This issue is coming after a gap of one year. The April issue could not be released due to the 2nd wave of the pandemic and the connected lockdown.
People’s perceptions and attitudes toward life and work have changed a lot over the last 17 months. People and businesses who were able to adapt to the fast changes encountered, have flourished. Those who could not, have unfortunately perished. The impact of the 2nd wave was quite severe on the personal lives of millions of Indians. More than 32 million people contracted the Wuhan Virus and unfortunately, 430 thousand people have died in our country. Worldwide figures: 207 million affected & nearly 4.4 million people have passed away.
The numbers are only growing by the day, even though multiple vaccines are available. For 7,800 million people to be vaccinated twice, it can take another year or two. Luckily, more than 500 million Indians have been administered at least one dose of the vaccine. As a result, if there is a third wave of the virus, the impact is likely to be less severe than the earlier 2 waves. Only time will tell. But, as individuals, one needs to strictly follow all precautions as recommended by the health authorities for their own good.
During these uncertain times, Brigade was able to sail through the troubled waters reasonably well. While our Hospitality and Retail segments were badly affected, the Residential real estate business performed remarkably well by posting the highest sales since the inception of the Group in October 1986. Office leasing sentiments are also affected quite a bit, although the Indian software sector has had exceptional times due to their sheer resilience and ability to keep up their commitments to clients.
The concept of life and work has also undergone tremendous change. Work From Home (WFH) in the financial and technology sectors is a shining example of success, wherever remote working is possible. E-commerce has made life convenient to the technologically savvy population. It has already revolutionised the retail shopping sector. It will have a big impact in the years ahead on the traditional ‘Kirana’ stores and even Shopping Malls. Lockdowns to contain COVID-19 have reinforced the importance of owning a ‘roof over one’s head’, that too a comfortable, spacious one. With reduced expenditure & increased personal savings due to lockdowns, and real estate developers coming up with attractive price & payment schemes, the affordability factor has increased at all levels, resulting in improved demand for housing. This has been the saving grace for developers. Even with all the challenges faced during the last 17 months, we have been able to complete 15 projects with an area of 12.40 million square feet, including our marquee project, World Trade Center (WTC) Chennai. During the same period, we launched 14 projects with an area of 11.30 million square feet including Brigade Citadel in Hyderabad, and Brigade Residences at WTC Chennai.
A feather in the cap is the recognition by the international body, Great Place to Work Institute in association with the Economic Times, for the 11th year in a row - placing Brigade amongst the Top 100 Best Places to Work in the Country - the only real estate developer in the country to receive such an honour. Despite inadequate support to business and industry by the Central & State Government, the Indian Corporate Sector has shown a lot of resilience, thereby presumably, helping wipe out the 7.5% negative GDP of 2020. Good monsoon across the country, in general, has played its part. But the concerns of MSME sectors and small businesses remain. This means by the end of March 2022, India’s financial position may get back to March 2020 status. With the loss of 2 valuable years of growth, it would be a miracle of sorts if our country can reach the targeted GDP of 5 trillion USD by 2024-25. Reaching the USD 5-7 trillion mark is essential for the country. This will ensure that per capita income goes up to USD 4-5k from the present USD 2k. Only when the per capita income goes beyond USD 4-5k, can the MIG population hope to have good disposable income, which in turn will give a boost for the next stage of growth. This would be very similar to what happened in China over the last 20 years. The Central Government has taken up several structural reforms during the past couple of years to help the Indian industry grow and at the same time supporting the farmers and the poorer sections of the society. One hopes these structural reforms will start yielding results soon. Stock indices of BSE & NSE have gone through the roof on this expectation. FII & SIP fund inflows have added fuel to the fire.
With this hope, as we enter the 75th year of Independence, we can expect ‘Tomorrow to be brighter than Today’.
Wishing our readers good health and safety.
—Jaishankar CMD, Brigade.
A lot has happened in the macro environment since the last issue of Brigade Insight in December – from successful demonetisation to introduction of GST proceeding in the right direction; commencement of RERA (Real Estate Regulatory Act); from BJP’s handsome win in the crucial assembly elections in Uttar Pradesh to BJP losing bye-elections in Karnataka (a wake-up call to Karnataka BJP); from a booming stock market to the monsoon predicted to be normal, et al
Full credit to our Honourable Prime Minister for successfully managing the demonetisation of INR 500 & 1,000 currency notes. This has resulted in crores of rupees getting deposited in the Banks, resulting in increased money in circulation due to reduction of black money; increase in tax collections & number of taxpayers; expected reduction in corruption; lower lending interest rates (good for business & industry) and increased use of digital currency, among other advantages. Our Honourable Prime Minister debunked the criticism by many reputed economists and showed that he means business by coming up with a slew of well thought out supporting measures. His vision backed-up by clear-cut strategies & implementation is sure to make him the Best Prime Minister our country has seen, apart from making him an enviable Statesman to reckon with in the world order. The result is the stupendous confidence shown in BJP by the electorate of Uttar Pradesh. Actions of our Honourable Prime Minister & that of Uttar Pradesh Chief Minister is a lesson for all leaders that good governance is bound to be appreciated by the citizens, and the impact it can have on electoral gains.
With the announcement of tax rates, the suspense surrounding the much-anticipated GST (Goods & Services Tax) seems to be over. Now, it is a question of ensuring that it is implemented both in letter & spirit. The exemptions given and rates announced by the committee of finance ministers seems to be very fair. By & large, GST should help business & industry in overall reduction of costs which is expected to be passed on to the ultimate customer/consumer. But, there would be a settling down period and confusion/misinterpretation galore during 2017-18 at the least.
Similarly, there is bound to be confusion in the implementation of RERA. There are no experts in the industry, in the consulting community or in the Government. Everyone will have an opinion, the correctness of which will be known over time, once the RERA Authority/Tribunal starts passing orders. There is bound to be a storm before calm can settle in. The developer community should tighten their belts and brace themselves for hard times from authorities & activist groups. While RERA will have long-term positive effects on the sector, with no entry barrier earlier resulting in all kinds of questionable characters entering the business. It is also bound to add cost due to delay in obtaining additional approvals from RERA authorities before a project is launched. The real estate sector already suffers from the problem of dealing with too many civic authorities, who have been conveniently let off by the Government from the regulations of RERA. Once the sector recovers from the impact & negative sentiments of demonetisation, the real estate costs/prices should go up at least by 10% due to the provisions of RERA and the recently revised National Building Code for new projects. For the real impact of RERA to be felt on unauthorised constructions, the all India developer body - CREDAI has requested the Government not to exempt apartment buildings of less than 8 apartments & properties of less than 500 square metres. Most of the large-scale deviations happen in this category by unorganised and one time developers.
Affordable housing will soon become the flavour of the season for developers and consumers alike. Rightly so, what with more than 20 million homes to be built in the next 5 years to meet Prime Minister Modi’s noble target of ‘Housing for All’ by 2022, to coincide with the 75th Anniversary of Indian independence. For the mission to succeed, the State Government and civic authorities should give incentives (if not subsidy) by way of allotment of Government/slum redevelopment land, reduction in stamp duty, reduced approval fees for building plans, water, sanitary & electrical utility connections for affordable housing projects.
Our first & much awaited 202-room hotel project in Chennai - Holiday Inn OMR IT Expressway opened for business on 21 April 2017. Its super location and great design has become the talk of the town in the Chennai hospitality market. Coupled with this, we were able to launch Brigade Xanadu - luxury residential apartments in a large 33-acre central located land parcel in West Mogappair - Nolambur, Chennai. It is bound to be a landmark project for Chennai & Brigade, offering superb quality of life. Brigade in partnership with the Government of Singapore Investment Corporation (GIC) is gearing up to commence work on World Trade Center Chennai in another landmark location on OMR, Perungudi. This is apart from commencing Brigade Tech Gardens, IT SEZ in Brookefields, Bangalore.
Two other residential projects of significance were also launched recently - Brigade Buena Vista on Budigere Road & Brigade 7 Gardens in Banashankari, Bangalore. Both received encouraging response in an otherwise subdued market.
With school holiday season coming to an end, with good monsoon round the corner, with NIFTY & Sensex having crossed 9,500 & 30,000 respectively (which should result in profit booking by investors), with business sentiments turning positive, central government taking continuous positive measures to improve the economy, RERA & GST in place, with incentives to affordable housing and home loan interest rates at the lowest in 10 years, there is no reason why the Indian real estate sector should not look up. It should happen sooner than later. So, it is time for fence sitters to jump to the right side of the fence and make their decision to acquire their dream home from Brigade!”