Our world is in turmoil. The mindless war in Ukraine continues. The number of Covid cases across the world has gone up to 650 million with 1% mortality. In other words, about 6.5 million deaths. The numbers are going up in the United States and more particularly in China – thebirthplace of the Wuhan virus.
With inflation levels inchingtowards double digits in Europe and parts of America, talk of recession in the western world is gaining momentum. Our country, by and large, seems to be insulated. The question is for how long will we be insulated in this globalised world. Only time will tell. Despite what is going on around us, Indian stock indices have reached an all-time high! It is an enigma. There is money with the Indian public with few options to invest. Unfortunately, big investments in the industrial sector are not happening to the desired extent to match the government’s expectations. Probably, Indian businessmen feel the risk factors are high based on macro indicators with impending elections in many States during 2023, and the Parliamentary elections in 2024, which is not far away. To reduce inflationary effects, Central Banks across the world, led by the US Federal Reserve, have increased the base interest rates significantly. The Reserve Bank of India has followed suit. The full effect of increased interest rates is yet to be felt by the business community. However, it is bound to hit profit-ability across sectors and the risk factors of higher borrowing will only increase.
In such a scenario, the Indian real estate sector is holding the fort and has shown a lot of resilience. The residential sector continues to do well. Business in retail malls and multiplexes is at an all-time high. Hotel occupancies and ADRs have also bounced back and have exceeded pre-COVID levels in many cases. The only area of concern is office leasing business, where companies in the IT sector are showing cautious approach and postponing major decisions. Employment generation is a key factor for the health of real estate business. However, Indian companies in the software sector and GCCs (Global Capability Centres) expect higher offshoring over time to ensure companies profitability is maintained in their home countries.
Having received all approvals for our residential projects – Brigade Valencia on Hosur Road and Brigade Calista on Budigere Road, the team is geared up to launch both large sized projects in the new year. Response to our maiden large plotted development project – Brigade Oasis on Devanahalli to Doddaballapur Road is very encouraging, having sold the 1st phase in a short period.
Succession in leadership is a necessity at various levels in any organisation. The time has come for me to take a step back from day-to-day routine activities. Having crossed 67 years in age, our Board of Directors have decided to elevateExecutive Directors Pavitra and Nirupa to Managing Director and Joint Managing Director, respectively. They are both eminently qualified with MBA degrees from Ivy League colleges – Columbia Business School and Cornell Business School, and each with more than 15 years’ work experience. They are both young, energetic, full of ideas and ready to work hard. I will continue as Executive Chairman.
I am happy and proud that FKCCI (Federation of Karnataka Chambers of Commerce and Industry) conferred on me the ‘Bharat Ratna Sir M. Visvesvaraya Memorial Award 2022’ on his birth anniversary, September 15, which is also celebrated in his honour as ‘Engineers Day’, across the country. It is in recognition of my services and contribution in the construction and building sector, as well as in the fields of education, health, community development, social and philanthropic work. I dedicate this recognition to all in Brigade Group. Without the support of Brigadiers, it was impossible to achieve, whatever has been achieved.
Lastly, I wish all the Brigade stake-holders season’s greetings, and the very best during the New Year 2023. We need a Santa Claus for the business sector also.
—Jaishankar CMD, Brigade.
There is no shortage of challenges and excitement – be it in the world or in a country or in an organisation or in one’s personal life
Our world, hit by the dreaded Wuhan Virus for the last two years has seen 550 million people affected by the virus; 6.3 million people succumbing to it (including one million in the USA alone) and with 20 million active cases still troubling people and governments. We did encounter the 3rd wave, ‘Omicron’ variant. Thankfully, due to vaccinating a few billion people, the negative impact (except in China) was much less. Our own country has done quite well to contain the Covid Virus because of the sensible approach of our general population (unlike many developed countries) resulting in more than 1800 million vaccinations administered to people. Kudos to the sheer determination of our Central and State Governments, and to the efforts of our doctors and health workers. While this should not result in complacency in following health safety protocols, thankfully day-to-day life is moving towards normalcy.
As if the health emergency is not sufficient, an undesired and terrible war is going on in Ukraine for more than four months due to Russian aggression. There seems to be no end in sight.
One can only hope and pray that it won’t expand to other countries and regions. The bloody war has displaced more than 15 million Ukrainians and has erased establishments and towns; killed thousands of soldiers and civilians; and has resulted in the loss of more than 100 billion dollars to infrastructure and properties.
Most inhuman act by the aggressor. The beneficiaries, as always, are defence, ammunition and equipment manufacturers (it has helped clear their stockpile); petroleum oil producers and many basic metal producers – aluminium, copper, nickel, steel, etc. Most businesses are paying the price due to the disruption caused by the war, resulting in increase in production costs. The full impact of the war is yet to be felt by the general public. In our country, cost of petrol has breached INR 100 per litre of petrol, for the first time. Once petroleum product prices go up, it will have a cascading effect on every other product. GDP growth of India, which was expected to be 9% in FY23, is already forecasted downwards to 7% or even less.
Residential real estate which was cruising well after every virus variant and lockdown, is being hit by a huge jump in construction costs – to give just one example, the price of construction steel has shockingly gone up by 80-100% since February’22! Furthermore, cost of several other inputs that go into construction. This is bound to have an impact of at least 10% in increase in selling prices in Southern Indian markets. Added to this, the general inflation is going up and has breached 7% already, resulting in hardening of bank interest rates, which means home loan rates will start inching up.
Brigade has done fairly well in FY22 in all the four SBUs we operate in – Residential, Office, Retail and Hospitality – in spite of the challenges, and considering we could not launch many new projects. We are hoping and working towards a brighter FY23.
We had the privilege of installing and unveiling the statue of the great Bharat Ratna Sir M. Visvesvaraya, opposite the Brigade School in Brigade Gateway campus. Sir MV’s achievements should surely inspire the next-gen.
Brigade and its people have received a number of recognitions during the past few months. Special mention is that of our Exec. Director, Nirupa being recognised by the Economic Times Jury ‘40 Under 40’, nationally. Also, with some amount of pride, I can mention that Bangalore City University conferred on me ‘Honoris Causa Degree’ (Doctorate) for the work done in ‘Infrastructure Development and Philanthropic Approach for Social Cause’. Naturally, I dedicate this recognition to my entire team at Brigade.
Lastly, let me hope against hope that the Ukraine war will end soon; the Corona Virus will not become virulent again, and businesses and people will be able to carry on with their lives more peacefully
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