Much has happened since the last issue of Brigade Insight published in Nov 2019.
The Wuhan Virus that originated in China during December last year has created unprecedented havoc around the world, the likes of which none of us have witnessed in our lifetimes.
Life has turned upside down - a 180O change; people have become helpless, more philosophical, many businesses have been run to the ground. India is staring at its worst recession since independence and other countries are experiencing the worst since the 2nd World War or the Great Depression of 1929. Helpless governments across the world are taking various measures to control the virus. It is unimaginable that an invisible organism (COVID-19) can bring the world to its knees! Over 27 million people have been affected so far and the numbers are increasing by the day, deaths are nearing a million, and with no end in sight till an effective vaccine is invented. Even after a vaccine is released, after successful clinical trials, the number of years it will take to vaccinate the world’s 7,800 million population, is anyone’s guess. No one knows, if the vaccine will provide lifelong immunity, or it should be administered every year like the Flu Vaccine. With all these uncertainties, life must go on. We need to do what we have to do, leaving the rest to providence, our destiny, our karma.
At times like this, the country’s leaders are in an unenviable position. Tough situations call for tough decisions. Damned if you take, and damned if you don’t take. Our PM, Shri Narendra Modi, known for his decisive leadership, bit the bullet by locking-down the entire country for 40 full days - the only time since 1947. It did create panic and resulted in untold misery to millions of migrant labourers across the country. It did help save lives and halt the spread of the Wuhan Virus initially. But once the lockdown was lifted and people started moving around, including the gradual return of the migrant labourers, the COVID-19 +ve cases started increasing. India currently has the dubious distinction of having the 2nd highest number of cases, next only to the United States. Now, livelihoods have taken precedence over lives, as can be seen with the economy opening up more and more, month after month.
During this crisis, many developed countries have come up with attractive stimulus packages for their citizens and businesses. Despite India being a developing country, our Government came up with a very ambitious, INR 20 lakh crores stimulus package. While it did raise expectations of the industry and the business community, unfortunately, too much fine print did not allow the benefit to reach the different sectors as intended. Personally, I believe, doles must be restricted for the economically weaker sections. For businesses, what is needed, is to unshackle them from a multitude of regulations and offer simple, transparent rules. As a stimulus, reducing taxes like GST, Stamp Duty, etc., for at least a year or so, would boost the economy. Otherwise, to return to positive GDP growth over 2019 or the prior figures would take a very long time. Oxygen, should be administered timely.
I am happy to report that during this pandemic, Brigade Foundation has taken several positive initiatives and has done its part to help the society and the community - supporting 11,000 workers with a combination of food, ration and direct transfer of money to remit to their families during the lockdown phase, distribution of lakhs of food packets, rations, truckloads of rice packets across different slums for the needy, donation of a 5-bed ICU container to KC General Hospital, starting a permanent health centre in South Bengaluru, in association with St. John’s Medical College Hospital; apart from numerous donations to the Chief Minister’s Relief Fund in different states. I express my appreciation and deep gratitude to the doctors and health workers for their selfless service to the affected patients.
Brigade is present across all 4 verticals of real estate business - Residential, Office Leasing, Retail Malls & Hospitality and each of these verticals have supported one another during this phase. Currently, with international travel having taken a big hit and the lack of confidence felt by most, to undertake domestic travel, hotel occupancies have taken a huge hit.
Similarly, Mall operations and walk-ins are badly affected, with Multiplexes still not being allowed to operate and with the restriction on the serving of liquor in restaurants to date.
Thankfully, residential sales are improving month on month resulting in the hope that there is light at the end of the tunnel. So also the collection of office lease rentals are robust.
What next, is the question each one of us will be asking? I believe life must go on in this ‘new normal’ situation but only by complying with safety norms as advised by the health authorities - wearing masks, maintaining physical distance, increasing sanitation standards, and avoiding crowded places. Otherwise, the negative impact on livelihoods can take catastrophic proportions. The concept of Work From Home (WFH) has helped businesses, particularly in the services sector, to survive and keep up their commitments. We humans, are social animals, and most of us are longing to get back to our normal routine of returning to our workplaces and interacting with our colleagues and other people. Till normalcy returns, we all must exercise patience and perseverance in whatever we are supposed to do. At Brigade, we believe that our Core Values have helped the organisation, in both, good and difficult times, to have come this far since our inception. We will continue to strive to live by our Core Values.
More than anything, we all need to seek God’s mercy and pray for normalcy to return soon.
—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!