Real Estate Developers Tie-Up With Education Industry

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Realty sector and Infrastructure firms like GMR and Hindustan Construction Company have announced to set up university campuses and other educational institutes within the country. They mainly aim to ride high on the huge returning education industry.

The education industry in India is worth more than 10 bn US dollars with continuous growth rate. As the Real Estate market is on a low developers are looking at alternate assets such as education.

Partnerships of such kind are increasing day by day in every other township or SEZ as educational institutes bring more revenue.

Chintan Patel, Associate Director, Transaction Advisory Services, E&Y said, “Access to social infrastructure such as schools and colleges serve as attractive features that make it easier for a developer to sell projects.”

Further he had to say that partnerships between a developer and an international institution benefits society and develops retail, office and residential spaces around.

The tie ups usually work on build-and-rent business model. While a developer acquires the land and builds the infrastructure for the educational facility, the institute runs the school or college. It either pays rent or works on a revenue-share model.

The companies which are laying out plans in education are HCC who have bought 500 acres for institutes at Lavasa, its hill city project close to Pune, Maharashtra.It has tied up with Symbiosis, Bangalore-based Christ University, Institute of International Business Relations of Germany, Switzerland-based hospitality Management Institute Ecole Hoteliere de Lausanne and Educomp, and more.

Global infrastructure player GMR, too, has collaborated with Canada-based Schulich School of Business to build a campus in Shamsabad, Andhra Pradesh, The Company will construct the physical infrastructure for the institute, and in return, earn management fee on the maintenance of residences and hostel facilities. Also, it is planning an aviation academy on 25 acres in the same region, fueled by its international airport project in Hyderabad.

The RBI’s Realty Indices For Ahmedabad

Ahmedabad happens to be one of the 11 countries for which the reserve bank of India would prepare one index for commercial and one for residential properties. This is done to curtail speculations and expected realty bubble burst in the coming years. The RBI report on asset price monitoring system (ASMS) advised to formulate these indices two months back.

Reserve Bank of India, Kolkata
Photo by seaview99

Many different countries such as Canada, France, us refer to these indices for realty prices.

The report says, RBI should start compiling a realty index and update it every quarter. To begin with, the report has proposed Mumbai and Delhi where property prices have skyrocketed to record levels. After these cities RBI would add 10 other cities which include Greater Chandigarh, Hyderabad, Chennai, Bhubaneswar, Pune, Jaipur, Kolkata, Lucknow, Bangalore and Bhopal.

The real estate price index once devised would become the primary index that could be perused by investors to gauge the performance of companies that are listed in the realty sector. The index can also help the investor analyze how real estate is performed in comparison to stocks and bonds. It can also provide information on the risk involved in a particular investment and returns that can be achieved from it.

The ASMS report has defined the deficiencies this indices would help overcome.