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.
Completion of 30 years in business is a significant milestone. One would have seen many highs & lows and weathered many a storm. It was no different for Brigade. What started as a single project venture has grown into what it is today. While I look back at the achievements, accolades, awards and landmarks created during the last 30 years, with a sense of pride & satisfaction, I realise that it is more important to look forward on what needs to be done, to continue to survive, grow & flourish to meet the aspirations of all stakeholders, for the next 30 years. It is a happy coincidence and a fitting tribute that during the 30th year of our operations, we completed 30 projects (across residential, office, retail & hospitality segments) adding up to 10 million sq.ft. in area.
Today, we are living in an interconnected, globalised world with very high customer awareness about what’s happening around us & in other parts of the world, resulting in increased expectation in the quality of products and services desired. While, we are working hard to meet the exacting expectations of customers and other stakeholders, at Brigade, we are also conscious of the fact that we need to give back to the society, that has supported us. Towards this end, Brigade has taken up three key initiatives - to plant 30,000 trees across our various projects, to build 30 toilets in schools which need them and to start a Skill Development Centre focussed in the areas of construction, hospitality and retail.
Disruptions Galore - the last few weeks the world and India has witnessed multiple disruptions and is going to witness even more, which will have a huge impact in the way companies do business. While the world was coming to terms with BREXIT, the unexpected election of Mr. Donald Trump as President of the world’s most powerful economy, United States, has come as a shock due to his unpredictable policies. If Mr. Trump sticks to his pre-election promise on Immigration, Make in America & Anti-outsourcing policies, many developing countries, including India will be affected, adversely.
As if this wasn’t enough, on 8th November 2016, our Prime Minister, Shri Narendra Modi announced the most disruptive policy - demonetisation of INR 500 & 1,000 currency. While the intention is noble (to eliminate fake currency, to curb black money in elections & business, to fight corruption and to move towards a cashless way of doing transactions), the immediate result is one of disruption in day-to-day activities. While I wholeheartedly support this bold initiative and pray for its success, the worrying factor is that, the business sentiment has turned negative. Hopefully, it is a temporary phenomenon and the positives of the policy initiative should outweigh the negatives. Only time will tell.
Two other forward looking Acts of the Central Government will have huge disruptive implications - RERA (Real Estate Regulatory Act) & GST (Goods & Services Tax). Both are likely to become a reality by April-May 2017. RERA should help streamline the real estate business and has many provisions to protect the interest of the customers.
Unfortunately, many draconian provisions are proposed against the developer which may lead to increased harassment & higher corruption. While the intention behind introduction of RERA is laudable, the implementation of the Act will be a cause for worry. It is likely to increase the overall cost for the developer & customer alike, due to compliance costs and added finance cost required, because of additional time for project approvals by RERA authority. Due to onerous provisions of RERA, hopefully the so called ‘fly by night’ developers will disappear from the scene and that should help organised developers to pursue business in a more professional environment.
Similarly, the GST Law should help streamline the tax administration in the country and it should help bring down the overall impact of duties & taxes on many products, thereby making Indian businesses more competitive. It should also help bring, larger number of business establishments under the tax net.
All the three initiatives of the Central Government - Demonetisation, RERA & GST are highly commendable, but will have a huge disruptive effect on the way companies have been doing business so far. Their impact on the country’s economy is expected to be very positive. The detractors must realise that there is ‘no gain without pain’.
As we enter the new year - 2017, one must realise that in this globalised world, one needs to be ready, to adapt to the constantly changing environment. Change seems to be the new certainty. Towards this end, Brigade has initiated the ‘Real Estate Accelerator Programme’ (Brigade REAP) to encourage, mentor & support ‘Start Ups’ in our area of operation.
Wishing all our readers & stakeholders Season’s Greetings and the very best during the New Year!
2016 has been a challenging year so far for companies, the state, the country & the world. Most countries in the world are struggling with troubled economies. The silver lining seems to be, United States, whose GDP is growing at a healthy rate of 3%, plus considering it is the largest economy contributing to 25% of the world’s economy. Though China’s GDP is growing at 6.5% & India’s at 7.5%, both countries have the problem of excess manufacturing capacities which were built to meet the expected demand of higher growth rates. India’s growth rate is questionable after the government changed the base data for calculations. What is surprising & distressing is that the State of Karnataka, generally considered as a progressive state, had a growth rate of 6.5% last year, which is below the national average.
The Central Budget - 2016, in general, was a commendable exercise by the Finance Minister. He was able to deftly handle many difficult issues. Thanks to the benefit the country is deriving from low oil prices in the international market, we can only hope that industrial growth picks up the way it is expected by the Government. It is sad that most State Government’s are not keeping pace with the vision of the Prime Minister and the efforts of the Central Government, to give a bigger push to the Indian economy.
The Central Budget has done its bit to give a push to the Real Estate Sector, particularly to affordable housing. So also, the much talked about Real Estate Investment Trusts (REITS), which should help unlock a lot of capital for commercial property developers and help bring in foreign exchange to the country. However, the concept of Smart Cities requires more clarity and much more fund allocation for the initiative to succeed.
5 State Governments are in election mode. The results are important to the present Government at the Centre to implement many major policy initiatives – GST for example. One wonders why so much of governance time is lost due for conducting elections at the Centre, State & Civic bodies at different times? If elections are held together for all, huge saving of resources and time could be achieved. The Indian election commission has the capability & has already excelled in conducting National & State elections very efficiently.
With bank interest rates in the downward mode, if the ruling party in the Centre does well in the State elections & gains majority in the Rajya Sabha, and if the country receives good monsoon during the next few months, there is no reason why the consumer & investment sentiment should not change for the better very quickly.
With this hope, optimism for the future continues.
