Enabling EV culture: It will charge up the Indian real estate sector

In India, there has been a lot of activity in the EV space. The first and most important push comes from the government itself. There are the FAME I and II schemes, a PLI scheme, a scrappage policy, and various incentives in place to encourage the use of electric vehicles. It is also promoting infrastructure development; in fact, 50 per cent of the states have drafted their own EV policies. Also, various concessions have been granted in the form of subsidies for those users who purchase EVs.

In addition to this, at the recent COP26, India pledged to reduce its carbon emissions to zero by 2070. Thus, we are seeing more initiatives in India to support EV mobility, the most recent being an announcement on battery swapping.

It’s all well and good but we should take a look at some hard facts too.

The first being that India still lags in 4W EV penetration compared to the larger markets. And the second being the fact that India’s EV push is inorganic.

In fact, the Society of Electric Vehicle Manufacturers (SMEV) reports that COVID-19 caused a 20 per cent drop in registrations in FY21 to 236,802 units, down from 295,683 units in FY20.

But contrasts exist everywhere. Therefore, all said and done, the industry insiders are predicting a bright future for this sector in the long run. Let’s see how this industry is doing via an infographic.

Inside article-Enabling EV culture-Indian real estate sector taking the charge

The numbers estimated by RBSA Advisors show a positive growth path that is congruent with the growth in other sectors. Consider the real estate industry.

The surge in the demand for EVs in India is because of increased interest, government incentives and the increasing desire among the general populace for moving towards a more sustainable way of life. This is encouraging the EV developers worldwide to come up with better and more efficient designs and models, says Sandeep Runwal, President, NAREDCO Maharashtra and MD at Runwal Group.

“Yes, it is estimated that this will create a huge demand for space and location which will trigger more real estate development and it will ultimately have command over these spaces. As the world is shifting towards sustainable and renewable forms of energy in all walks of life, EVs are considered the future of the automobile industry,” he comments.

EV investments will benefit real estate

Let’s talk numbers first.

Rs 94,000 crores or US$12.6 billion is the value that the electric vehicle segment is projected to witness in the form of investments over the next five years, as estimated by a report from property consultant Colliers.

The said investment is deemed to be in the form of new EV manufacturing units, EV charging infrastructure, industrial zones for the EV sector and what not. Add to that the investments from the private real estate developers doing EV infra inclusions on upcoming projects. Now imagine the sort of opportunities and benefits that this marriage is likely to bring to the sectors involved, especially to the real estate sector. It will be huge!

“EVs can be a game changer. Real estate players can tap into the opportunity for manufacturing, warehousing, charging stations and dealerships of EVs,” stated Ramesh Nair, Chief Executive Officer, India & Managing Director, Market Development, Asia, Colliers in a statement.

According to him, the government’s aim of manufacturing 110 GWh of EV batteries by 2030 can spawn a manufacturing requirement of about 1,300 acres of land pan-India.

The report also figured out that about 13.5 million sq. ft of space is required by 2025 for EV stations. This implies that India needs at least 26,800 public charging spots, providing ample opportunities for landlords across the spectrum.

“Landlords can outsource dedicated charging stations to charging service providers at busy locations. They can also enter into a revenue sharing model with the charging service providers. There is also ample scope for developers to develop retail and recreation spaces in proximity to the charging stations,” states the Colliers report. 

The real estate and the EV sector make a great team

You don’t need to be an expert to understand that the current momentum in the EV sector will rub off on the real estate sector as well. Without a doubt, the demand for EV charging will propel the real estate players to make investments towards incorporating charging stations in their properties.

There is already a silent demand for this, as per the experts.

“Market research states that the EV business will develop at a CAGR of as much as 40 per cent by 2030 given the government’s policies and the gigantic EV reception rate. Of course, this is fuelling the interest in EV charging stations in buildings, consequently driving the requirement for such spaces,” says Runwal while speaking on the subject of how the real estate sector is witnessing a burgeoning demand for EV infrastructure.

The majority of developers are now including EV infrastructure in their blueprints, predicting that EV mobility will increase in the coming years.

Rohit Gupta, CEO at Mantra Properties tells us that his company already places a high value on integrating innovative solutions in their projects, and the electrification of premises with EV infra is one of them.

“We at Mantra place a high value on staying current with the technology and innovations in our industry. Because we believe in “Creating the Next,” our new launches since April 2021 already offer EV-enabled parking spaces. This feature will be available to buyers for both residential and commercial projects,” he says.

Mumbai-based Kalpataru is another developer offering EV-ready parking in its projects. In fact, it will be incorrect to discuss only residential and corporate complexes. The demand for EV infrastructure is becoming more visible in hospitality real estate as well.

Properties are gearing up for EV infra

Being conscious about the environment and working towards a more sustainable future is an important trend worldwide and it is here to stay. So, due to the rising demand for sustainable transport infrastructure, the hospitality brands are keen to invest in EV charging points.

Note that this is also a strategy to woo the new-age consumers as these ‘on the go’ charge-ups are eco-friendly and convenient at the same time.

Recently, the hospitality brand, Indian Hotels Company (IHCL) announced their collaboration with Tata Power to install EV charging points at over 30 of its properties across 11 destinations.

In a statement, the company declared that this is a step forward in catering to the evolving needs of their environmentally conscious customers by reducing their travel carbon footprints and embracing a more sustainable future.

Similarly, smaller brands are investing too.

“It’s a necessary step” feels Ankita Sheth, Co-founder, Vista Rooms, a holiday homes and rental property platform. They are moderately installing EV compatible infrastructure in their rental assets, of course it’s as per the requirements.

In a short conversation with SME Futures, she says that since it’s at a nascent stage, their company has done a few pilot projects just to observe the air. “We are in the process of installing EV charging points at all our properties. We have already done pilots at 5-10 properties and have received positive responses from our guests for this service,” she tells us.

It’s a demand driven activity

The Ministry of Housing and Urban Affairs (MoHUA) has amended the Model Building By-laws and has recommended that 20 per cent of all parking spaces in new real estate projects should be equipped with EV charging. This will definitely bolster the growth of EV infrastructure.

Talking on this topic, Runwal points out that going forward, all new planned residential developments will have at least 5 per cent of their parking lots reserved for common charging facilities.

However, many stakeholders are of the opinion that it’s a demand driven activity rather than a compliance driven one.

Gupta of Mantra Properties agrees, saying, “Increased sustainability in the real estate sector is being demanded not only by the policymakers but also by the tenants and the customers who have specific requirements. Two of the growing demands are electric car charging and energy management. The EVCD can assist the real estate industry in meeting the growing needs of the urban population, which is rapidly shifting to electric vehicles. It will undoubtedly be a win-win situation in terms of increasing sales in the country, not only for the sector but also for the electric vehicle industry.”

At the same time, the state governments are also offering property tax breaks to housing cooperatives in exchange for charging stations. But the number of electric vehicles on the road is still small and is the deciding factor too for the real estate developers.

There is another factor with EV infrastructure inclusion that the real estate developers are vocal about, that of the significant investment that this process entails. This will lead to an increase in property prices.

Properties to get dearer due to EV infra

The process of incorporating EV charging points or stations into properties has already begun.

But the important factor to consider is the heavy investment that is required for the setting up of EV infra in new projects or for restructuring the old ones according to the mandates.

Nand Kishore Ramky, MD at Ramky, while speaking on this subject at a webinar says, “High rise residential properties come with two car parking spaces. We can’t give them anything less as it will not suffice. Also, because the investments are going to be abnormally high, we will be unable to provide multiple fast charging points. So, we are planning to install a single charging point on two car parks. So that every owner will have access to a charging point. And there are a lot of changes that go into the process. This has brought in lot of additional costs, in the form of EV infra, transformers, wiring, electricity loads and other ancillaries.”

JLL Research estimates confirm the pattern. According to their estimates, the prices of new residential properties outfitted with EV charging stations will rise by 2 to 5 per cent. While existing building prices may rise by 1 per cent. By 2026, it is expected that the number of EV charging stations installed in existing buildings will have increased dramatically.

According to Runwal, contingent upon the kind of structures, these retrofitted ventures will significantly affect the valuing of the private resource class and will likewise help in the productive usage of real estate.

“There will be a premium of around 1 per cent for spaces in existing buildings with the retrofit of charging focuses, given the difficulties relating to high establishment expenses of charging units for huge residential properties/multi-storey structures and the limited power supply,” he comments.

But it’s a community, and as EV projects become more common, some other trends are emerging.

Behind the scenes

As of now, the developers are installing charging stations with help from the specialist organisations in neighbourhoods. In numerous other huge scope advancements, affiliations have taken up the movement and introduced these to offices, thus acquiring from the clients on a proper expense model, Runwal tells us.

Another aspect that emerges with the inclusion of EV infrastructure is that of training and skill enhancement.

Going forward, as charging infrastructure grows in the real estate, the stakeholders will need to gear up accordingly. Obviously, there will be certain people who will be involved in handling the charging stations and points, which according to the industry experts, opens up new avenues of opportunities.

Autobot Academy, an EV tech learning company which imparts specialised trainings is excited about the developments that India is witnessing in the arena of EV mobility.

Talking about how EV inclusion in real estate assets will drive opportunities, Ashwini Tiwary says, “With EV sales and the setting up of the required infrastructure, there has been a massive rise in demand for green learning facilities in India. We have thus launched this academy to address this demand.”

“The current count of the EVs on the roads is approximately 1.3 lakhs. I feel, for around 2 million EVs we will need around 4 lakh charging stations by around 2025 or 2026. So, to start with, by the end of 2022, even if we look at installing 10,000 to 15,000 charging stations, it will be a good start. So far, we have not received any queries from the real estate firms around EV training infrastructure. But going forward the real estate developers will play a bigger role,” he further adds.

Going forward, EVs are now inching towards being within reach of the mainstream buyers, spurred on by India’s initiatives to promote e-mobility. However, there are still many obstacles to overcome. Studies show that the lack of knowledge about the government’s EV schemes and the consequent lack of awareness about their economic benefits and the technology associated with them can have a direct impact on the large-scale adoption of EVs.

Furthermore, the rising sales of EVs are being negatively impacted by the lack of charging infrastructure, particularly in the high-rise apartments built by real estate developers. However, these developers themselves are taking the steps to drive the momentum for the comprehensive development of EV infrastructure.

Experts too are of the opinion that the real estate sector can make good use of the EV sector to fulfil the new requirements of the urban population, which is increasingly veering towards electrical mobility. It is bound to lead to a win-win situation, not only for the real estate sector, but also for the EV industry, by boosting their sales in the country.

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