Realty development in India’s tier II, III cities need govt intervention: Colliers India CEO

Taking over the reigns of the India arm of property consultancy Colliers last week, Badal Yagnik, the chief executive, is very gung ho about the country’s realty prospects. Speaking to DH’s Shakshi Jain he elaborated on India’s significance for the consultancy, its growth prospects during the year and the state of real estate development in tier II, III cities of the country.

Edited excerpts.

What is India’s position as a market for Colliers?

Southeast Asia, which is a very nascent story for us, is small when it comes to the global scale. In the Asia Pacific region, India today is the third largest market for us. But in the next ten years we see this becoming the largest market for Colliers. 

The firm in India has been growing at a 25-30% compound annual growth rate for the past four years. This year it is expected that we should be close to the 30-40% mark because there’s a huge swing when it comes to other verticles - whether it is commercial, residential, new hospitals and even government initiatives. That is on the project side of things. We’re also seeing traction in the commercial side of the business because we’re seeing a lot of global capability centres, new firms entering India. A lot of developers, both institutional and homegrown, have been on a spree of buying land for construction. So the capital side of things is also strong. 

In May, Colliers announced that it plans to add 350-400 people to its India workforce. Are you on track to achieve that and what are your business plans going forward ?

The plans remain intact because of India’s growth story. A part of it would be in brokerage, but most of it would be the industrial, projects and facilities businesses, where we would be adding to the workforce. With the kind of momentum and velocity of transactions we’re seeing, we would definitely keep the hiring momentum on.

The new verticles are giving a lot of opportunities - data centres, logistics and industry - there will be focus on strengthening them. Towards the end of the year to the first quarter of the coming year is when most of these plans will be executed. But the core business for us remains primarily office and projects.

What are your thoughts on real estate growth in tier II, III cities in India ?

It’s been happening for ten years. The kind of infrastructure and resources which these tier II/III cities provide are perfectly fine. Those can be augmented but there has to be intervention from government bodies as to how they need to develop these cities. This is very important because the top seven-eight cities in India are already overburdened. The main reason for tier II,III cities not picking up is because quality talent is exploring opportunities in the bigger markets. The government needs to have a plan as to how they incentivise occupiers in these cities. 

The GIFT City (Gujarat International Finance Tech City) is a classical example. The Gujarat government made certain plans and today it is a mushrooming market. Plans like these will make tier II,III towns vibrant. But there has to be a lot of impetus, because talent would want to be where opportunities exist.

Where do you see the next leg of growth and what are the challenges before the sector?

Data centres, warehousing and capital markets are on a super highway of growth. They are going to become very big and important sectors, not only for our industry, but across all industries.

Talking about challenges, skilled manpower comes as a very big question mark. That is the first challenge that we clearly anticipate could be one of the caveats for our growth. We will grow but it could be subject to availability of skilled resources and manpower.

Which technology offerings are revolutionising the realty industry in India?

A number of new technologies are being adopted by the construction industry to improve efficiencies, reduce human dependency and perhaps even completely eliminate the scope of error. Today, we have scanners mounted on drones that capture real-time data from the construction sites, and AI-enabled algorithms help us convert this data into actionable information. This along with 3D printing, robotics and the widely adopted Building Information Modeling (BIM) software are some of the technologies reshaping the industry. Mapping of real estate properties and providing 3D walkthroughs, geo-referencing the amenities with the property will help clients broaden the scope of property marketing.