Founder's Message
Half of calendar year 2023 is over. Unfortunately, there isn’t much ‘feel good’ news in the world, except in India, Middle East & few countries in Southeast Asia.
The mindless war between Russia & Ukraine continues. Other than helping clear the stockpile of weapons in few western economies & securing billions of dollars of fresh orders for manufacture of weapons, it has only resulted in destroying large areas in Ukraine & displacing millions of its citizens. The war resulted in much of Europe to go into recession. From a unipolar world with United States ruling the roost since the disintegration of USSR during 1991-92, the world is getting back to a bipolar world with the 2nd largest economy of the world, the communist China supporting Russia.
While politically the world has become bipolar again, economically countries have become more interdependent than ever before due to globalisation & WTO policies. This is posing a huge challenge to different economies, particularly to the United States and to the countries in Europe.
The Indian Government has played its cards smartly. Our country is beginning to see the benefit of China+1 strategy of the developed economies, not only for sourcing their product requirements, but also because they see India as a good investment destination. This has greatly helped the Indian economy to become resilient and not be affected so far by the war in Ukraine. The best indicator is the stupendous increase in Sensex & Nifty indices and Indian foreign exchange reserves crossing US$ 600 billion again. Many senior bankers feel that for the 1st time after many many years, all sectors of business are doing well. One can only hope this good show sustains for a longer time thereby helping Indian GDP reach US$ 5 trillion, sooner than later. The spoil sport can be poor monsoon, interest rate increase and unexpected events like political turmoil.
The ruling party at the centre got the shock of its life by badly losing State Elections in Karnataka. The smart electorate of Karnataka has punished the unexpected poor performance of the previous Government, apart from succumbing to the lure of multiple freebies offered by the winning party. While this has invigorated the opposition parties against the ruling party at the centre, it has also made the 2024 parliamentary elections more unpredictable. Anything can happen. What India requires is political stability and retaining its position in the world order & the goodwill generated during the past few years. What all this means to the business is the question? Uncertainty to a great extent. One never knows when the current positive sentiments will start turning negative, though there is absolutely no indication at present.
The Residential Real Estate sector is continuing to grow in a healthy way. Financial year 2023 is the best so far for the sector. The WFH/ A (work from home/ anywhere) culture continuing in a big way in USA & Europe has created millions of square feet of vacant office space in those countries, which has resulted in cautious approach by Indian & MNC companies in the tech sector to sign up new office space. Most experts feel this could be a cyclical and temporary phenomena. The good news is many MNC companies are increasing the size of their GCCs (Global Capability Centres) in India as a way to cut costs by offshoring work thereby helping to retain/ improve their profitability. This is the saving grace for the Indian Office Real Estate sector. The data localisation policy of the Indian Government has also resulted in increased demand for Data Centres. So also, the growing organised retail business has increased the demand for Fulfilment Centres/ Warehouses.
In such a macro environment, Brigade is trying to play its cards well but carefully. We have made headway in increasing our presence in Chennai significantly. We are trying to do the same in the highly competitive real estate market of Hyderabad.
While a number of new launches are slated in this financial year, obtaining civic authorities approvals is becoming more challenging than ever before, for a variety of reasons. By adhering to the multiple rules, administrative procedures and after overcoming red tape, if one succeeds in real estate business in India, they deserve to receive accolades and a pat on their back.
Rightly, the new Congress Government in Karnataka is talking of ‘Brand Bengaluru’ – to improve the image of the city which has taken a beating due to severe traffic congestion, insufficient infrastructure planning & implementation. Bengaluru deserves much better treatment by the State Govt.
Bengaluru, which contributes more than 50% of the tax revenue of the State; should receive similar share in the expenditure budget of the State to improve its infrastructure. Bengaluru is not just a city of Karnataka, it is now a Global City, known for innovation and home to 100s of MNCs.
Hyderabad with its superior infrastructure is already breathing down Bengaluru‘s neck and sure to overtake Bengaluru as an attractive investment destination, if the Karnataka Government continues to be complacent.
The advent of ChatGPT & AI (Artificial Intelligence) into our lives, slowly but surely, will have a profound effect, not fathomed by us so far. It will become a necessary evil in the years ahead. While there would be demand for people with new skills, it may also lead to thousands of job losses. So, it is very important for people and businesses to gear up the skills to keep pace with the ever changing technological advancements.
The festival season is approaching. My warm season's greeting to all our readers.
JAI HIND.
—Jaishankar CMD, Brigade.
The past few months have not been great for India, for that matter many parts of the world. Exception seems to be United States whose economy has seen substantial recovery in recent times. US being the largest economy in the world, brings a ray of hope to the rest of the countries, including India. There is a lot of turmoil in Europe due to the migrant crisis & terrorism, and they are busy grappling with the problem. While low oil prices have benefitted oil importing countries like India, it has created problems for several oil producing countries in the Middle East, South America and Russia. All this is bound to result in continued economic uncertainty witnessed across the world during the last few months.
While the Indian economy is in a relatively better shape with 7% plus GDP growth, it is likely to become a case of missed opportunities to reach double digit growth in spite of its huge potential. Other than creating the much needed positive sentiment, the single party majority government at the Centre hasn’t succeeded in kick starting major infra projects, in implementing majors policy changes and living up to the election promises made. It is rather sad that opposition parties have unfortunately blocked important initiatives like GST which could have had far reaching positive impact on the Indian economy and its GDP growth rate.
Even at the State & Civic authority levels, the progress in introducing policy improvements is painfully slow. Bangalore, which is internationally recognized, contributes more than 2/3rds of Karnataka State revenue. But, the State does not invest adequately to take care of the milch cow resulting in poor infrastructure, traffi c & garbage issues and inability to cope up with urban growth. Citizens can only hope that before it becomes too late (and allowing it to go down like Kolkata) the decision makers will wake up and act. It is too hurtful to witness the negative publicity our beautiful City gets in the national media.
Brigade Group is not a mute spectator and a critic. In recent times, we spent crores of rupees to make neighbourhood improvements - restored the 23 acre Sitharampalya Lake in Whitefi eld; developed a 3 acre citizens park & a 5 acre playground in Malleswaram; and installed a pedestrian bridge with escalators in Rajajinagar. It gave us immense satisfaction. These signifi cant eff orts were recognized recently by All India Real Estate Developers Association - CREDAI National - when they conferred the National Awards to BRIGADE in two categories - one for Environmental Impact and the other for Social Infrastructure.
Real Estate Management Bill, which was in the offi ng since 2013 should become a reality soon. It is bound to protect the customers by answering their concerns and regulate the way business is conducted by the Developers. It is pro long term players and anti ‘fl y-by-night’ operators. Even then, developers fear that it will add time & cost to launch projects and may become one more window to face harassment, as the Bill contains several draconian clauses for non-compliance.
With excess stock and a ‘status quo’ economy, real estate prices are depressed in general and stable in few cities like Bangalore. For a prudent investor, it is a good time to buy. With deposit rates coming down, Bank deposits are not attractive; with US Dollar gaining strength, Gold is losing its luster; with Stock market being very volatile, it has become too risky for a non- professional operator.
Whatever may be the external factors, hope is what keeps an optimist going. Let us hope 2016 will bring us cheer!
Wishing our readers the Very Best in the year ahead - 2016.
It is a fantastic feeling to be adjudged as ‘The Best Place to Work’ among all the Real Estate Companies in the country. We sincerely thank the Economic Times & the internationally acclaimed The Great Place to Work Institute for this recognition. It will certainly motivate us to continue to adopt & innovate, when it comes to people friendly HR policies. It is heartening to note our Group received a number of Awards during the last few months; be it ‘Hotel Owner of the Year’ at the Hospitality Leaders Industry Choice Awards, or the Best Luxury Residential project for Brigade Caladium and even those awarded to individual Brigadiers.
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The Indian economy is just chugging along. Unfortunately, the new Government has not been able to meet the high expectations of the people & the industry. Probably they promised too much in a short span of time. All said & done, ours is a complicated economy with too many pulls & pressures from all directions, apart from multiple vested interests. One can only wish & pray that our dynamic Prime Minister will ultimately succeed in his efforts to improve the growth rate and put the Indian economy on the right track. For too long we have been a third world country.
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While the government understands the importance of Tourism, too little is done to improve the inflow of foreign tourists with high spending power. With a population in excess of 1200 million, we have tourist inflows of only 6 million. That hardly works out to 0.5% of the population. A not so prominent country like Croatia, has a tourist inflow of 12 million with a population of just 4 million. The impact of tourism on Croatia’s economy & job creation for ordinary citizens is huge.
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Bangalore Citizens will elect new representatives (Corporators) to the City Council in BBMP (Bruhat Bangalore Mahanagara Palike). Hopefully, the representatives who get elected will actively work towards improved Urban Infrastructure like better quality roads, traffic management, waste management & related issues.
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Recently, Sheraton Bangalore Hotel at Brigade Gateway was rebranded as Sheraton Grand at Brigade Gateway. It is one of the only 10 hotels in the world to be rebranded amongst all Sheraton Hotels, based on parameters such as superior product, service & customer satisfaction.
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We recently concluded Brigade Showcase, our annual property exhibition. The event witnessed robust support in an otherwise subdued market environment, thanks to a good choice of product offerings in different locations, apart from the Group’s brand strength.
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The Festival season is around the corner - Onam, Ganesh Chaturthi, Eid Ul-Adha, Dussehra, Diwali & Christmas - Seasons Greetings and best wishes to each and everyone.
The first 4 months of the new year witnessed Awards galore to Brigade Group's projects & its people: Brigade Meadows was awarded the Best apartment project in its category by NDTV; Orion Mall was considered the Best Shopping Mall in South India; Nothing gives more satisfaction than being recognized by ones own fraternity - CARE Awards instituted by Credai Karnataka considered, in their categories, Brigade Rubix as the Best Commercial building; Brigade Sparkle as the Best dwelling; more importantly recognized Brigade Group's CSR efforts as the Best by a Developer. At a personal level I was recognized for my Outstanding Contribution to the Real Estate Sector in Karnataka. Our CFO Suresh & COO Manjunath Prasad also got recognized by different organisations. Certainly satisfying. This should motivate all in Brigade to continue to perform well & exceed expectations.
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Post Central Budget, there is a sense of disappointment by the business & industry. Much was expected but the budget pronouncements fell woefully short. While the new government proclaimed 'Housing for All' by 2022, the budget contained zero incentives or policies to encourage housing. Affordable Housing for the Middle Class & EWS Housing for the poor certainly deserves tax incentives apart from favourable regulations.
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With inflation under check, by & large, lower interest rate regime was expected, but that has not happened. While RBI knows best what it is doing, lower rates have the capability to give the push the Indian economy deserves. Increased activity in infrastructure & real estate has tremendous positive impact on the core sectors of industry and will help improve our GDP growth. Our neighbour China is the best example of what improved infrastructure can do to the economy.
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Number of our projects have reached the critical stage of completion. It is a challenge our team is ready to face & working hard to achieve before Diwali.
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IPL cricket is growing from strength to strength. It has helped spot talent and has given opportunity to many cricketers to show their mettle. I wish similar efforts in other sports also taste success. A nation of billion plus people is bound to have the talent. Right environment & encouragement will help deserving sports people blossom.
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Unseasonal rains have created havoc to agricultural sector in many states. We should hope & pray that the country receives good monsoons in the next few months, which should in turn have a favourable impact on the economy.
