In all the talk about globalisation, being local does have a bad name. But as per B&E’s analysis, regional centres are teeming with realty potential. And regional players are proving that staying local could actually prove to be a blessing in disguise
Media and Real Estate – the two sectors may be largely antipodal to each other in terms of business dynamics, but there is a lot that the latter can learn from the former. You may be wondering what? Consider this: Globally, print media (to be specific) has invariably been a regional industry. So there is The New York Times dominating in New York and The Los Angeles Times, which is dedicated to LA. In India too, regions have their own unique favourites – The Hindu in Chennai, Deccan Herald in Bangalore, The Hindustan Times in Delhi, The Telegraph in Kolkata, Tribune in Chandigarh, et al. Attempts by most of these dailies to go national have not been so fruitful. Similarly, it is being observed that real estate players operating out of specific regions of the country like Jaipur, Hyderabad, Kolkata, Kochi, Chennai, et al, are showing spectacular growth. What is the basis behind this trend, and is it sustainable? B&E finds out.
The broad figures are hardly regional, as the Indian real estate sector contributes around 14-15% to the GDP of the country. The construction business’ contribution to the GDP stood at 7.95% in 2002-03 and spiralled to 16.46% by 2005-06, before showing a downward trend then onwards (t stood at 11.98% in 2006-07; 9.81% in 2007-08; and 7.24% in 2008-09). The real estate business forms over 60% of the total construction business of the country. The last 24 months have been a tough ride for national real estate players. Huge debts riding on their backs, stalled construction and instability in the global real estate market further added to the woes of the Indian realtors. Hovering at 12,727.42 points in December 2007, the BSE Realty index had plummeted to 1561.01 points by November 2008 – a drop of 87.73%, before rising up to 3361.10 as on March 15, 2010.
In the second quarter of 2009, debt liabilities on national realty players like DLF and Unitech stood at Rs.150 billion and Rs.78 billion respectively. But the downturn hit them hard as the cost of construction sky-rocketed. Sample this: for the quarter ending December 2009, the cost of construction for DLF stood at Rs.6.73 billion – a mind-numbing increase of 262.75%. Even for Unitech, the cost of construction increased by 197.57% over the last year to Rs.4.47 billion. For Parsvnath Developers, the cost of construction increased by 173.75% yoy to gross Rs.1.29 billion currently. Increase in the excise duty from 8% to 10% will further add to the woes. High property rates led to decline in sales (by almost 50-60%) and national developers were forced to stall projects. Before the slowdown struck, big developers had hastily acquired land all over India to increase their land banks. Currently, DLF has a total land bank of close to 430 million square feet, of which, only 50 million square feet is under construction. Also, a lot of space acquired for launching commercial hubs could not be developed because of a slowdown in the big ticket IT/ITeS sectors.
Media and Real Estate – the two sectors may be largely antipodal to each other in terms of business dynamics, but there is a lot that the latter can learn from the former. You may be wondering what? Consider this: Globally, print media (to be specific) has invariably been a regional industry. So there is The New York Times dominating in New York and The Los Angeles Times, which is dedicated to LA. In India too, regions have their own unique favourites – The Hindu in Chennai, Deccan Herald in Bangalore, The Hindustan Times in Delhi, The Telegraph in Kolkata, Tribune in Chandigarh, et al. Attempts by most of these dailies to go national have not been so fruitful. Similarly, it is being observed that real estate players operating out of specific regions of the country like Jaipur, Hyderabad, Kolkata, Kochi, Chennai, et al, are showing spectacular growth. What is the basis behind this trend, and is it sustainable? B&E finds out.
The broad figures are hardly regional, as the Indian real estate sector contributes around 14-15% to the GDP of the country. The construction business’ contribution to the GDP stood at 7.95% in 2002-03 and spiralled to 16.46% by 2005-06, before showing a downward trend then onwards (t stood at 11.98% in 2006-07; 9.81% in 2007-08; and 7.24% in 2008-09). The real estate business forms over 60% of the total construction business of the country. The last 24 months have been a tough ride for national real estate players. Huge debts riding on their backs, stalled construction and instability in the global real estate market further added to the woes of the Indian realtors. Hovering at 12,727.42 points in December 2007, the BSE Realty index had plummeted to 1561.01 points by November 2008 – a drop of 87.73%, before rising up to 3361.10 as on March 15, 2010.
In the second quarter of 2009, debt liabilities on national realty players like DLF and Unitech stood at Rs.150 billion and Rs.78 billion respectively. But the downturn hit them hard as the cost of construction sky-rocketed. Sample this: for the quarter ending December 2009, the cost of construction for DLF stood at Rs.6.73 billion – a mind-numbing increase of 262.75%. Even for Unitech, the cost of construction increased by 197.57% over the last year to Rs.4.47 billion. For Parsvnath Developers, the cost of construction increased by 173.75% yoy to gross Rs.1.29 billion currently. Increase in the excise duty from 8% to 10% will further add to the woes. High property rates led to decline in sales (by almost 50-60%) and national developers were forced to stall projects. Before the slowdown struck, big developers had hastily acquired land all over India to increase their land banks. Currently, DLF has a total land bank of close to 430 million square feet, of which, only 50 million square feet is under construction. Also, a lot of space acquired for launching commercial hubs could not be developed because of a slowdown in the big ticket IT/ITeS sectors.
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influence and funding notwithstanding, has been given a new and exciting opportunity by G-20 nations of rebuilding the emerging economies which are tattering under the shackles of recession. $750 billion will be pumped into IMF’s kitty to try and do that. The new Managing Director of IMF, Dominique Strauss Kahn is trying his best to restore its old glory by shifting its ideology that can satisfy even its hardest critic. It has certainly done so with Joseph Stighitz, a Nobel Laureate who had a long time antipathy for IMF’s policies, thus declaring the new polices as ‘welcome’ in Wall Street Journal. The criticism was particularly sharp for inveterate IMF’s policies of imposing conditions against granting loans. So much so, that it often used to instruct governments to cut-back on public spending as a pre-requisite for granting loans. This kind of dealings with fragile Third World economies has often proved to be its nemesis. East Asian crisis and Argentine collapse are the examples of IMF’s flawed policies based out of the US and Western Europe’s dictates.
was passing through the main commercial district of Dallas, driving from the airport to the city centre. A bystander alleged that shots were fired from the casement of a construction across the road. The President buckled into Jackie Kennedy’s arms, who was heard crying out “Oh no”. The President’s limousine was immediately driven at speed to the Parklands Hospital. He died 35 minutes after being shot. Within hours of the shooting, a cop approached Lee Harvey Oswald, believing he matched the description of the killer. The cop was shot dead. Oswald was arrested straightaway, suspected of being the assassin. Shortly afterwards, he was charged. The suspect was never tried as he was shot dead two days later.
online ads are on a decline since the past few months. Positive for the surfer, given the irritant value that comes combined with pop up ads. According to ComScore’s AdMetrix data, internet surfers were exposed to 12% less display-ad impressions per page view than they were a year ago. Whether it’s a conscious decision of the advertisers present on the digital media or just a mere coincidence, the fact is that the falling growth rate of the online ad industry is good news for advertisers! Surprised? We called it, dumb meets dumb. Well, a study conducted by Dynamic Logic, Starcom and DoubleClick in 2007 found that a 15% increase in ads on a page results in about a 10% decline in click-through rates. Well, if that is not a positive correlation, read on to get confused a bit more.
the various IT companies. A study titled ‘IT opportunity in the SMB sector’ by Zinnov Management Consulting reports that this segment in India spent nearly $6.6 billion during 2007-08, which is 30% of the total expenditure on IT in India during the year. Indeed great news for the IT sector, but what about a time when funds are quickly drying up? Indeed, for the SMBs, it is getting difficult by the day to maintain the expenditures for keeping pace with speed at which technology is getting upgraded, reinvented and reinnovated! And that’s where Cisco Capital comes in, to help solve the financial problems that the SMBs are facing to buy/utilise latest in the field of technology. Cisco Capital is a wholly-owned subsidiary of Cisco Systems and therefore a captive financing arm of Cisco. It however also deals directly with high-end enterprises and high end customers. It was incorporated in 2005, with an initial corpus of $150 million. It is dedicated to providing financing solutions and options to Cisco’s channel partners and its customers. In an exclusive interview with 4Ps B&M, Gautam Munish, Country Manager, Cisco Capital, discloses how Cisco Capital helps organisations derive maximum from investments in technology...
apparently inspired in Bollywood) spun their tires on the silver screen some 5-6 years ago and left some seriously impressionable kids (and more than a few adults) drooling at the sight of amazingly curvy, deliciously proportioned and meticulously modified cars, nothing has ever been the same. Oscar Wilde said, “Life imitates art far more than art imitates life.” Well, in this case it has been both in equal measure. The Fast and the Furious was inspired by the American culture (specifically Californian) of modifying cars, where enthusiasts and gear heads lovingly tuned and modified almost every nut and bolt of their cars, to get them to look and feel just right, just like a modern day Picasso. Transplanted to India by two blockbuster movies, the same culture took hold without the requisite base to support it. Meaning, that after seeing the movies, everybody wanted to modify their cars but didn’t have the faintest clue as to how to go about it resulting in a lot of copycats. “I hardly meet any car owner who has any knowledge about car modifications; they look at others and come to me saying that they want this look or that look. They pick up technical terms like turbochargers and free flow exhausts from the internet and ask me to install the component, without knowing what it does,” laments Piyush, owner of a car modification garage in Lajpat Nagar. Finding the problem widespread in our research, we at B&E magazine decided to give our readers a brief intro course on the do’s and don’ts of modifying cars and how to keep things in your specific budget while still managing to look cool.
technology like hybrids to the Indian customer? How many hybrids have you imported initially?
to the poor in the country, which the poor can’t do to the banks? Can’t guess? Read on... A paper by Burgess and Pande of the London School of Economics titled ‘Can Rural Banks Reduce Poverty?’ proves that “rural branch expansion in India between 1977 and 1990 significantly reduced rural poverty”. Sadly, even today, while corporate entities from all segments are foraying into the Indian hinterlands, national banks are literally crawling ahead at a pace which even a snail would mock!
the fact is that there is no other logical way to prove truth other than the damn statistics. Figures don’t lie and they definitely don’t when we say that lack of proper public transit systems and infrastructure leads to high usage of private cars in India.
think the 10% (as part of the GDP) mark is achievable. Earlier the government thought that the AMP was a bit conservative. Soon the Ministry of Heavy industries will start to initiate the plan and things will move in a positive direction.
continue to grovel to Hillary Clinton’s dead-enders, some of whom mutter darkly that they will not only not vote for him, they’ll never vote for a man again. Obama met for an hour on Tuesday with 3 dozen top Hillaryites at a hotel here, seeking their endorsement & beguiling their begrudging.