Long Line of Real Estate Inventory but who are the buyers?

Last four weeks have been quite busy , first of all i was getting my feet in settling down again in Chennai, which meant i had to do lot of administrative work to ensure a smooth settlement . There were scores of things that had to be completed both for my wife and me. Right from getting new phone & Internet connection to ensuring that all necessary documentation had right addresses and contact numbers.

Apart from this , i was also adjusting to 4 hours of commute to office every day. I travel by my office bus every day. The bus jostles around the early morning & evening traffic, during the mornings as the mist lifts off some parts of the journey is actually very pleasant.

This blog is not about my bus journey but more about what has caught my eye in the last few weeks.

When i board my bus , within a span of few hundred meters there are 3 new construction projects , each of which in their phase 1 would have no less than 150 flats and these are premium flats ( or at least premium in my area ) . Last week while i was traveling via public transport to Nungambakkam i couldn't believe what i saw . There were scores of real estate projects which cumulatively should have had about 000's of flats being built or almost ready to be completed.

Last morning i opened the news paper, more than the actual news, the paper was full of new real estate project launches for republic day and the associated discounts. In the evening i watched a property show in one of the major business news channel, i couldn't comprehend the prices that were being quoted , the range for good flat seem to be between Rs 80 (8 Million ) Lakhs to Rs 8 Crores (80 Million Rs). My jaw dropped hearing these prices & i was astonished to say the least.

The combination of the prices and the amount of inventory that has already been built and slew of new projects that have already been or are being launched every week defies logic. Recent research points to the fact that property prices (house hold) will increase in 2013. Despite this research & high interest rate in the country, players in this market believe that this is the right time to buy a property.

While there is a lot of inventory being built up , am not so sure who the buyers are? The news is that the appetite for buying in real estate is not abating. What is driving this crazy high prices? i cannot make any sense of this.  Am scratching my head to understand that . Incidentally last night i heard through unofficial sources that that there is a new property project due to launched in my street and 50% of the project has already been booked !!!!!!! , quite unbelievable.

On one hand business are complaining about high interest rate which is making customers to spend very little if they do spend anything at all but on the other we seem to be having scores of new launches of properties. Interestingly enough, there has been no major discounts from any of the real estate players , there is no rush to sell-off inventory, which is an interesting conundrum.

Builders do not want to budge as they expect the Reserve Bank of India to cut rates which will make credit more cheaper , which in turn will get the buyers back to the market, will real estate property prices keep going up and up ? only time will tell, however

There is an old adage - What goes up , has to come down . The higher it rises, the bigger it will fall.

This space would be very interesting to watch!

21 Years at the helm - a Tribute

It was July 2004 & the summer in Chennai was just abating.  The day was Saturday and a memorable day for me , it was to be my first overseas travel. 

I was flying Lufthansa from Chennai to Amsterdam via Frankfurt. The flight's departure time was 01:45 AM in the morning.With typical German efficiency,the flight took off from Anna International airport to Frankfurt Main airport slap bang on time. Flight time was just under 7 hours and the expected landing time was 07:10 CET . Flight was uneventful and landed on a cold morning at the destination.

I disembarked from the flight and had to hurry as my connecting flight to Amsterdam was less than 1 hour away. As i was walking from one gate to another , i could not but admire the developed world. I just got a glimpse but my mind was already thinking of when India would become anything closer to what i was seeing .

My next flight was just 50 minutes from Frankfurt to Amsterdam Schipol Airport.

As the flight was taxiing down the runway at Schipol Aiport , a huge white billboard caught my eyes.In it was written " Tata Consultancy Services " . A moment of pride overtook my thoughts & unknown to me trickle of tears were flowing down my cheeks. Am sure , this could just not be an isolated thought just from me , many Indians would have been made proud by the ubiquitous " TATA Group" . 

This blog is a tribute to the man who took Tata group to the world stage and turned the heads of many a nation, Mr Ratan Tata. 

A span of more than two decades at the helm of what is the parent company of the giant Tata Group company " Tata Sons" . In those two decades, Mr Tata has put the Tata name & India firmly on he world radar through his tenacity , business acumen, spotting trends & opportunity , not to miss out on being audacious & ambitious at the same time.

Starting from Feb 2000 with the acquisition of Tetley tea to become worlds second largest tea producer to the acquisition of Corus in 2007 at that time India's largest overseas acquisition to the most recent acquisition of premium car brand " JLR", Not to undermine his vision of creating worlds small car in "Nano" against all odds right from technical issues through to political backlash in Singur . His sights were always big & bold. He has been determined & has carried his vision through. Not only was he a businessman , he also showed his emotional side , when he went all out to ensure that the attack on the Taj Hotels in Mumbai would not be a deterrent & went to ensure the hotel opened in record time.

His contribution to Indian business community & India as a whole has been immense & through this blog , i would like to personally thank him for all his contribution & for making many of us proud in every which way possible.

I admire him for the statesman & the astute business man he is .He took on the mantle from the venerable J R D Tata and is now handing over the batton to Cyrus Mistry. I wish him & the tata group the very best.

Six Months & Ninteen Days

It's been that long since i last wrote a blog. The last blog was a combination of the famous Williams F1 win in Barcelona, much awaited & messed up Facebook IPO coupled with thoughts on the ever sliding rupee.

While fundamentally nothing much has changed snce then, post that famous win for williams F1 by Pastor Maldanado in Barcelona , they have been laggards the whole season . Facebook recuperated some of its losses and the rupee is still sliding but is more range bound & expect to improve during 2013.

It was a similar story for me during the last six months for me , fundamentally no big change but just that i was planning & executing step by step relocation back to India & believe me it wasn't easy but was made possible by support from lot of well wishers to whom i will always be thankful.

In those six months i travelled to India twice, Dubai , Abu Dhabi & Hyderabad once, that equated to travelling about every month & half over last six months.  In a nut shell my time was consumed by things which were  important for my relocation.

It's been a fascinating second half of the year 2012, i learnt a lot . Some of what i learnt were networking ,planning & execution,using time to your advantage etc.

Now that am back here and settling down , am hoping to get my blogging upto speed and be a regular, expect to write about experiences in the last six months.

Watch this space!

Last Few Weeks - Story of Facebook, Williams & Indian Rupee!!!

I haven't blogged over the last few weeks, so this blog is aptly titled " Last Few Weeks".

What's been happening in the last few weeks. 

For me , the world hasn't changed much , my time has been split between office chores and personal work. However few other things have happened.

FACEBOOK IPO

I have been following facebook ipo through news channels ever since they filed the prospectus with the SEC back in Feb 2012. 

Its been a roller coaster ride for the firm and their underwriters Morgan Stanley. Not to miss out Nasdaq. The hype was so feverish that CNBC and other business channels were covering the whole story leading upto the IPO date almost 24 hours every single day.

I still remember that there were panel discussions about how the company would raise an eye popping 104 billion $ in the IPO and how the founders and the venture capitalists who backed the firm would become instant billionaires etc.

What was interesting was that the increase in IPO price and the insiders selling a large portion of the shares to be sold to public was never scrutinised prior to the IPO . 

When Facebook chose Nasdaq for its listing , everyone said that NYSE missed out on this massive IPO , i bet they would beg to differ now.

On the day when it listed , the whole listing fiasco was exacerbated by the NASDAQ technical glitch .

If that wasn't enough , the stock closed at a meager +o.6% up from its IPO price and all the investors who wanted to make money in an IPO POP were ruined. Incidentally one major fund - Citadel is supposed to set to loose close to 35 Million $ . 

If all this wasn't bad enough , the next day the stock tanked 16% of its value . Then all hell broke loose with investors trying to blame the underwriters for misjudging the demand and valuing the company much more , which meant the IPO price was set way higher than the book value of the stock which in turn meant there was no IPO POP.

Then came the scrutiny by the media about how GM pulled the plug on facebook just days before the IPO and how Morgan Stanley's Analyst had casted doubts on Facebooks monetising model just days before the IPO and how the firm sent out the note only to select investors.

Morgan Stanley was vilified for it in the press over the last week. In the same time the shares have slid further and closed at $31.91 down 3.39% on Friday meaning its lost 16% since its IPO.

For a stock that was touted to be the next big thing to have underperformed so badly calls for lot of questions.

No doubt the debate would still rage for the next coming months and the SEC will investigate Morgan Stanley for their role and the media frenzy would continue further.

It was interesting to see how Media suddenly switch sides.

WILLIAMS F1 VICTORY IN BARCELONA

One of the most illustrious names in F1 history, which had been win less for more than five years . All that changed in Barcelona when a little known Venezuelan named- Pastor Maldenado drove brilliantly to take the podium.

It was a bitter sweet victory for Sir Frank Williams and his team .

However the victory was over shadowed by a big fire in the garage after the race.

I watched an interview in BBC where they interviewed Dickie Stanford Williams F1 Race Team manager.

He was asked what the problem was and why the fire had broken down in the garage.

He Simply said - " Our Process was wrong and it was static current".

That statement took me aback , for a sport know for its absolute accuracy and razor sharp minds such a statement of acceptance made me think.

If a team like Williams say that their process were wrong and they have rectified it , well there could be opportunities for other organizations around the world who can look at their process and re engineer them continuously.

If someone comes to me next time and says my process is perfect , i would quote the above incident as an example.

INDIAN RUPEE SLIDE

Here we go again .

India Rupee to the Greenback is now at 55.355/$ . Indian rupee is now the worst performing currency in Asia .

This is a cause of concern on two counts

1 It is hurting the business , mainly exporters 

2 As the central bank is intervening in the market , it drains up our precious reserves

3 This thing hurts our overall economy 

Bofa Merril Lynch , Morgan Stanley have already revised our growth for year ending Mar 2013, expectation is that we will grow at sub 7% level , probably at 6.3-6.5% 

Which is not good news . 

Of course what we hear is that most of this is Macro Economic driven , well that may be only partially true but most of why we have ended up in such a situation is due to our own misgivings.

We have had several hiccups and no major political will to stem this slide.

Me , along with many other Indians are hoping that the government will get its act together and ensure that it comes up with policies that are more conducive and ensures that these policies are agreed and implemented swiftly.

Currency futures traded in BSE & NSE are pointing to further slide of the Indian Rupee , markets expects rupee to slide around 56.8 levels by end of this year per the futures contracts traded.

That's not good news.

Fingers Crossed.

That's been mad few weeks already!

Have a great start to the new week. 

We Have Shot Ourselves in the Foot!

Last few weeks have been a mix of key news for India as far as am concerned.

The list of news is as follows

1. Launch of XOLO X900 by Lava
2. Google Measures Web speeds around the world
3. Deepak Parekhs interview with Shereen Bhan

What is so special about these news, well read on to find that out.

The first one is special because XOLO X900 is the first phone in the world to have an Intel chip , the Intel Atom Z2460 SoC chip inside it. All phones in the world run on chips made by UK company ARM . The XOLO is the first foray by Intel into mobile market and guess what it has been developed in conjuction with LAVA , an indian company. Although not the biggest mobile market in the world but this news shows the importance of the Indian market in the minds of worlds big corporation.

You can read all about the phone - 

http://www.gsmarena.com/intel_medfield_based_lava_xolo_x900_launched_in_india-news-4118.php

If you are smiling having read that, you have just had a pre mature good news , as the bad news is just to follow suit.

The second news that i heard was about a project that google carried out to compare internet speeds in many countries in the world. To be precise 50 countries.

The result was surprising. 

The top speed achieved in desktop/laptop based internet speed was in Slovak republic and the best speed in mobile internet was in Chile .

I was searching for the name that i was most interested in the list " India". Well India did not score well to enter the top ten countries in either list.

Did we then come in the top twenty , the answer was a big NO . The internet speeds were so poor that we came in the bottom ten in both the categories.

Reading the news i felt appalled .  Read full story below.

http://go.bloomberg.com/tech-blog/2012-04-19-whos-fastest-google-measures-web-speeds-around-the-world/

If that was not enough , the shocker came from the man whom i have always considered as the flag bearer of Indian corporations the most respected business man in Indian and world circles - Mr Deepak Parekh.

In an interview with CNBC TV18 , Mr Parekh lashed out at the indian government for not being able to push through reforms.

He also made two alarming references

1 Foreign Investors , companies inclusive are reluctant to invest in India , due to unfavourable investment climate

2 Two years ago , India was the darling of the board rooms of world corporations, now we are not on their radar.

That should shock any one who is even remotely interested and wants India to grow and become the torch bearer of the world economy for the ensuing economic periods.

Mr Parekh neatly summarized - " We Have Shot Ourselves in Foot" .

Watch the video here .

http://www.moneycontrol.com/video/economy/govts-7-75-growth-target-over-ambitious-deepak-parekh_693652.html?utm_source=Article_Vid

The Excerpts of the interview here

http://www.moneycontrol.com/news/economy/govts-7-75-growth-target-over-ambitious-deepak-parekh_693652-2.html

Apart from the above , There has also been a new book called " Breakout Nations" by Ruchir Sharma ,  head of Emerging Market Equities and Global Macro at Morgan Stanley Investment Management.

In the book , Mr Sharma has been too pessimistic about India and its growth prospects , in general he has been pessimistic about whole of the BRIC countries.

Right from Retrospective taxes for which Vodafone is going to take India to court, through to the latest thoughts from key business leaders, there isn't any room for India Shining!

We seem to have risen meteorically and now find ourselves fading away .

Doesn't make for a good reading .

Hope things get better over the coming months & years.

Itunes University - The Unsung "I" Hero

Anything "i" these days is a winner whether it is Ipod, Iphone, Ipad or the new Ipad . The line of products from Apple has always been a winner and path breaking. 

Having said that , there is one product in the apple line up which i have come to use in the last year, its been a winner as far as am i concerned and what i like the most is not so much as its features but more its contents.

Am speaking about the unsung hero " The Itunes University" aka " Itunes U" 

The Itunes U is embedded within itunes and is part of the Apple's drive into education. 

It contains numerous educational material and in some cases full course lineups from some of of the worlds most premier institute, some of the ones i know of are listed below.

• Wharton Business School
• Yale University
• INSEAD Business School
• HEC Paris
• Oxbridge University ( Oxford & Cambridge are fondly called Oxbridge University)
• SDA BOCCONI

These are just a handful of universities which have a presence in Itunes U . Looking at the list of universities, they go from A-Z , starting with Aberdeen University to Zeppelin Universitat

If that is not enough , the course list is even larger, there are plethora of subjects covered in Itunes U , some of them are

• Business
• Engineering
• Fine Arts
• Mathematics
• Fine Arts
• Social Sciences
• Health & Medicine

The best part is most of these courses are free to download, for example i have downloaded the following courses 

• 2011 , Financial Markets Course - Yale University - by Prof Robert Shiller
• Moon An Introduction - Open University

This is just to name a few. These courses are actual courses thought at the university & the videos of these courses , their actual course curriculum along with term exams are loaded in Itunes U . 

Listening to a Ivy League professor without actually being on the programme is just such a pleasure. Of course not to miss, we can start, stop and listen to these lectures when ever we need . Isn't that cool!

Earlier this morning i saw a guest lecture by Stephen Schwarzmann founder of one of the most successful private equity firm " The Blackstone Group" .

There are a number of other course videos that i have downloaded for viewing later.

So far this year, i have put Itunes university to a good use and would recommend this to anyone.

All you need it access to Itunes - " Who These days doesn't have access to one" & you are ready to access the courses.

In my view , its blindingly obvious that its a good thing to disseminate knowledge one way or the other . I personally think it would make knowledge to flow easily and it is a good thing for the society.

Now if you ask me would this reduce poverty in this world ? Maybe not , but this could very well be a proof of concept for a much bigger thing that could be executed using Internet as the backbone which in the years to come might be a catalyst to reduce poverty.

Am sure most of you all would agree with that. 

Oh by the way there is a Itunes U app if you are interested . Hope you enjoyed this post. Have a great week ahead.

Investing Uncomplicated - I Wish !

It's a wish that's been every investors wish for long. 

Should ones money work hard? obvious answer " yes" but question is how to make it work ? " Invest it and make it work" quite simple. If you think its that simple , probably you are the next whiz .

I wouldn't consider myself an active investor however over the last few months I have been spending lot of my time understanding which products to invest and its not only for me but the aim was to understand and see if i can pass on the knowledge - Strictly not Financial Advising but just information.

Given that we live in the Internet age creates one of the many problem , I.e. information overload. 

When I kicked off my preparation it was hard to navigate through the maze of information. Sitting like a lame duck, I just couldn't get to grips with what I wanted to do. 

First question on my mind , which product/s to invest in? 

With this question in mind , I scouted for various information to help me out. Starting the information barrage was the age old adage " don't put all your eggs in one basket" holds good in investing as well , simply said that "Diversification" is king! Which seemed to be a fair call, but over diversify one tends to loose more than gain.

This now complicated things a step further , diversify but how and what? 

Further mining and understanding led me to a phrase " Risk Appetite & Profile" I.e. investing and it's residual components are dependent on individual circumstances and ability to assume risk. 

That sounded about right , everything in this world is driven predominantly by personal preferences & situations , so investing should be no different. 

Meticulously I sat down to prepare on what I needed to invest in & made some rough notes on products which might help. 

1 Equities 

2 Bonds 

3 Funds 

4 Commodities 

5 Real Estate 

 OK, that was a good start, what should I consider per product came next. 

Equities 

Investing in this asset class has been made simple by the advent of demat form of holding the shares and online trading . Shouldn't this been simple then to dive in and put your money in ? Well if only it was well simple. Here I called upon my better half's assistance , being masters in finance, I had asked her for assistance. 

Her first question , which broker do you want to trade with ? Aghast I asked why would that matter , she simply said service & commission. I was becoming tired by now, however with further encouragement and the need to understand I plodded on . 

Working through enormous amount of paper work , we finally chose a big financial house offering brokerage services. 

Next came the stocks to choose . I was by now loosing patience . My better half poured over few companies we choose , she came up with various numbers . 

• P/E 
• EPS 
• CEPS 
• ROCE 
• Dividend Yield 
• Management Value Add
• Business Outlook
• Sector Outlook
• Economy Outlook on sector operation outside home country

Combined with the above , we had one more ingredient to add " Instinct" to it to make the concoction before choosing some of the stocks. Phew , that was just a kick off.

Didn't bother getting into understanding Fundamental or Technical analysis in detail. 

 Fixed Income 

Our fixed income market is still shallow , although IDBI has launched its samriddhi web portal for retail bonds,but one cannot trade all government securities in question , at the time of our investigation, there were only handful of securities on offer . The corporate bond market is even more shallow, making it extremely hard to invest directly. This Asset class is my favourite but we had to skip this altogether

 Funds 

This was an absolute monster with plethora of choices .

With opening up of the markets , we now had options to invest in

1. Mutual Funds
2. OEIC
3. SICAVs
4. Investment Trusts
5. Fund of Funds

There were numerous literature's about the fund industry and the underlying intricacies .

Difficulty was which one to choose , this has now been left open as we are still studying the market.

The place we have started at the moment is the BSE Morningstar website , which has been launched by BSE as a part of the investor education series .

One thing which i did learn was TER - Total Expense Ratio of a fund can actually diminish returns, am still trying to comprehend what this means in real terms and make my mind up.

In the mean time i have been pouring over a book about exchange traded funds , understanding the nuances of this latest piece of financial engineering pioneered by American Stock Exchange just around the turn of 2000's.

A clear indicator seem to be the fact the mutual funds and investment trusts perform poorly compared to  ETF's and fund managers add to the overall cost of managing the funds.

If that was not enough , ETF's have their own pit falls i.e. one has to understand how the index tracker or the ETF is constructed, if its physical replication then the tracking error could be minimal but if its sample sized based creation then the tracking error could magnify and diminish returns. If its a swap based tracker or a ETF then the return could be guaranteed but it could well mean that there is a counterparty risk.

Oh my god why doesn't some one make it simple...

Commodities

An Inflation busting asset as its often called, commodity is seen as a the darling i.e. queen of all assets . Its predominantly driven by supply demand factors err that's strictly not true.

The question on commodity investing is 

1 Do i invest in physical commodity

2 Do i invest in a commodity mutual fund

3 Do i invest in Exchange Traded Commodity 

My research has so far pointed to ETC because its much easier to invest without the necessity to actually worry about holding the physical asset.

Real Estate

Still Researching on this sector but looks very likely i'll drop this all together .

Not to rule out fixed deposits which might be safe haven

Oh i forgot the big daddies " Income Tax" & " Capital Gains tax " 

Well that's complicated enough for now !

Most of the countries in the world both developed and emerging markets have taken steps to step-up investor education programme , having said that there are still a lot of unknowns .