Data Effect - Real Estate (India)

What does 5G, Covid and Semiconductor PLI scheme of India have to do with Real Estate.

These seemingly disconnected themes have one unifying but long term impact. Reducing the cost of Urban real estate in India. This is one prediction which may take a few years and then continue for a couple of decades so bookmark this page. The rapid rollout by #jioplatforms #airtel and #vodafoneidea of 5G in the country is already resulting in disrupting business models. From teleconsultation on platforms like Practo for telemedicine to Virtual Accounting (i havent met my auditor in three years and yet everything gets filed on time and accurately) models, the juggernaut of tech enabled work keeps rolling on. #data fuels this growth and continues to become richer and richer.

India has always been a fast adopter of technology as we can visualize by its huge mobile penetration, Rapid Mobile Banking, UPI and many more. 5G will provide the 100X speed and consistency for video, audio and #data to stream seamlessly across the country from far off corners of Arunachal Pradesh to Rameshwaram and from Gurez to Chilika. This is aided by a rapidly falling price of #data per GB of consumption. India is the largest #data consumer in the world with 1500 Million Gigabytes per month

Semicon - The PLI scheme from the government means that Apple is already leveraging India for its China +1 model and bringing in super fast production capabilities to play. #foxconn #wistron #pegatron

Do you think these factories will be set up in metros? Absolutely not - the ecosystem will be setup on the lines of the Hosur or Sriperambudur model.. or the Hisar - Manesar model.. or Sanand .. i can go on.. the list continues. Also what will cascade from here will be the continuous lower cost push of hardware; making laptops, desktops and mobile tabs cheaper and affordable for next generation of indians. This in turn fuels higher #data consumption and the virtuous cycle continues.

Covid - This huge disruptor taught the world (SIs, Government bodies, customers and recruiters) that work is getting done remotely with little to no disruption, in fact sometimes better productivity than in a fully swipe in/Swipe out mode. Of course security systems had to adapt, VPNs had to be reconfigured and a whole lot of SEZ rules had to be revamped for Covid. .. but the Great disruptor of the 2020 era created the necessary digital culture enabling remote work

Now on to my prediction - Real Estate in india will continue to grow - but will show muted growth in Tier 1 cities and rampant growth in Tier 2 and Tier 3 cities. The combined power and confluence of the above three will drive rapid digital penetration, mobility, remote working, Semi Urban working models and a techtonic shift in the way India populates its urban centers. Builders and Real Estate investors would do well to factor in this trend and recalibrate their offerings. Muted growth -(3-5%) growth in price CAGR (tier 1 cities), Rapid growth (7-10% growth CAGR) (Tier 2 cities). With india inflation at 6-7% any growth below this number is a net real decline.. not growth per se... Stay tuned

This article is my personal view and not endorsed by Capgemini. I am not SEBI registered investment advisor and it is not to be taken as a recommendation to invest in any sector, make your own judgement.