The Real State of Real Estate

I plead guilty to being less than laudatory of the Real Estate sector in recent posts. This comes partly from experience: investments where I was promised the Moon have yielded negative to negligible returns. Again, I understand the caveat emptor argument (my ventures being ill-advised, risk-reward equation etc). It could be sour grapes too: nerves made me sit out the boom years and now I am priced out. Yet, it remains true that many of us are wary of the sector and its general functioning in our country.

Logically, things ought not to be in a bind. The dictum of being in money when investing in mitti had been ancient wisdom. Further, India's long term housing shortage story had its takers a decade ago. Little wonder then that, as friendly interest rates and rising household incomes fed core demand, realty prices pushed north. Investors attracted by visible short-term price upswing (perhaps more than long run potential) and overseas liquidity added to the momentum. Landowners made fortunes selling ancestral holdings in New India’s cities (NCR, Hyderabad, Bangalore, Pune etc). 'Buy pre-launch sell pre-possession' became the go-to strategy while a few risk averse or financially constrained folks like I fretted on the boundary!

This is where it began to go crazy. Developers overleveraged themselves using all avenues under the sun to raise money domestically (banks, IPOs) or across borders (ECB, FDI, PE). In short order (unlike most parts of the world), this borrowing stopped funding construction. Instead we had a mad frenzy to build ‘land banks' driven by continuous new project launches, and realty valuations feeding off every cycle. End-users were relegated to the sidelines; investor mood swung into high speculation zone. Fly-by-night developers sprung up dime-a-dozen in urban India, more than a few clearly headed towards a debt trap.

Enter GFC 2008. Liquidity dried up and demand, speculative or otherwise, was hit. It was mayhem. Buyers, caught unware, were the worst off; New India was abuzz with protests against project delays or defaults. The response from even the most well-known realty names was not much to write home; dharnas and court cases became the order of the day. The government could finally not look the other way, virtually leaning on banks to go easy on real estate loans to stop the bleeding for getting worse.

Today, we have come off the crisis edge. Property prices almost regained their peaks last year (although 2011 appears flat). The fundamental issues in the sector, however, have not been fixed for good. Like much else in our beloved country, there is more than meets the eye:

• core demand stays strong, a good chunk unmet. It ought to rise over time for population and prosperity reasons (the good);
• scope for corruption is unabated, ranging from Money Matters borrower scam variety to land acquisition, clearances etc (the bad);
• cash preponderance makes it a money-laundering magnet. Shahid Balwa types shall fester, with vested interest from powerful neta-naukarshah-businessman nexus (the ugly)

Clearly, the only way out of this jalebi of a mess is reform. A solution benefits those looking for roti-kapda-makan; yet others desiring more upmarket addresses; and wannabe investors like I. Hope is at a premium mid-week, but I set some aside for this. And may be rethink those Noida Expressway SMSs again :)

Keep It Simple Son!

History repeats, or almost. The story starts many moons ago, in a conversation between two highly unequal individuals. The first of them was first in many respects. An idol for many, he had chosen to strike out on his own despite not-so-humble moorings. Starting from scratch thus, he had risen through the ranks by virtue of sheer grit and effort, never compromising his values in the face of hardship or temptation. He would achieve a lot more in the years to come, but even in the times we speak of, was widely quoted as an example of integrity, determination and commitment to professional excellence.

The other party to the conversation was young; in fact too young to have any worldly standing. Imbued with the precocious confidence of youth, he ventured an opinion on the quality of the elder's published output. Of course he had no credentials whatsoever to comment on its technical or pedagogic merit. Neither did he have any justifiable claim to pontificate on the literary value. In fact, the little exposure he had to the Queen's was due to a love for the word, engendered and facilitated by this very conversation-partner!

Fortunately, the older man was characteristically large-hearted. He understood the recklessness of youth. Perhaps he gave some leeway to the chastity of the boy's intention too. As it turned out, he took the cheeky attempt to critique his body of work in his stride. Notably, the advise ran thus: the language ought to be simpler, the sentences shorter and words commonplace! History has it that the elder smiled and the young boy came away feeling on top of the world, an emotion of exaggerated self-importance of the kind one experiences on making an unexpected contribution in a chain of events.

The years rolled by: the boy turned into a young man and more, though the elder remained first. One day, the historical conversation was relived. The not-so-young man asked for the elder's opinion on his limited ouevre. The shoe, as they say, was on the other foot! Yet, with usual humility, the older man read through the younger's outpourings, half-smiled and nodded. Presented with what was clearly mild approval at best, the son took recourse to boyish petulance, and pressed for more pointed feedback. The father replied: "It is good, but you may consider making it an easier read, lest the message be lost in the medium". It was not a comeback, just the truth, resonating with what many others had said earlier; but that one moment had turned the idea to an important actionable!

Thank you and happy 16 June :)

Text-Me-Not

I would stop short of calling myself a gadget geek. I do, however, have a deep-rooted belief in Technology's game-changing abilities - at work and otherwise. This, coupled with a proclivity towards things new, often leads me to play early adopter to techie products and concepts. One such acquaintance I made in the late 90s was text messaging. In fact, I evangelized its discreet convenience, referable memory etc, compared to here-and-now voice calls to anyone who cared to listen (in context, it helped that it was free vs steeply priced airtime!); and remain an above average user to this day.

I must add that I did not register in the first wave of DNC, even if sympathetic to the indignation on unwanted calls. My reasons were largely professional. At its root, the credo of open communication (read taking calls from unknown numbers) was an occupational hazard. In reality, it was a goldmine of information - it helped me get bad news (the variety you want to know ASAP) promptly more than once, plus rudimentary competitive intelligence; not to forget insights best derived from listening to the occasional irate customer! All of this strengthened my resolve to stick it out amidst the onslaught of sundry telemarketers.

Unfortunately, it seems to be going from bad to worse. It is almost an incipient reality of modern life that text-messaged advertisements carpet-bomb your Inbox every day. Pesky calls too, after an initial decline, have reared their head again. The vanguard is clearly SMS though, and the biggest violator real estate firms and agents: I am subject to a dozen messages daily, in complete disregard of my tenuous pecuniary state! The bulk of these supposedly fantastic property deals are in assorted parts of Delhi NCR; but interspersed are offers from Jaipur's Tonk Road, plots in Uttarakhand hills, down to faraway Mysore and back-of-beyond. It makes me wonder if only geographic bounds have been transcended or those of sanity too. Or perhaps it is my middle class upbringing that limits me to imagine an investor class that takes large realty investment decisions basis an SMS exchange!

The uninvited texts wear other colours too. In fact had it not been for the glaring segmentation error (maybe they score intention, not ability, explanation for ignoring my financial position) in real estate ads, or those ridiculous friendship helplines, I would have thought a grand design in peddling me travel packages, hairfall cure (ouch) or zero-effort, fat-removal therapy (I even got one for 10 yr US visa in 10 days/10K from some arbit Churchgate agent last week)! Frankly, if only less prolific, it would have been funny.

Think a broader context and the seeming helplessness of the Indian consumer to overcome this mess does add to general scam-season discontent. True to form, an irresolute, blundering UPA-2 has little to tell beyond a revised-twice-yet-missed 31 Mar deadline. With public attention on other more ignominious spectacles, they have actually been able to get away without saying almost anything. In fact, with declared intentions to snoop on all voice-data exchanges in the country (recall the BlackBerry tangle), the Government can hardly argue that policy formulation or erecting filter infrastructure are insurmountable asks. Likewise, alloting a special telemarketing code for landlines, or cracking down on rogue telecom companies that continue to sell bulk SMS deals should not be too tough to execute. Yet, the ongoing specatcle of DoT-TRAI ping-pong on the issue inspires little confidence in their appreciation for the task at hand or seriousness of their commitment to it.

No one, of course, can fault the Government if it avers that implementing a foolproof DNC (or do-call) registry, including critical security pieces, is a complex exercise. I am just not sure why it should remain open-ended and a shifting goalpost (which sounds counter-intuitive in the context of technology). The nation needs a quantifiable plan. Or perhaps Mr Sibal needs to be text-blitzed to know this...