Markets are slump, real estate is dead. But, Is it? Really?

I play badminton frequently. Outside of the court, we engage in casual chat on variety of topics, from recent experiences. One of the players, was cursing real estate market. He has invested in a house, in a luxurious gated community, 3 years ago. He was not getting the right resale price. He is being quoted price lower than purchase cost. That’s a major concern. I had purchased 2 flats, in 2004 and 2009. The resale prices have shot up crazy. Likewise, I would have expected 10-15% appreciation YoY. So, are the stories of economic slowdown, national crisis true? Is Modi, failing, as lot of economist talk about?

I spoke to a friend of mine, at a senior position in a large finance corporation having multi crore exposure in real estate market (financing not only consumer home loans, but also large builders/projects). What better source to find out. I discussed example of this badminton friend's potential loss. He asked for details of location, scheme, builder etc. Then gave a clear picture of the situation. The area (Ahmedabad, in general), has huge over supply. About a third houses are actually occupied, although, almost 100% property has been sold out. Most purchases, as investment instruments. (One of my classmates purchased 3 flats in the township, for 4 member family). Newer township are being constructed in the vicinity at a rapid rate.

There's a whole lot of people (migrating for jobs) who are looking at flats, on rent, because they do not want to invest in property. Some other, who are actually looking to buy, either to stay, or as an investment (still- I fail to understand why?). Let's skip rent segment. Focus on the buyers. The builders have only marginally increased the prices. So, when my friend was trying to sell the flat, expecting 10% YoY appreciation, the buyer sees a brand new flat for a slightly higher price. They would be interested to buy the old flat, only if they are getting a bargain. The seller doesn't agree to this, obviously.

Just because a lot of people are not able to sell (cash out) invested property at profits does not mean a slowdown. Newer flats are being build and being purchased. People are renting out flats. That's not slow down. The very fact, you can buy new flats for a marginally higher price, is good; inflation is under control, builders are not artificially inflating prices, lobbying. Prices are determined by market forces- supply/demand, not manipulated.

Out of curiosity, I asked him about real estate industry; if there is a gap in demand, why are people buying? How long will builders keep constructing. The answer was obvious. Till people keep buying. The current market scenario promotes buying for staying. Not so much conducive for investment (hoarding); many businessmen, NRI's etc used to do; to stash surplus/unaccounted cash, used as an instrument to convert black money. Now that's becoming difficult. Due to the drop in resale value, and regulation changes.

He also added, they are largely funding affordable housing schemes (under Pradhan Mantri Aavas Yojna). Numerous builders are now constructing houses in the affordable segment where the demand and consumption there is high. But the prices are controlled by government regulations, slabs and ceiling, builders have to adhere to, to avail benefits/incentives. For end users (poor man), the regulation change eases buying process/owning house. Now, the entire subsidy is calculated using Net Present Value method, released at the time of purchase; easing burden of heavy initial investment, which people in lower segment struggled with. This also brings down the monthly instalment. The revised EMI, now is quite close to what these folks pay in rented/shared accommodation. By paying slightly more, without the burden of high initial investment, the poor are now able to afford own house. And there are thousands of such houses being constructed and purchased, by the needy, who need a roof over their head. Houses being owned by people who otherwise would have never dreamt of it. I see that as progress. Growth. "Sabka Vikas".

Jain Hind

Note: the market situation described here is of Ahmedabad. The scenarios may be different across different cities.

Government Employees plight: How the PM is aggravating it.

One of my friends is married into a family where numerous of her in-laws/their relatives are in government jobs. I was paying a social visit to their place, on a festival. Few representatives from the in-laws side were in an ongoing discussion about the plight of government employees. The focus was on how (Current) government is ill-treating employees. There was a strong anti Modi flavour; the PM being cursed for making their life hell, working on holidays. Government jobs are no longer what it used to be… all because of Modi.

On a later day, I was talking to this friend, to get some perspective. I too have been a government employee, over a decade and a half. So I was curious about their plight.

As the discussion progressed, I learnt about these folks & their dissent. Most have been in government jobs for years. Their major dissent was about working conditions and work pressure. Some of them had to skip a family function recently, for compiling reports for CM and PM office. That sounds inhumane. At least on the surface. As I drilled deeper, a lot more things surfaced. The reports routine monthly reports. In the earlier days, they would have sent it whenever they wished to. Now they have deadlines.

Their performance is being monitored. Their output, efficiency, cases handled, …  a lot of things are being tracked. Complaints handled by employees and grievances are being tracked. Most government offices have been fitted with biometrics. Work timings are being logged. Absenteeism, or frequent late logging in , or not enough hours; they are asked for explanations, maybe conversion to leaves/salary cuts, depending on the frequency. For someone in the corporate/private sector, this is business as usual. However, these folks, they never went to office on time, left whenever they wished. My friend tells me, one of the ladies would send kids to school, husband to office, finish up supervising maids; then leave for the office, leisurely. She would be back home in the afternoon, before the children come back home. Most of the times, not go back to work; being busy with kids homework, and household chores.

Now, these people have to report to work on time every day. They are required to work; work efficiently;  as their performance is monitored,  they have deadlines, targets.

I too have been a government employee. I have actually been in hell. When I joined Army, I signed up for it. Likewise, these folks, when they joined the government job, they signed up to perform and discharge certain duties. The problem is, for past  decades, they weren't held accountable. Now, you have a PM who works round the clock. He doesn't expect you to do the same. The basic expectation is, do what you are paid for. These folks have gotten so used to sitting on their butts, ordering everyone. Now, doing what they are supposed to do, feels like an atrocity.

My ideas are clear. Being from the army, dedication to duty is high. Even otherwise, I expect people to do their job. I would rather have people in government offices to do their jobs (Or are made to do it), working for the country.

What is your choice? What do you wish for? Whatever it is, the choice needs to be made soon. I hope you choose the country.

"Jumla Politics", So they say.

"Modi is a Jumla PM", he said. Anyone other than Modi in 2019.

One of my relatives, whom I met recently, said, and concluded the topic started, just 2 mins back.

He said it's possible to talk to a bhakt or even andh bhakt. But somebody who doesn't want understand, what to talk.

Anyway, he was in town for just a few hours. It was an occasion that called for a celebration, the reason he was in town. He initiated Politics, as topic, abruptly, and shut it equally abruptly. I still am unable to comprehend why.

Some other things he mentioned were- He had big expectations, no work, black money, jumlas.

Firstly, I still don't understand Jumla Politics. No one has been able to explain it satisfactorily. Because Modi does not name schemes after Nehru/Indira/Rajeev and so on; and gives innovative names such as Udaan, Jan Dhan, Suraksha, Ujjwal, Ayushman Bharat. I have seen things changing for the better under numerous such schemes. So what's Jumla?

Anyways, that’s a different topic.  Coming back to this gentleman.

A brief background. Not a close relative I speak to frequently or confide in, & vice-versa. So I don't know much. This gentleman is from a tier-2 city (Upgraded from tier 3 in 2014); in construction business over 20 years, loves to travel; domestic and international (about 2 international family trips/year). As I write, he is somewhere in Europe, holidaying.

He was cribbing about not having any work. He and his firm were not getting projects from the government/ municipal authorities; his files/proposals not getting approved. I have no idea what he has done or how. Being in construction and architecture for 20 years, you can't just be dependent on authorities to give you work. I do not know why he is not getting projects. But why should he be solely dependent on that. 20 years in business. You should have many Projects, Clients, market Reputation, Good will.

Agreed, He may not be getting projects. What's Modi's fault, and what Jumla?

He talked about rising black money in last 4 years, 50% of rise in worlds black money in India. The source; you guessed it; whatsapp forward…. He flashed an image on his screen, something in Hindi, looked like a short article, some text and picture (not sure whose). He vouched on the newspaper article. Irony, he didn't know the name of the newspaper, the city, date, edition, … in short- Nothing.

I wonder is that the reason he wrapped up the discussion in 2 mins.

Obviously, since I had no inputs, I couldn't research if it's actual newspaper, photoshop, or some fake news.

Like I said, he travels. I learnt from a cousin, that they all had gone to a religious place recently. Because of Udaan scheme by Modi, they flew directly from tier-2 city, did the pilgrimage, comfortably. Else they'd have taken a bus, train or own car; at least 12 hours plus- one way. You want to turn a blind eye to schemes, call it jumlas, call others bhakts and andh bhakts. It's democracy. Suit yourself.

They also have a nice getaway home, on a hill station. They had a caretaker there, for many many years. Recently, he quit the job. This gentlemen wasn't particularly happy about it too. I learnt through another cousin., the caretaker had been in the job for over a decade. He quit the job, took loan and started a hotel/eating joint on the highway. There's no Modi scheme or Jumla. He quit the job, and become independent is good. I see it as progress, not job loss. From this gentleman's point of view, the caretaker must continue serving them because they looked after him initially? That sure looks like dynasty. I guess is that’s where his political inclination is - Dynasty.

This gentleman I talked about is one of the many. People who enjoy the benefits of progress and growth, enjoy the benefits of the schemes, but don't want to see or acknowledge it. And want to call other andh bhakts. They want to prosper, but others must continue doing what they  have been.

Its democracy. Suit yourself.

Jai Ho.