03 February 2017
Nitish Bhasin Managing Director, Markets–India of JLL, heading a team of 160 professionals across JLL’s seven offices in India- interacting with RICS SBE students on Corporate Leasing and Transactions Management.
In his discussion with students at RICS SBE, Mr. Nitish Bhasin from JLL encapsulated the current state of the real estate industry in India by touching upon aspects such as corporate real estate and its development. He further cited some case studies which threw light upon the skill set one needs to have in order to excel in the industry.
He initiated by giving the examples of Real Estate Regulation Act (RERA), FDI in real estate, Real Estate Investment Trust (REIT), Goods and Services Tax (GST) and Make in India. These regulations have had a large impact on the corporate real estate sector which has led India to move up the Transparency Index and Ease of Investing Index. On the other hand, problems such as those of the debt trap are plaguing the industry, he said.
Pointing out that this industry is dependent on an IT boom or the US economy buoyancy; he introduced students to the concept of the Property Clock. The time taken by this clock to complete a cycle depends upon the market and so do the dynamics of the industry. The clock has four quadrants: slow growth, value decline, slow deterioration and rise of the value. These parameters indicate the outlook for the next few years, especially in the job market.
“In India, now we are in a rent increasing model across cities such as Pune, Bangalore and Hyderabad,” he said, adding that it will be newer industries, for instance- FMCG companies, banking, insurance and telecom which will take the highest end. Compliance is also becoming more pertinent and so companies don’t mind paying a premium for this factor.
He further indicated that with the Make in India initiative, the next big wave in real estate will be in the industrial warehousing and storage space.
Corporates in real estate
He then spoke about four kinds of companies in the industry:
The first type is the one that buys more than it can retain and will gradually fade away.
The second is the smart investor who invests more in office spaces and gets all the clearances which make it high on liquidity.
The third type is the conservative MNC with deep pockets which can take up the development of incomplete projects in order to make money.
The fourth is the real estate fund firm that will buy good quality assets and make money out of the deals.
After answering queries from students on the concepts of RFP, the impact of REIT investing in the property sector, the skills needed for negotiating; Mr. Bhasin explained the nuances of negotiation and how a negotiator has to balance out the interests of both the parties involved.
“It is a very thin line of balancing, you know at the end of the day the objective of negotiations is to come up with a fair deal; and communication plays the utmost important role,” he remarked.
He then ran students through the office transaction process while comparing the Indian real estate market to a pendulum which moves from left to right -left being the tenant, right being the landlord, the pendulum is very much skewed in favour of the tenant. So what you will see is that the pendulum is getting more balanced; hence flexible around the leases coming down and it'll start becoming more of a level play field for the next 2-4 years,” he said.
Thereafter, Mr. Bhasin referred to a couple of case studies from his stint at JLL to make the students understand the importance of going beyond plain real estate deals in order to build long-lasting relationships with the business partners.
The first and foremost was about the global consulting firm Accenture, a professional company that expects the highest standards from landlords. In this assignment, the relationship with Accenture was not just about working out a deal, but involved things such as making a commitment in terms of energy savings. “The demand is beyond just going and securing space on office, it is much larger than that,” he said.
He cited another case study, which was about building relationships with the clients. They worked out an ‘investment banking’ deal with KKR & Co. L.P., the global investment banking firm. The client wanted to create a series of transactions which could sell and JLL successfully did it for them.
More so, as he explained, it’s not just about securing deals but it takes a lot more if what you are seeking is to build a relationship with them. At the same time, you have to be street smart and need to know how to make more money out of the deals.
In his concluding remarks, he said that people in the business have to develop analytical skills along with a good grasp on the basics of market and product knowledge. With this, 75 percent of the deal is won. Also, business relationships do not get built by sponsoring clients on business dinners and trips. According to him, real estate is a very large and comprehensive subject- an industry which is very complicated and not as easy as it seems to a lot of people.
Mr. Nitish Bhasin heads the pan India operations of JLL’s Office Brokerage Services, heading a team of 160 professionals across JLL’s seven offices in India.
Transitioning from a Senior Team Member of the Delhi Tenant Representation team to the Head of Markets, India, Nitish has been in the centre of evolution of real estate transactional work and a critical part of the firm’s growth story in India.
Prior to joining JLL, Nitish worked with PricewaterhouseCoopers’ Strategic Consulting team for five years where he strengthened his skill sets in Corporate Strategy, Financial Management Systems and Business Process Improvement whilst working on funded engagements for large organizations.