difficult task of ensuring all required energy efficiencies are made-to-measure and in place from the beginning. Utilising a purpose-built modular factory dramatically improves waste control. That’s borne of working to specific measurements in an environment that makes it easy to order only exactly what you need.

That’s not to say that traditional building methods aren’t precise and materials ordered accordingly. But, without such controlled conditions, over-ordering and materials waste is notably higher. But that’s not the only green credential modular construction techniques lay claim to.

By constructing all the internal wall panels and other elements of a modular building in a factory, it’s much simpler to ensure all the required energy efficiencies are fully installed, at source in the right way. This makes any eco-friendly options easier to safely install in the factory. Solar panels, water saving features and suitable heat conservation, or air circulation requirements can be handled in a controlled, measurable way, using the right materials and methods.

Modulex Construction is the World’s largest and India’s first Steel Modular Building Company, setting out to meet the challenges posed by India’s urban housing shortages in a practical and dynamic manner. The company is at the heart of a project established by Red Ribbon to harness the potential of India’s markets and delivering opportunities for investors. Because, when it comes to investing on the subcontinent, nobody knows India and its markets better than Red Ribbon.

Red Ribbon CEO, Suchit Punnose said:

India’s housing needs are no secret. But nor are the advances in techniques to help support faster and more cost-effective construction options. Add to that a supportive Government regulatory environment it begins to make sense that all types of reliable and suitable methods are put to good use. We, along with an increasing number of professionals, investors and industry specialists, know that modular construction is a major part of the answer to India’s housing needs.

Modular construction is already part of India – and the world’s – property development needs. And that’s something that is only going to increase as it becomes a major element of the construction landscape. Not only due to its speed of delivering the finished, habitable product, but also its cost-effectiveness, green credentials and sustainable factors it brings.  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 not only a vital element in meeting market challenges but will also deliver on the unprecedented opportunities currently presented by the subcontinent’s burgeoning economy.

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India Real Estate - Red Ribbon Asset Management Plc

Time matters with India’s Real Estate revitalisation

By Archive, India, News No Comments

KPMG reported last month that Indian Real Estate Sector has now entered a “revitalisation mode”, with aggregate growth projected to reach $ 650 Billion by 2025 and topping $850 Billion by 2028: the average yearly contribution of real estate to the Indian economy will more than double from its current 7% by 2025. And CBRE India are equally optimistic: in their own quarterly report, snappily titled “India Real Estate: Variance in Construction Costs”, they forecast 17 Million new jobs will be added to the sector and an additional 8.2 Billion square feet of space released by 2025.  It all resonates well with the ambitions objectives of Prime Minister Modi’s Affordable Housing Programme, with Real Estate now set firmly in growth mode, and growing stronger every year. But there’s a dark shadow in the garden…

Each of these influential reports has highlighted a potential issue relating to construction costs on the subcontinent, capable of acting as a brake on growth and with no less than six major conurbations (Chennai, Pune, Hyderabad, Mumbai and Delhi) causing particular concern. Perhaps predictably, Mumbai tops the list of areas where unit construction costs have spiralled over recent years and show little sign of slowing down despite the broadly stabilizing effect of GST legislation introduced by the Modi Administration which helped smooth out some of the worst supply and pricing differentials across the country.

The average cost of construction for a residential apartment in Mumbai is now Rs 3,125 per square foot, compared to the Rs 2,375 per square foot the same apartment will cost in Hyderabad. At one (macro) level the reason for all this is obvious: an increasingly urbanised population pushing up demand for units in the largest conurbations as part of a gradual drift away from the land, but the disparity in relative costs between conurbations is still striking. Inter market differentials of this kind are likely to be caused primarily to an uneven distribution of construction skills, with highly skilled workers drawn to areas of greater demand so increasing the unit cost of labour in specific areas of the subcontinent. Certainly we might expect other variables such as recent sharp rises in the wholesale price of steel to be more uniformly spread across the country.

In short, construction is becoming progressively more expensive in the very areas where more housing and commercial units are likely to be needed most…and that’s a real dilemma.

One answer is to make greater use of just in time delivery systems which are capable of dramatically reducing overall construction schedules: simple maths tells us that if an expensive worker is on site for a quarter of the normal building phase, costs will come down no matter how prohibitive the daily rate. And of course we have now grown used to the significance of just in time methodologies because of the prominence the issue has assumed as part of the current Brexit debate. Just as any significant inhibition on frictionless trade has potential to throw the UK economy into chaos after Brexit, so too the same frictionless technologies can help address systemic cost differentials across the Indian construction sector as well.

Modular Construction prefabricates all of the essential components of the building off site, everything from exterior walls, ventilation systems and internal wiring networks with the parts then arriving on location only when they’re needed: meaning field workers aren’t left waiting around (expensively) for the next phase of the project to get underway. Research has shown that through a combination of just in time delivery techniques and modular technology, otherwise complex units such as student accommodation blocks or hospitals can be erected on site in days rather than the months and sometimes years of conventional technologies. And an added advantage is that Modular Technology also reduces the potential for human error and snagging in the final building which can also be a major but hidden expense on any project.

Modulex Construction is the World’s largest and India’s first Steel Modular Building Company, setting out to meet the challenges posed by India’s urban housing shortages in a practical and dynamic manner. The company is at the heart of a project established by Red Ribbon to harness the potential of India’s markets and delivering opportunities for investors. Because, when it comes to investing on the subcontinent, nobody knows India and its markets better than Red Ribbon.

Red Ribbon CEO, Suchit Punnose said:

Prime Minister Modi has successfully appealed to the youthful and increasingly urbanised population that is currently driving India’s economic growth, not least through his Government’s re-energised Affordable Housing Programme the scale and scope of which has at times been breathtaking. So it should come as no surprise to learn that such an increasingly mobile population is also creating real estate hot spots (and cost differentials) through being attracted to a number of specific locations: by definition, a mobile population is difficult to keep still.

So as it seems to me the resulting cost differentials in construction across the subcontinent are likely to be a fact of life for some years to come yet. But that’s certainly not to diminish the problem, and cost disparities are a problem in India’s most expensive real estate markets, Mumbai in particular. They have real potential to distort the market.

In delivering a workable solution to that challenge most expert commentators now agree that Modular Construction is simply inescapable. No other technology offers the pace and scale of delivery needed to meet India’s housing needs and, as the article points out, it is the perfect corollary for just in time delivery systems. 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 not only a vital element in meeting market challenges but will also deliver on the unprecedented opportunities currently presented by the subcontinent’s burgeoning economy.

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Modular Construction India - Red Ribbon Asset Management Plc

Modular Construction: the answer to the shortage of skills in India

By Archive, India, News No Comments

Most Indians work in agriculture but next comes construction, and according to the latest Economic Survey the subcontinent’s real estate and construction sector is likely to create more than 15 Million jobs over the next five years, that’s three million every year. To put that in perspective less than 3 Million people are currently employed in the entire UK construction industry. And of the 52 Million building workers employed by Indian companies, 90% are involved in on-site construction with the other 10% busily painting, plumbing and wiring the finished product. It’s fair to say all these painters, plumbers and electricians are skilled workers…but not so the other 90%.

Because the vast majority of India’s construction workers are either minimally skilled or have no skills at all: an astonishing 97% of them aged between 15 and 65 will receive no formal training of any kind before starting work on site and, plumbers and painters aside, most of the skilled workers won’t be getting any cement dust on their boots because they’re probably office based clerks, technicians and engineers. And that’s a real problem…

It’s a problem, because coming the other way down India’s infrastructure and logistics superhighway is an unprecedented surge in demand for urban housing, fuelled by an increasingly urbanised population projected to become the biggest on the planet by 2022. India’s National Skill Development Council predicts that by then the real estate and construction sector will require a workforce of more than 66 Million, so without any obvious core of skilled workers currently able to sustain anything like growth it’s no wonder the sector is starting to show signs of stress.

Of course all this was supposed to be addressed by 2016’s Real Estate (Regulation and Development) Act which was intended to act as a platform for local, State driven planning capable of creating an appropriate environment for improved training and regulatory structures, but so far six States out of 29 have failed to produce any plans at all under the legislation which means finding workers with the right skills in the right place will continue to be a source of real concern.

Billionaire developer Niranjan Hiranandani, head of Hiranandani Construction, has a simple enough solution: just pay unskilled workers less and reap the savings while you can. But that’s not a particularly attractive solution for anyone buying one of his apartments 76 floors up in the Mumbai skyline where quality assurance is far from being a dispensable extra. The behemoth that is Hindustan Construction Company perhaps takes a slightly more realistic approach, going on record last week to say that skills shortages have become a huge problem for the sector: 50% of its workforce needs advanced training just to use the complex machinery now prevalent on most modern building sites. With a heavy tone of understatement a spokesman for the company announced grandly that given these skilled workers are not available, “the only option is to train them”.

Well, it’s not quite the only option…

With no actual shortage of workers seeking employment in India’s urban conurbations, particularly in the light of a seemingly inexorable drift of former agricultural workers from country to town, what if the physical construction process itself could be de-skilled? Why not make a virtue of necessity and draw on this pool of former agricultural labourers to release the margins of between 20% to 70% that Deloitte India predict would follow from a wholesale deskilling initiative? These savings would go straight to the bottom line without endangering the quality and safety of the finished building. Skilled construction workers earn Rs 1,000 a day as opposed to their unskilled counterparts who earn an average of Rs 200.

And there is just such a business model on the market right now, a model with the potential to uncouple construction projects from a seemingly insoluble skills conundrum: it’s called Modular Construction.

Modern Modular technologies allow all of the building’s key components to be put together off site by specialist workers and then assembled locally at the same time as the site works are completed, not only reducing overall completion schedules by as much as 50% but also significantly reducing the need for skilled workers in the construction phase. All of the design and engineering disciplines are instead concentrated at the offsite manufacturing facility leading to labour, financing and supervision costs. Which will all be music to Mr Hiranandani’s ears…

Modulex Construction is the World’s largest and India’s first Steel Modular Construction Company, meeting the challenges of the subcontinent’s current urban housing shortages in a practical and focused manner. The company was founded by Red Ribbon as part of an innovative project to harness the potential of India’s dynamic and evolving real estate markets whilst at the same time delivering opportunities for investors through Red Ribbon platform. Because, when it comes to investing on the subcontinent, nobody knows India’s markets better than Red Ribbon.

Red Ribbon CEO, Suchit Punnose said:

Delivering on India’s stringent housing targets over the next five years presents an enormous challenge for the subcontinent, and that challenge is likely to get more testing still given the underlying demographics of a rapidly increasing and ever more urbanised population. Existing skills shortages within the construction sector have the potential to be a crucial block to meeting these targets, especially given the scale and scope of the training programmes necessary to release a further 3 Million workers into the sector every year for the next five years: never mind the attendant costs which are likely to be eye watering on any basis.

That’s why to my mind the answer has to be Modular Construction. No conventional technologies can beat it for sheer pace of delivery and, with a centralising of skilled labour in the offsite manufacturing facility, it will beat conventional construction methods hands down on overall profitability too.

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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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