The Mumbai Paradox: the Commingling of development and Tradition in India's Largest City.
REAL ESTATE MANAGEMENT IN MUMBAI
"If I had to summarize the state of Mumbai's real estate management in two words, I'd say 'deferred maintenance,"' said Lynn Peters, CPM, director of operations for RETransform, based in Mumbai.
RETransform established The Real Estate Management Institute (REMI), IREM's newest international licensee. "Because of the way real estate here has traditionally operated, buildings do not get the same level of attention we provide in the states."
Indeed, Mumbai's skyline tells the story of its history: one of the world's oldest and most populated cities, bursting at the seams, with overextended resources.
"Within Mumbai today, the remains of Portuguese fishing villages dating back to the 17th century are juxtaposed with the glass facade skyscrapers of the 21st century," said Rohan Bulchandani, cofounder and president of RETransform.
Mumbai's building style reflects India's time under British rule when neoclassical structures were popular, as well as newer trends, like Art Deco. Over the last two decades, modern high-rises have been sprouting up throughout Mumbai, as well as large-scale mixed use developments. Mumbai's older style buildings, which were typically constructed outwards rather than upwards, sit in contrast, with many independent sections and entrances all belonging to different owners. The newer buildings meet higher construction standards, including requirements for quality infrastructure, advanced security systems, one prominent entrance and energy efficiency. Unfortunately, management techniques are advancing slower than construction. "There is real estate here, but the market lacks consistent methods and policies to maintain it. Establishing fundamental processes and procedures would greatly improve property longevity," said Peters.
Another contributing factor to the lack of professional property management is that, historically, Indian businesses and individuals prefer to own their properties rather than lease them. "From a commercial real estate acquisition standpoint, purchase of an office requires significant capital outlay. With low rental yields and high interest costs, the economics of ownership here are counter-productive," said Bulchandani. In this way, he explained the shift to leasing as a more attractive option. As leasing becomes the norm, the need to make a property competitive in the marketplace and increase rents will drive up demand for professional management services.
CONCENTRATION ON SECURITY
While 9/11 forever changed security in American cities, November 26, 2008 had a similar affect in India. On this date, a terrorist group targeted multiple properties in Mumbai and killed over 160 people. The most famous building hit, the Taj Mahal Palace and Hotel, built in 1904 by Jamsetji Tata, had a major part of its interior destroyed, including the hotel's oldest wing. Reconstructed and reopened, the Taj now boasts what has become a common feature in contemporary India: extensive security. Before entering the building, visitors must go through metal detectors and both vehicle and bag searches. Noticeably, no building--from retail to office--lacks at least a minimum level of security upon entry.
The Taj Hotel, more than any other, represents a changing India--connected to its past but adapting for its future. The high-security entrance reflects the country's modern condition: surrounded on all sides by hostile neighbors and the heightened sense of awareness that such a condition dictates. At the same time, the structure harkens to India's past as a colony of the United Kingdom, a showcase to opulence and luxurious Indian style, influenced by British tastes and standards.
"THE GUEST IS GOD" OR VALUE-ADDED SERVICE
Athithi Devo Bhava, or "The Guest is God," is a Sanskrit verse eptomizing India's group mentality and treatment of visitors, which very much translates to superior service amenities in Mumbai. India's concentration on the service industry is evident at all types of properties--from residential to hotels to office buildings. An essential employee for an Indian company is at least one designated service person, charged with making the office employees more comfortable by serving drinks and food, cleaning up after meetings and assisting in other non-clerical tasks as needed. Even newer retail complexes are designed with service in mind. For example, a large attached parking complex may have multiple marked pick-up areas to facilitate taking a car with a driver to the stores.
"Because they are so service-driven," said Peters, "from a development standpoint, value-added onsite amenities like dry cleaning, concierge services, banks, etc., are automatic for owners. Managers here would not experience the conflicts American managers do when making an argument to an owner in favor of value-added services."
Shannon Alter, CPM, concurred. On a recent trip to Mumbai, she also observed this service-driven characteristic: "The superior service already existent throughout the city will help new real estate managers here ensure their properties have the competitive edge."
THE GOOD DAYS HAVE COME
"Today, India stands upon the cusp of an economic boom," said Bulchandani. He specifically points to the administration of new Prime Minister Mr. Narendra Modi as a turning point for India. "Modi's main objectives are to break down the corruption, investment paralysis, rising inflation and declining rupee, which has characterized the past 10 years." In addition, Modi's direction strives to make the climate in India more attractive for foreign direct investment through his "make in India" initiative--a program designed to facilitate investment, foster innovation, enhance skill development, protect intellectual property and build quality infrastructure. In fact, the Obama administration called a relationship with India "a defining partnership of the 21st Century," in expectation of the Prime Minister's official visit to the White House in late September 2014.
For Mumbai, this means an increase in foreign investment as companies set up shop, bring in jobs and spend money. Bulchandani summarizes: "A new and improved India has taken root." As Modi put it: "Ache din aa gaye hai--The good days have come."
PHOTO, COURTESY OF LEAH MISBIN
LEAH MISBIN, MA, (LMISBIN@IREM.ORG) IS SENIOR MANAGER OF INTERNATIONAL PROGRAMS AT IREM HEADQUARTERS IN CHICAGO.
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|Title Annotation:||spotlight: Global Practices|
|Comment:||The Mumbai Paradox: the Commingling of development and Tradition in India's Largest City.(spotlight: Global Practices)|
|Publication:||Journal of Property Management|
|Date:||Jan 1, 2015|
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