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.
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
