Sudarshan Lodha is the co-founder at Strata, the tech-enabled fractional real estate investment platform. As the lead of the team, he drives innovation and is responsible for leading company’s strategic roadmap, delivering world-class customer experience and also managing the key resources. His vision is to offer premium commercial real estate enabling investments accessible to everyone and driving adoption of technology in the real estate industry.
Here, he tells us more regarding Strata and his plans. Excerpts from an interview:
DQ: Elaborate on the activities of Strata.
Sudarshan Lodha: Strata is a tech-enabled real estate investment platform that allows investors to own and sell fractions of pre-leased, Grade-A commercial properties such as office spaces, warehouses, etc. Often institutional-grade commercial assets which offer high rental income and capital appreciation, are not accessible to individual investors. It is this problem that Strata is trying to solve in India.
With an online investment process and a focus on data-driven investing, Strata brings accessibility, transparency, and liquidity to real estate investments. It aims to offer premium commercial real estate investments affordable and accessible to anyone from anywhere. Any property that is offered for investment to the investors, it passes through stringent financial due diligence. The investors with the company enjoy both regular cash flow through rental income along with long-term capital growth. Investments in commercial real estate through fractional mode had fared better when compared with gold, fixed deposits, and corporate bonds.
DQ: Being a fintech company, why this interest in real estate?
Sudarshan Lodha: The idea for Strata came from the personal experiences of my co-founder Priyanka and myself. Our careers in the commercial real estate industry showed us that most investors in India are uncertain about investing in real estate. In the past few years commercial real estate has emerged as a stable asset class with lower risk and higher returns.
It is because of a lack of awareness, knowledge, and inaccessibility of smart data in real estate that can help to decide on investments. Also, when it comes to commercial real estate, it is always seen as an investment category for investors falling in the top of the pyramid.
While HNIs and Private Equity firms make over 15% returns by investing in prime office spaces and warehouses, the average investor is stuck in the residential area where investment returns rarely cross 2-3%.
Another pain-point we noticed was the lack of liquidity. It can take months or even a couple of years to sell a property, locking up money that could have been invested elsewhere. Strata solves your commercial real estate investment issues with a three-pronged approach:
First, reduce the high capital requirement. Strata do this by breaking up the ownership of premium properties into more easily investable portions or ‘fractions’, which come in small ticket sizes.
Second, bring in expertise. Our team scours hundreds of features and measures over a dozen different parameters before zeroing in on one that has the best combination of yield, stability, and value appreciation.
Third, improve liquidity. Thanks to the easily transferable nature of the fractions, Strata brings liquidity to an otherwise rigid marketplace. Investors can list their fraction on our proprietary resale market, sell their holdings offline through a personal network, or via our dedicated secondary window.
DQ: How are you, being data-driven, using real estate analytics, finding the best opportunities for investors?
Sudarshan Lodha: As it is said, ‘Data is a new oil’, it is the case with our business as well. Any property that is shortlisted goes through a robust filtration process that is based on the location, building specifications, profile of tenants, history of rental yield, capital appreciation, sale price, etc. Further, these data are presented in a form to our investors, which helps them to decide on the investment in a transparent manner.
Investors staying anywhere in India or overseas get access to an online dashboard that allows them to track their performance of investments anytime. They can also view current NAV, yields, tenant details, legal documents, and download reports. Investors also have the option to add family accounts and review performance across multiple accounts.
DQ: There seems to be a lot of interest in warehousing. Tell us about the Strata Avigna Warehousing.
Sudarshan Lodha: Having grown at a CAGR of 44% in the past four years, we see warehousing mature as a sunrise sector in the real estate asset class. Covid-19 has been a game-changer for warehousing space.
With ‘social distancing’ being the new norm, the demand for essentials is now being addressed majorly through online shopping. There has been a behavioral change and increased acceptability of buying daily essentials online. This crisis has taught the e-commerce companies on how they need to be more organized. This shift is a crucial indicator of companies needing third party logistics and eyeing higher inventory levels, which will increase demand from the warehousing segments.
Similarly, global supply chains are diversifying away from China to India. Greater acceptance and penetration of e-commerce, a significant increase in institutional investments, faster shift to third party logistics, and companies eyeing higher inventory levels are some of the key factors fueling this trend further. Besides, our Prime Minister has started a campaign of ‘Vocal for local.’ In the longer run, it will give rise to manufacturing units leading to demand in storage facilities.
At Strata, we expect a spurt in warehousing demand to go up to 30% in 2021 and beyond. With excellent yields of 9-11% vis-à-vis offices and other retail spaces, where it ranges between 7-9% and 5-7% respectively, longest lease tenure ranging between 10-15 years with negligible impact of the pandemic ‘warehousing’ is one of the safest and most stable asset class in commercial real estate.
Avigna Warehousing is the third CRE investment opportunity fund offered by Strata in less than a year. It is a warehousing investment opportunity asset worth Rs. 54 crores. The asset is expected to offer its investors an average rental yield of up to 11.67%, plus an upside on the capital appreciation when compared to other investment opportunities such as — mutual funds, fixed deposits and equity markets.