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.
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!”