Rents for premium properties will remain robust: Amit Diwan of Hines India

In a Q&A, the country head and MD of Hines India says housing projects by good developers are doing well despite the pandemic and lockdown

Hines, a property investor-cum-developer with $133.3 billion in real estate assets under management in 24 countries, has signed many development and development management deals in the country. Amit Diwan, country head and managing director of Hines India, tells Raghavendra Kamath affordable housing projects by good developers are doing well despite the pandemic and lockdown. Edited exerpts:

How do you look at the post-covid Indian real estate market in terms of demand for residential and commercial properties?

In India, Hines sees several factors at work here. For office properties, demand will reduce due to remote working; but increase due to “de-densification” and “flight to quality”. For players like us, the positive factors will outweigh.

For residential properties, demand will be affected until the economy recovers; but will increase due to remote working (need for extra rooms) and the safety net of an owned home.  

Will Hines tweak its strategy in terms of preference to asset classes, regions, price points and so on?

Globally, Hines is focused on the four key product types: office, living, industrial and retail. In India, we will look at opportunities across all sectors except standalone retail.

Our geographic preference will continue to be for key metros like NCR, Mumbai, Bengaluru, and Pune.

We prefer premium locations and projects, in which we can provide quality to customers.

Do you think opportunities for you go up in JVs, DMs, joint developments?

We’re flexible and open to all deal types.

What are your views on land and asset valuations and rents in the coming days?

Over the next several months, volumes may remain low, so we won’t have critical mass of transactions to ascertain change in valuations or rents.

Over time, land value as percentage of total project cost will reduce.

Rents for premium developments like ours will stay robust. Occupiers will demand quality and be willing to pay appropriately for it.

Do you see greater opportunities for Hines to invest in distressed assets and greenfield projects?

Yes, the deal flow for us has continued to increase over the past several years.

Do you expect buyers to wait before they buy residential properties or will they see value in properties and buy them right now?

Affordable housing projects from good developers have been doing well even in the last quarter. Premium housing will have a mixed performance - strong sponsors, locations and products will do well; others will struggle.

How many Indian realty firms have you signed development management contracts with now in commercial properties? 

We have signed two agreements so far, and have some more at the term-sheet stage. Sorry we won’t be able to share more details as we are bound by confidentiality.  

Will you explore the REIT route in India?

When we have a critical mass of income-yielding properties, then yes. We’re not there yet.