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Did FM succeed in hitting realty?

The Finance Minister had blamed the realty beast for driving inflation; & had subsequently increased interest rates. Now comes recent evidence that it worked, though the beast, as our B&E Sector feature comments, lives on!

Flush with foreign funds, while the industry has grown overall at 30% & emerged as one of the backbones of Indian economy, the sector’s realty index at BSE has remained low. And this despite the fact that a real estate major like DLF has amazingly already crossed the Rs.1 trillion mark in m-cap. While the Sensex & Nifty were thundering up to historical highs, the realty index morbidly slumped by 1.31% last week. Nine out of eleven stocks that constitute the index, marked declines, with the only exceptions being Indiabulls Real Estates & Phoenix Mills. But the question is, in the days to come, will realty stocks experience a further slowdown, as what with interest rates & disclosure norms continuing to act as dampeners. Satish Kannav of Arihant Capital Market, differs. Speaking to B&E, he asserted, “Inflation & interest rates are not going to cause much of impact. Contribution of real estate firms to the economy is going to be tremendous & the sector will see faster growth in Tier II & III cities.” Agrees Amit Saxena, CEO, Planman Financial, “Inflation is controlled, & interest rates won’t be hiked now; so realty can take a positive reality check now.” Index or no index, one doesn’t need a soothsayer to know that the realty sector lives to fight another day.

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Source: IIPM Editorial, 2008

An IIPM and Management Guru Prof. Arindam Chaudhuri's Initiative

IIPM Arindam Chaudhuri 4Ps Business & Marketing Business & Economy Kkoooljobs Planman Media Planman Consulting

Planman Marcom Planman Technologies Planman Financial Planman Motion Pictures GIDF The Daily Indian IIPM Think Tank The Sunday Indian

The gigantic Indian realty sector grumbles & groans

While the lovelorn Presley look-alike gorilla met his imbecile downfall because of his rising prime ‘interest’ in Ann Darrow, a young and most desirable protagonist in the movie, India’s real estate sector – displaying a brilliantly remarkable shallow foresight – had to shove down hard on all its brakes in reverse gear due to, yes, rising prime ‘interest’ rates.

But first, let’s describe our interest infatuated sector for all its worth. The real estate sector in India has grown into an enormous $16 billion behemoth in terms of size (Assocham projections), spawning a journey that started thanks to some overzealous, and not so clumsy pioneers (the exemplary K. P. Singh of DLF being one of them), who had the business acumen to acquire vast tracts of land and develop them into sprawling commercial & residential complexes. In the past two years, property rates across all metros have shot up by more than 100% and the situation in the tier-II & III cities is almost analogous. The sector has been growing very fast indeed, with a respect- able CAGR of 15% over the last decade. If one were to hone in on the two most critical reasons this happened in the past few years, it was clearly the availability of loans at dirt cheap interest rates on one hand, and on the other, obviously, spectacularly rising demand. But the segment, which was supposed to have been a part of the closely supported and regulated infrastructure segment, was quite surprisingly allowed by the government to play to the galleries following the standard rules of market capitalism.

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Source: IIPM Editorial, 2008

An IIPM and Management Guru Prof. Arindam Chaudhuri's Initiative

IIPM Arindam Chaudhuri 4Ps Business & Marketing Business & Economy Kkoooljobs Planman Media Planman Consulting Planman Marcom Planman Technologies Planman Financial Planman Motion Pictures GIDF The Daily Indian IIPM Think Tank The Sunday Indian

Free trade from ideological and political predilections

If one thought that the recent Boeing -Airbus turf battles are merely an outcome of the capitalist urge to out-wit close competitors, one may be a little off the mark. The battle between the two leading aviation companies of the world has been raging for years (in 2004, the US had lodged a major complaint with the WTO against the subsidies offered to Airbus company by the European consortium. The EU had retaliated by stating that the Boeing was subsidised through the sale of its defence equipment), with the two governments actively involved in promoting & protecting their respective companies. Boeing is dear to the US administration because it is one of the leading lights of its Military Industrial Complex and the chief sponsor of the Presidential elections, while Airbus stands tall as Europe’s long-time ambition and pride.

Post Cold War, Europe is in the process of evolving a more civilised set of policies (as opposed to the US reliance on pre-emptive military strikes) to deal with the prevailing uncertainty in global polity. “The EU is strong in a less tangible ‘soft power’ way. The European way of life, its culture & societies, not only appeal but also attract many of its neighbours and colonies. Meanwhile, the policies of the Bush administration have prompted a wave of hostility towards America, around the world,” said Robert Kagan, a noted Trans- Atlantic expert, while talking to B&E. So is the Boeing-Airbus tussle symptomatic of the strained transatlantic ties? Undoubtedly, the trend represents geopolitical prejudices spilling over into the trading arena. One only hopes that these disputes would be resolved amicably (in the true spirit of “free trade”) much before they begin to assume menacing proportions that threaten global peace.

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Source: IIPM Editorial, 2008

An IIPM and Management Guru Prof. Arindam Chaudhuri's Initiative

IIPM Arindam Chaudhuri 4Ps Business & Marketing Business & Economy Kkoooljobs Planman Media Planman Consulting Planman Marcom Planman Technologies Planman Financial Planman Motion Pictures GIDF The Daily Indian IIPM Think Tank The Sunday Indian