By M H Ahssan
When reporting on multifamily finance in the 2000s, I came across a common refrain from desperate mortgage bankers again and again: “There is a surplus of money chasing a limited amount of product.” This intensely competitive environment—for lenders, that is—went on for years, seemingly never-ending. But the capital “surplus” environment did come to an end.
What Sam Chandan, chief economist of Reis, said recently at the company’s third quarter briefing throws light on the situation. He cited an essay about banking crises. Such a crisis happened, famously, in Japan in the 1980s. The cycle begins thus: There is some sort of initial loosening of credit in the economy. The subsequent great abundance of credit brings about a real estate bubble. Eventually, that bubble bursts and asset prices deflate. The banks' asset values also fall, they cannot lend as much, and a recession occurs.
Indeed, there was much abundance of capital in the multifamily sector during that period, and it was driven in large part by CMBS financing. The point is that multifamily asset values may also have been pushed up by the great availability of credit. There was much talk then of cap rates being squeezed down to ridiculous levels by highly leveraged buyers. The question is, was there also a bubble in multifamily asset prices, and if so, what was the magnitude?
This issue’s report “Apartment Property Prices Have Fallen by 17% Since Last Year” suggests that the numbers at least do not show severe distress yet. Prices per unit/square foot for apartments in the third quarter of 2008 was 17 percent below its peak in the third quarter of 2007, according to Reis. Chandan says that transaction cap rates for apartments in the third quarter have increased by just under 40 basis points, to 5.7 percent. Apartment cap rates had hit a low of 5.4 percent, in the third quarter of 2007. That is the latest report.
Wednesday, December 24, 2008
EDITOR'S NOTE: Real Estate Bubbles
By M H Ahssan
When reporting on multifamily finance in the 2000s, I came across a common refrain from desperate mortgage bankers again and again: “There is a surplus of money chasing a limited amount of product.” This intensely competitive environment—for lenders, that is—went on for years, seemingly never-ending. But the capital “surplus” environment did come to an end.
What Sam Chandan, chief economist of Reis, said recently at the company’s third quarter briefing throws light on the situation. He cited an essay about banking crises. Such a crisis happened, famously, in Japan in the 1980s. The cycle begins thus: There is some sort of initial loosening of credit in the economy. The subsequent great abundance of credit brings about a real estate bubble. Eventually, that bubble bursts and asset prices deflate. The banks' asset values also fall, they cannot lend as much, and a recession occurs.
Indeed, there was much abundance of capital in the multifamily sector during that period, and it was driven in large part by CMBS financing. The point is that multifamily asset values may also have been pushed up by the great availability of credit. There was much talk then of cap rates being squeezed down to ridiculous levels by highly leveraged buyers. The question is, was there also a bubble in multifamily asset prices, and if so, what was the magnitude?
This issue’s report “Apartment Property Prices Have Fallen by 17% Since Last Year” suggests that the numbers at least do not show severe distress yet. Prices per unit/square foot for apartments in the third quarter of 2008 was 17 percent below its peak in the third quarter of 2007, according to Reis. Chandan says that transaction cap rates for apartments in the third quarter have increased by just under 40 basis points, to 5.7 percent. Apartment cap rates had hit a low of 5.4 percent, in the third quarter of 2007. That is the latest report.
When reporting on multifamily finance in the 2000s, I came across a common refrain from desperate mortgage bankers again and again: “There is a surplus of money chasing a limited amount of product.” This intensely competitive environment—for lenders, that is—went on for years, seemingly never-ending. But the capital “surplus” environment did come to an end.
What Sam Chandan, chief economist of Reis, said recently at the company’s third quarter briefing throws light on the situation. He cited an essay about banking crises. Such a crisis happened, famously, in Japan in the 1980s. The cycle begins thus: There is some sort of initial loosening of credit in the economy. The subsequent great abundance of credit brings about a real estate bubble. Eventually, that bubble bursts and asset prices deflate. The banks' asset values also fall, they cannot lend as much, and a recession occurs.
Indeed, there was much abundance of capital in the multifamily sector during that period, and it was driven in large part by CMBS financing. The point is that multifamily asset values may also have been pushed up by the great availability of credit. There was much talk then of cap rates being squeezed down to ridiculous levels by highly leveraged buyers. The question is, was there also a bubble in multifamily asset prices, and if so, what was the magnitude?
This issue’s report “Apartment Property Prices Have Fallen by 17% Since Last Year” suggests that the numbers at least do not show severe distress yet. Prices per unit/square foot for apartments in the third quarter of 2008 was 17 percent below its peak in the third quarter of 2007, according to Reis. Chandan says that transaction cap rates for apartments in the third quarter have increased by just under 40 basis points, to 5.7 percent. Apartment cap rates had hit a low of 5.4 percent, in the third quarter of 2007. That is the latest report.
India's Dangerous Divide
By M H Ahssan
History and political opportunism have left most Indian Muslims poor and a few angry. In the wake of the Mumbai attacks, tensions have mounted and loyalties are being tested. So, what is the path forward for India and its Muslim minority?
In October 1947, a bare six weeks after India and Pakistan achieved their independence from British rule, the Indian prime minister, Jawaharlal Nehru, wrote a remarkable letter to the chief ministers of the different provinces. Here Nehru pointed out that despite the creation of Pakistan as a Muslim homeland, there remained, within India, “a Muslim minority who are so large in numbers that they cannot, even if they want, go anywhere else. That is a basic fact about which there can be no argument. Whatever the provocation from Pakistan and whatever the indignities and horrors inflicted on non-Muslims there, we have got to deal with this minority in a civilized manner. We must give them security and the rights of citizens in a democratic State.”
In the wake of the recent incidents in Mumbai, these words make for salutary reading. It seems quite certain that the terrorists who attacked the financial capital were trained in Pakistan. The outrages have sparked a wave of indignation among the middle class. Demonstrations have been held in the major cities, calling for revenge, in particular for strikes against training camps in Pakistan. The models held up here are Israel and the US; if they can “take out” individual terrorists and invade whole countries, ask some Indians, why can’t we?
Other commentators have called for a more measured response. They note that the civilian government in Islamabad is not in control of the army, the army is not in control of the notorious Inter Services Intelligence (ISI) agency, the ISI is not in control of the extremists it has funded. They point out that Pakistan has itself been a victim of massive terror attacks. India, they say, should make its disapproval manifest in other ways, such as cancelling sporting tours and recalling diplomats. At the same time, the US should be asked to demand of Pakistan, its erratically reliable ally, that it act more decisively against the terrorists who operate from its soil.
One short-term consequence of the terror in Mumbai is a sharpening of hostility between India and Pakistan. And, as is always the case when relations between these two countries deteriorate, right-wing Hindus have begun to scapegoat those Muslims who live in India. They have begun to speculate as to whether the attackers were aided by their Indian co-religionists, and to demand oaths of loyalty from Muslim clerics and political leaders.
There are 150 million Muslims in India. They have gained particular prominence in one area: Bollywood. Several top directors and composers are Muslim, as well as some of India’s biggest movie stars. One, Aamir Khan, was a star and producer of Lagaan, a song-and-dance epic about a game of cricket that was nominated for an Academy Award in 2002. But Muslims are massively under-represented in the professions—few of India’s top lawyers, judges, doctors and professors are Muslim. Many Indian Muslims are poor, and a few are angry.
Pakistan was carved out of the eastern and western portions of British India. To this new nation flocked Muslims from the Indian heartland. Leading the migration were the lawyers, teachers and entrepreneurs who hoped that in a state reserved for people of their faith, they would be free of competition from the more populous (and better educated) Hindus.
Pakistan was created to give a sense of security to the Muslims of the subcontinent. In fact, it only made them more insecure. Nehru’s letter of October 1947 was written in response to a surge of Hindu militancy, which called for retribution against the millions of Muslims who stayed behind in India. Three months later, Mahatma Gandhi, who was both Father of the Nation as well as Nehru’s mentor, was shot dead by a Hindu fanatic. That act shamed the religious right, which retreated into the shadows. There it stayed until the 1970s when, through a combination of factors elaborated upon below, it came to occupy centre stage in Indian politics.
If the first tragedy of the Indian Muslim was Partition, the second has been the patronage by India’s most influential political party, the Congress, of Muslims who are religious and reactionary rather than liberal and secular. Nehru himself was careful to keep his distance from sectarian leaders, whether Hindu or Muslim. However, under the leadership of his daughter Indira Gandhi, the Congress party came to favour the conservative sections of the Muslim community. Before elections, Congress bosses asked heads of mosques to issue fatwas to their flock to vote for the party; after elections, the party increased government grants to religious schools and colleges.
In a defining case in 1985, the Supreme Court called for the enactment of a common civil code, which would abolish polygamy and give all women equal rights regardless of faith—the right to their husband’s or father’s property, for example, or the right to proper alimony once divorced. The prime minister at the time was Rajiv Gandhi. Acting on the advice of the Muslim clergy, he used his party’s majority in Parliament to nullify the court’s verdict. After Rajiv’s widow, Sonia Gandhi, became Congress president in 1998, the party has continued to fund Muslim religious institutions rather than encourage them to engage with the modern world.
Partition and Congress patronage between them dealt a body blow to Muslim liberalism. The first deprived the community of a professional vanguard; the second consolidated the claims to leadership of priests and theologians. In an essay published in the late 1960s, the Marathi writer Hamid Dalwai (a resident of Mumbai) wrote of his community that “the Muslims today are culturally backward”. To be brought “on a level with the Hindus”, argued Dalwai, the Muslims needed an “avant garde liberal elite to lead them”. Otherwise, the consequences were dire for both communities. For “unless a Muslim liberal intellectual class emerges, Indian Muslims will continue to cling to obscurantist medievalism, communalism, and will eventually perish both socially and culturally. A worse possibility is that of Hindu revivalism destroying even Hindu liberalism, for the latter can succeed only with the support of Muslim liberals who would modernize Muslims and try to impress upon these secular democratic ideals”.
The possibility that Dalwai feared has come to pass. From the 1980s, the dominance of the Congress party has been challenged by the Bharatiya Janata Party. The BJP seeks to make India a “Hindu” nation by basing the nation’s political culture on the religious traditions (and prejudices) of the dominant community. Charging the Congress with “minority appeasement”, with corruption and with dynastic rule, the BJP came to power in many states, and eventually in New Delhi. However, its commitment to the secular ideals of the Constitution is somewhat uncertain. For the party’s members and fellow travellers, only Indians of the Hindu faith are to be considered full or first-class citizens. Of the others, the Parsis are to be tolerated, the Christians distrusted, and the Muslims detested. One form this detestation takes is verbal—the circulation of innuendoes based on lies and half-truths (as in the claim that Muslims outbreed Hindus and will soon outnumber them). Another form is physical—thus, the hand of the BJP lies behind some of the worst communal riots in independent India—for example, Bhagalpur in 1989, Mumbai in 1992, and Gujarat in 2002; in all cases, an overwhelming majority of the victims were Muslims.
The rise of the BJP owes something to the failures of the Congress, and something also to the example of Pakistan. As that society has come increasingly under the influence of Islamic fundamentalists, there is a more ready audience, within India, for the rants and raves of Hindu extremists. Likewise, the expulsion, by jihadis trained in Pakistan, of some 200,000 Hindus from the valley of Kashmir in a single year—1989-1990—has been used to justify attacks on Muslims in other parts of India. But to explain is not to excuse—for the BJP has stoked feelings and passions that should have no place in a civilized society.
In its activities, the BJP is helped by a series of allied groups. Known also by their abbreviations—RSS, VHP, etc.— these were at the forefront of the religious violence of the 1980s and beyond. Roaming the streets of small- (and big-) town India, they addressed their Muslim prey with the slogan “Pakistan or Kabristan!” (Flee to Pakistan, or we will send you straight to your graves). Meanwhile, their ideologues in the press—some with degrees from the best British universities—make the argument that Muslims are inherently violent, or unpatriotic, or both.
In fact, the ordinary Muslim is much like any other ordinary Indian—honest, hard-working and just about scraping a living. A day after I heard a BJP leader denounce the Congress for making the Muslims into a “pampered and privileged minority”, I found myself making a turn into the busiest road in my home town, Bangalore. Just ahead of me was a Muslim gentleman who was attempting to do likewise. Except that he was making the turn not behind the wheel of a powerful Korean-made car but with a hand-cart on which were piled some bananas.
That the fruit seller was Muslim was made clear by his headgear, a white cap with perforations. He was an elderly man, about 60, short and slightly built. The turn was made hard by his age and infirmity, and harder by the fact that the road sloped steeply downward, and by the further fact that making the turn with him were very many motor vehicles. Had he gone too slow, he would have been bunched in against the cars; had he gone too fast, he might have lost control altogether. Placed right behind the fruit seller, I saw him visibly relax his shoulders as the turn was successfully made, with cart and bananas both intact.
One should not read too much into a single image, but it does seem to be that that perilous turn was symptomatic of an entire life—a life lived at the edge of subsistence, a life taken one day at a time and from one turn to the next. In this respect, the fruit seller was quite representative of Indian Muslims in general. Far from being pampered or privileged, most Muslims are poor farmers, labourers, artisans and traders.
The failure to punish the perpetrators of successive pogroms has thrown some young men into the arms of fundamentalist groups. But the number is not, as yet, very large. And it is counterbalanced by other trends, for instance, the growing hunger for modern education among the youth. The desire to learn English is ubiquitous, as is the fascination for computers. Even in the disgruntled valley of Kashmir, a press survey found that the iconic founder of India’s most respected software company, Infosys Technologies, a Hindu named N.R. Narayana Murthy, was a greater hero among Muslim students than the founder of Al Qaeda.
Since the reasons for the poverty (and the anger) are so complex, a successful compact between Indian Muslims and modernity will require patient and many-sided work. It would help if the Pakistan centre was to reassert itself against the extremism it has itself, in past times, encouraged. It would help some more, if, pace Hamid Dalwai, there was a more forthright assertion of Muslim liberalism within India. But perhaps the greatest burden falls on India’s major political parties. The Congress must actively promote the modernization of Muslim society. And the BJP must recognize, in word and in deed, that the 150 million Muslims in India have to be dealt with in a civilized manner, and given the security and the rights due, them as equal citizens in a democratic and non-denominational state.
Writing in 1957, the historian Wilfred Cantwell Smith pointed out that Indian Muslims were unique in that they shared their citizenship “with an immense number of people. They constitute the only sizable body of Muslims in the world of which this is, or ever has been true.” True no longer, for in many countries of western Europe and even in the US, the Muslims are now a sizeable but not dominant component of the national population. This makes this particular case even more special.
For if, notwithstanding the poisonous residues of history and the competitive chauvinism of politicians, Indians of different faiths were to live in peace, dignity and (even a moderate) prosperity, they might set an example for the world.
History and political opportunism have left most Indian Muslims poor and a few angry. In the wake of the Mumbai attacks, tensions have mounted and loyalties are being tested. So, what is the path forward for India and its Muslim minority?
In October 1947, a bare six weeks after India and Pakistan achieved their independence from British rule, the Indian prime minister, Jawaharlal Nehru, wrote a remarkable letter to the chief ministers of the different provinces. Here Nehru pointed out that despite the creation of Pakistan as a Muslim homeland, there remained, within India, “a Muslim minority who are so large in numbers that they cannot, even if they want, go anywhere else. That is a basic fact about which there can be no argument. Whatever the provocation from Pakistan and whatever the indignities and horrors inflicted on non-Muslims there, we have got to deal with this minority in a civilized manner. We must give them security and the rights of citizens in a democratic State.”
In the wake of the recent incidents in Mumbai, these words make for salutary reading. It seems quite certain that the terrorists who attacked the financial capital were trained in Pakistan. The outrages have sparked a wave of indignation among the middle class. Demonstrations have been held in the major cities, calling for revenge, in particular for strikes against training camps in Pakistan. The models held up here are Israel and the US; if they can “take out” individual terrorists and invade whole countries, ask some Indians, why can’t we?
Other commentators have called for a more measured response. They note that the civilian government in Islamabad is not in control of the army, the army is not in control of the notorious Inter Services Intelligence (ISI) agency, the ISI is not in control of the extremists it has funded. They point out that Pakistan has itself been a victim of massive terror attacks. India, they say, should make its disapproval manifest in other ways, such as cancelling sporting tours and recalling diplomats. At the same time, the US should be asked to demand of Pakistan, its erratically reliable ally, that it act more decisively against the terrorists who operate from its soil.
One short-term consequence of the terror in Mumbai is a sharpening of hostility between India and Pakistan. And, as is always the case when relations between these two countries deteriorate, right-wing Hindus have begun to scapegoat those Muslims who live in India. They have begun to speculate as to whether the attackers were aided by their Indian co-religionists, and to demand oaths of loyalty from Muslim clerics and political leaders.
There are 150 million Muslims in India. They have gained particular prominence in one area: Bollywood. Several top directors and composers are Muslim, as well as some of India’s biggest movie stars. One, Aamir Khan, was a star and producer of Lagaan, a song-and-dance epic about a game of cricket that was nominated for an Academy Award in 2002. But Muslims are massively under-represented in the professions—few of India’s top lawyers, judges, doctors and professors are Muslim. Many Indian Muslims are poor, and a few are angry.
Pakistan was carved out of the eastern and western portions of British India. To this new nation flocked Muslims from the Indian heartland. Leading the migration were the lawyers, teachers and entrepreneurs who hoped that in a state reserved for people of their faith, they would be free of competition from the more populous (and better educated) Hindus.
Pakistan was created to give a sense of security to the Muslims of the subcontinent. In fact, it only made them more insecure. Nehru’s letter of October 1947 was written in response to a surge of Hindu militancy, which called for retribution against the millions of Muslims who stayed behind in India. Three months later, Mahatma Gandhi, who was both Father of the Nation as well as Nehru’s mentor, was shot dead by a Hindu fanatic. That act shamed the religious right, which retreated into the shadows. There it stayed until the 1970s when, through a combination of factors elaborated upon below, it came to occupy centre stage in Indian politics.
If the first tragedy of the Indian Muslim was Partition, the second has been the patronage by India’s most influential political party, the Congress, of Muslims who are religious and reactionary rather than liberal and secular. Nehru himself was careful to keep his distance from sectarian leaders, whether Hindu or Muslim. However, under the leadership of his daughter Indira Gandhi, the Congress party came to favour the conservative sections of the Muslim community. Before elections, Congress bosses asked heads of mosques to issue fatwas to their flock to vote for the party; after elections, the party increased government grants to religious schools and colleges.
In a defining case in 1985, the Supreme Court called for the enactment of a common civil code, which would abolish polygamy and give all women equal rights regardless of faith—the right to their husband’s or father’s property, for example, or the right to proper alimony once divorced. The prime minister at the time was Rajiv Gandhi. Acting on the advice of the Muslim clergy, he used his party’s majority in Parliament to nullify the court’s verdict. After Rajiv’s widow, Sonia Gandhi, became Congress president in 1998, the party has continued to fund Muslim religious institutions rather than encourage them to engage with the modern world.
Partition and Congress patronage between them dealt a body blow to Muslim liberalism. The first deprived the community of a professional vanguard; the second consolidated the claims to leadership of priests and theologians. In an essay published in the late 1960s, the Marathi writer Hamid Dalwai (a resident of Mumbai) wrote of his community that “the Muslims today are culturally backward”. To be brought “on a level with the Hindus”, argued Dalwai, the Muslims needed an “avant garde liberal elite to lead them”. Otherwise, the consequences were dire for both communities. For “unless a Muslim liberal intellectual class emerges, Indian Muslims will continue to cling to obscurantist medievalism, communalism, and will eventually perish both socially and culturally. A worse possibility is that of Hindu revivalism destroying even Hindu liberalism, for the latter can succeed only with the support of Muslim liberals who would modernize Muslims and try to impress upon these secular democratic ideals”.
The possibility that Dalwai feared has come to pass. From the 1980s, the dominance of the Congress party has been challenged by the Bharatiya Janata Party. The BJP seeks to make India a “Hindu” nation by basing the nation’s political culture on the religious traditions (and prejudices) of the dominant community. Charging the Congress with “minority appeasement”, with corruption and with dynastic rule, the BJP came to power in many states, and eventually in New Delhi. However, its commitment to the secular ideals of the Constitution is somewhat uncertain. For the party’s members and fellow travellers, only Indians of the Hindu faith are to be considered full or first-class citizens. Of the others, the Parsis are to be tolerated, the Christians distrusted, and the Muslims detested. One form this detestation takes is verbal—the circulation of innuendoes based on lies and half-truths (as in the claim that Muslims outbreed Hindus and will soon outnumber them). Another form is physical—thus, the hand of the BJP lies behind some of the worst communal riots in independent India—for example, Bhagalpur in 1989, Mumbai in 1992, and Gujarat in 2002; in all cases, an overwhelming majority of the victims were Muslims.
The rise of the BJP owes something to the failures of the Congress, and something also to the example of Pakistan. As that society has come increasingly under the influence of Islamic fundamentalists, there is a more ready audience, within India, for the rants and raves of Hindu extremists. Likewise, the expulsion, by jihadis trained in Pakistan, of some 200,000 Hindus from the valley of Kashmir in a single year—1989-1990—has been used to justify attacks on Muslims in other parts of India. But to explain is not to excuse—for the BJP has stoked feelings and passions that should have no place in a civilized society.
In its activities, the BJP is helped by a series of allied groups. Known also by their abbreviations—RSS, VHP, etc.— these were at the forefront of the religious violence of the 1980s and beyond. Roaming the streets of small- (and big-) town India, they addressed their Muslim prey with the slogan “Pakistan or Kabristan!” (Flee to Pakistan, or we will send you straight to your graves). Meanwhile, their ideologues in the press—some with degrees from the best British universities—make the argument that Muslims are inherently violent, or unpatriotic, or both.
In fact, the ordinary Muslim is much like any other ordinary Indian—honest, hard-working and just about scraping a living. A day after I heard a BJP leader denounce the Congress for making the Muslims into a “pampered and privileged minority”, I found myself making a turn into the busiest road in my home town, Bangalore. Just ahead of me was a Muslim gentleman who was attempting to do likewise. Except that he was making the turn not behind the wheel of a powerful Korean-made car but with a hand-cart on which were piled some bananas.
That the fruit seller was Muslim was made clear by his headgear, a white cap with perforations. He was an elderly man, about 60, short and slightly built. The turn was made hard by his age and infirmity, and harder by the fact that the road sloped steeply downward, and by the further fact that making the turn with him were very many motor vehicles. Had he gone too slow, he would have been bunched in against the cars; had he gone too fast, he might have lost control altogether. Placed right behind the fruit seller, I saw him visibly relax his shoulders as the turn was successfully made, with cart and bananas both intact.
One should not read too much into a single image, but it does seem to be that that perilous turn was symptomatic of an entire life—a life lived at the edge of subsistence, a life taken one day at a time and from one turn to the next. In this respect, the fruit seller was quite representative of Indian Muslims in general. Far from being pampered or privileged, most Muslims are poor farmers, labourers, artisans and traders.
The failure to punish the perpetrators of successive pogroms has thrown some young men into the arms of fundamentalist groups. But the number is not, as yet, very large. And it is counterbalanced by other trends, for instance, the growing hunger for modern education among the youth. The desire to learn English is ubiquitous, as is the fascination for computers. Even in the disgruntled valley of Kashmir, a press survey found that the iconic founder of India’s most respected software company, Infosys Technologies, a Hindu named N.R. Narayana Murthy, was a greater hero among Muslim students than the founder of Al Qaeda.
Since the reasons for the poverty (and the anger) are so complex, a successful compact between Indian Muslims and modernity will require patient and many-sided work. It would help if the Pakistan centre was to reassert itself against the extremism it has itself, in past times, encouraged. It would help some more, if, pace Hamid Dalwai, there was a more forthright assertion of Muslim liberalism within India. But perhaps the greatest burden falls on India’s major political parties. The Congress must actively promote the modernization of Muslim society. And the BJP must recognize, in word and in deed, that the 150 million Muslims in India have to be dealt with in a civilized manner, and given the security and the rights due, them as equal citizens in a democratic and non-denominational state.
Writing in 1957, the historian Wilfred Cantwell Smith pointed out that Indian Muslims were unique in that they shared their citizenship “with an immense number of people. They constitute the only sizable body of Muslims in the world of which this is, or ever has been true.” True no longer, for in many countries of western Europe and even in the US, the Muslims are now a sizeable but not dominant component of the national population. This makes this particular case even more special.
For if, notwithstanding the poisonous residues of history and the competitive chauvinism of politicians, Indians of different faiths were to live in peace, dignity and (even a moderate) prosperity, they might set an example for the world.
Will Recession Change Online Advertising?
By Smrithi Khanna
Everyone’s searching for accountability and measurability across media to ensure their ad expenditure is giving results
Will the death knell sound for digital advertising as we know it? It’s ironic that even as digital is touted as a saviour in these stretched times, banner ads are increasingly coming under the scanner.
Some digital media specialists say the old formats of online display ads are too bland and easy to ignore, and will be expunged during economic crisis giving way to more rich media—interactive multimedia—and larger-format ads.
Everyone’s searching for accountability and measurability across media to ensure their ad expenditure is giving results. Digital advertising solutions provider Eyeblaster Inc.’s India and GCC (six Gulf Cooperation Council countries) managing director Raghu Seelamsetty says there is already a move towards more rich media advertising, and as bandwidth improves, we will see an increase in video ads. His reasoning: Rich media is more effective than standard banners because of its inherent ability to measure interactions—much more than just a click-through ad. You can measure every interaction and the real time of engagement with the rich media ad. For example, in video ads, you can know exactly how many people saw the video and which part of it, since people do not step out to the kitchen in the middle of an Internet video ad (unlike television ads).
Measurability combined with the deep analytics which rich media provides will act as a catalyst for advertisers to move online.
Rich media may also address the issue that site publishers and brand advertising may actually be working at cross purposes. Observes Seelamsetty: “The most effective direct response campaigns tend to come from media occasions in which consumers are less engaged. This is because they are more willing to take time out to respond when they are less involved in the media interaction.”
In the context of online, publishers are shifting their focus to providing engaging content to keep the viewer on the page for a longer time rather than generating as many impressions as possible. People are far less likely to click on a banner ad when they are immersed in the content of a site than when they are merely browsing through a site to pass the time. Therefore, the ability rich media provides to interact with the ad without leaving the page is crucial.
Some digital specialists at ad agencies, however, underline that most of the poor banner ad outcomes are a result of bad planning. Prasanth Mohanachandran, executive director, digital services, OgilvyOne Worldwide, India, points out how simple reach-frequency metrics and creative rotation principles are not employed for most campaigns. His point: The banner is not dead. Bad creative is.
This is true of every medium, especially in times such as these when advertising is largely driven by return on investment. The simple banner still provides the highest opportunity to see among all variants and, with a good call-to-action it still provides excellent results on a cost-per-click or a cost-per-engagement basis in India.
Improved infrastructure and technology allow advertisers today, to use richer formats in those conventional flat banner spaces—but rich media too, delivers only with good creative backing, says Mohanachandran. He predicts newer formats such as interactive video coming into play sooner and contextual advertising witnessing exponential growth next year.
If banner ads don’t change format, advertisers could move some of their display ad budgets to online ad networks and direct marketing. Says Roy de Souza, founder and chief executive of global ad serving network Zedo Inc.: “Some advertisers who are watching their budgets are starting to really ask if brand advertising on the Internet is working. Brand advertisers are asking this, not direct marketers. And it will definitely affect India, too.”
He points out how direct marketers such as Makemytrip.com can track exactly how many ads they have to buy to sell a ticket. They can use the ad server to track how many people saw the ad, how many people clicked on the ad and went to the website and booked a ticket on it.
In contrast, it is more difficult to track the success of brand advertising. An ad server such as Zedo has no way of recording whether a person who walked into a shop chose Samsung because he saw a lot of Samsung ads on the Internet.
So, what’s next for display? Roy predicts bigger ad formats gaining ground for brand advertisers. For example, ads on top of the page that cover up what the reader is reading until the user closes the ad. These ads are big and visible and brand advertisers like them.
Also, formats which are visible for longer will gain ground. Usually, as a user scrolls down the page the ad will be left at the top and the user will no longer see it. By making the ad scroll down the page as the user scrolls down the page, the ad will be visible longer.
Everyone’s searching for accountability and measurability across media to ensure their ad expenditure is giving results
Will the death knell sound for digital advertising as we know it? It’s ironic that even as digital is touted as a saviour in these stretched times, banner ads are increasingly coming under the scanner.
Some digital media specialists say the old formats of online display ads are too bland and easy to ignore, and will be expunged during economic crisis giving way to more rich media—interactive multimedia—and larger-format ads.
Everyone’s searching for accountability and measurability across media to ensure their ad expenditure is giving results. Digital advertising solutions provider Eyeblaster Inc.’s India and GCC (six Gulf Cooperation Council countries) managing director Raghu Seelamsetty says there is already a move towards more rich media advertising, and as bandwidth improves, we will see an increase in video ads. His reasoning: Rich media is more effective than standard banners because of its inherent ability to measure interactions—much more than just a click-through ad. You can measure every interaction and the real time of engagement with the rich media ad. For example, in video ads, you can know exactly how many people saw the video and which part of it, since people do not step out to the kitchen in the middle of an Internet video ad (unlike television ads).
Measurability combined with the deep analytics which rich media provides will act as a catalyst for advertisers to move online.
Rich media may also address the issue that site publishers and brand advertising may actually be working at cross purposes. Observes Seelamsetty: “The most effective direct response campaigns tend to come from media occasions in which consumers are less engaged. This is because they are more willing to take time out to respond when they are less involved in the media interaction.”
In the context of online, publishers are shifting their focus to providing engaging content to keep the viewer on the page for a longer time rather than generating as many impressions as possible. People are far less likely to click on a banner ad when they are immersed in the content of a site than when they are merely browsing through a site to pass the time. Therefore, the ability rich media provides to interact with the ad without leaving the page is crucial.
Some digital specialists at ad agencies, however, underline that most of the poor banner ad outcomes are a result of bad planning. Prasanth Mohanachandran, executive director, digital services, OgilvyOne Worldwide, India, points out how simple reach-frequency metrics and creative rotation principles are not employed for most campaigns. His point: The banner is not dead. Bad creative is.
This is true of every medium, especially in times such as these when advertising is largely driven by return on investment. The simple banner still provides the highest opportunity to see among all variants and, with a good call-to-action it still provides excellent results on a cost-per-click or a cost-per-engagement basis in India.
Improved infrastructure and technology allow advertisers today, to use richer formats in those conventional flat banner spaces—but rich media too, delivers only with good creative backing, says Mohanachandran. He predicts newer formats such as interactive video coming into play sooner and contextual advertising witnessing exponential growth next year.
If banner ads don’t change format, advertisers could move some of their display ad budgets to online ad networks and direct marketing. Says Roy de Souza, founder and chief executive of global ad serving network Zedo Inc.: “Some advertisers who are watching their budgets are starting to really ask if brand advertising on the Internet is working. Brand advertisers are asking this, not direct marketers. And it will definitely affect India, too.”
He points out how direct marketers such as Makemytrip.com can track exactly how many ads they have to buy to sell a ticket. They can use the ad server to track how many people saw the ad, how many people clicked on the ad and went to the website and booked a ticket on it.
In contrast, it is more difficult to track the success of brand advertising. An ad server such as Zedo has no way of recording whether a person who walked into a shop chose Samsung because he saw a lot of Samsung ads on the Internet.
So, what’s next for display? Roy predicts bigger ad formats gaining ground for brand advertisers. For example, ads on top of the page that cover up what the reader is reading until the user closes the ad. These ads are big and visible and brand advertisers like them.
Also, formats which are visible for longer will gain ground. Usually, as a user scrolls down the page the ad will be left at the top and the user will no longer see it. By making the ad scroll down the page as the user scrolls down the page, the ad will be visible longer.
Market Report: India Residential Sector Gears Up for an Overhaul
By M H Ahssan
The residential sector in India has undergone a far-reaching metamorphosis in the last decade. After years of unplanned and haphazard development, the sector is now marked by enhanced product offering, heightened investment including foreign capital, and augmentation of the national footprint of some prominent Indian developers. Modern apartments and villa and township projects have come up across the country and new city master plans have been drawn to include a number of suburban and peripheral locations within the city’s folds.
The Indian economy has been growing at an average rate of 8.8% in the last four fiscal years, with the 2006-07 growth rate clocking an impressive 9.6%. This stellar growth, augmented by the unmatched fundamentals that the country enjoys, has given strong impetus to the real estate sector in India. The residential segment leads the growth trajectory—nearly 75-80% of the total real estate space development across India is in the residential segment. Rapid urbanization, increase in number of households, rising income levels, and easy availability of housing finance are among the chief reasons cited for this trend.
According to United Nations Population Fund (UNFPA), India’s urbanization rate is higher than the world average, and by 2030 more than 40% of the country’s population will be living in urban areas. This, together with the fact that the average household size in India is fast decreasing, has fostered residential demand in recent times.
Also, salaries in India have been rising at the rate of 10-15% per year and the per capita disposable income that has increased manifold in the past decade is expected to further grow by 8-13% in the next five years. Thus, improved affordability and the increased penetration of housing mortgage finance have led to the unprecedented housing acquisition drive both by end-users and investors. Over the last few years, unabated demand and supply-demand gap has led to spiraling of capital values across locations and cities.
Dealing with a slowdown
However, after a dream run of close to 36 months, the residential sector has been exhibiting signs of slowing down in the last few quarters. In response to the Reserve Bank of India’s measures to control credit growth and liquidity in the economy, interest rates on home loans have increased by several basis points in the last year. This came at a time when the rising residential values and compounding inflation had started to negatively impact the affordability of many end-users. Shrinkage of demand and retreating of end-users and investors from the market had closed the gap between demand and supply, resulting in correction in values. On the other hand, developers are facing a cash crunch due to diminishing sales, expensive credit and drying up of private equity funding as a result of the current global investment conditions. New project launches have been put on hold and under-construction projects are facing delays.
Within such a scenario, developers and stakeholders in this sector are looking at optimizing their resources and employing befitting strategies to tide over the current times. With buyers adopting a wait-and-watch stance, developers are taking various steps to bolster sales. These range from giving early-bird discounts on bookings to freebies such as semi-furnished homes and cars. Apart from the above, in line with quickly changing external conditions, some structural changes are also underway in the residential sector, with affordable housing or mid-end becoming the new mantra. Until now, most of the developers focused on constructing high-end housing, and there has been a dearth of mid-priced, affordable units.
Temporarily reduced buying power due to high inflation rates and stock market fluctuations—combined with the hike in interest rates—have impacted the demand for high-end residences. As such, venturing into affordable or mid-priced housing seems to be the appropriate recourse, as developers are realizing that the segment offers maximum opportunity and prospects on account of two key factors. First, the total estimated shortage of 26 million dwelling units, the maximum shortage is in the mid and low segment, and the demand here is relatively inflexible. Second, this segment will entail a volume game rather than value, and will serve to boost the topline.
With the builder fraternity moving in to fill the existing gap in affordable housing, some constructive steps need to be (or are being) taken by the government to facilitate this movement. These would primarily include introducing progressive reforms like repealing the Urban Land Ceiling Regulation Act (ULCRA limits land holding quantum at a single entity level); and, increasing Floor Space Index (FSI restricts the built-up potential on a plot of land), micro-financing and removing restrictions on credit availability for such kinds of projects. Also, mobilizing funds from various agencies, encouraging private-public partnership, subsidization of construction inputs, and above all developing land and providing infrastructure facilities in locations feasible for affordable housing projects, will give it the required boost. A number of prominent developers are in the process of shifting focus to mid-end and affordable housing. Apart from affordable housing, integrated township developments are also increasingly gaining momentum.
Price corrections are inevitable
The Indian real estate market, including the residential sector, has traditionally been an under-supplied market. On the demand side, Indian consumers are informed, discerning and demand value. Corollary to the current economic conditions, demand has been compressed but is expected to spring back with interest rates softening, price reduction and property market sentiment improving. Price corrections are inevitable, particularly in markets where a demand-supply mismatch has been built up.
Under the current scenario, it is imperative that residential supply and demand are coordinated and that gaps, wherever existing, are filled. In the long term, current churn and shakeout in the Indian real estate sector is expected to lead to market consolidation, making it more attractive for foreign investors and PE funds, as the valuations will be more realistic.
With India’s strong economic and demographic fundamentals, real estate will remain a long-term attractive proposition. Hopefully, the next cycle we witness after the current slow down will be the one that is more efficient and self-sustaining.
The residential sector in India has undergone a far-reaching metamorphosis in the last decade. After years of unplanned and haphazard development, the sector is now marked by enhanced product offering, heightened investment including foreign capital, and augmentation of the national footprint of some prominent Indian developers. Modern apartments and villa and township projects have come up across the country and new city master plans have been drawn to include a number of suburban and peripheral locations within the city’s folds.
The Indian economy has been growing at an average rate of 8.8% in the last four fiscal years, with the 2006-07 growth rate clocking an impressive 9.6%. This stellar growth, augmented by the unmatched fundamentals that the country enjoys, has given strong impetus to the real estate sector in India. The residential segment leads the growth trajectory—nearly 75-80% of the total real estate space development across India is in the residential segment. Rapid urbanization, increase in number of households, rising income levels, and easy availability of housing finance are among the chief reasons cited for this trend.
According to United Nations Population Fund (UNFPA), India’s urbanization rate is higher than the world average, and by 2030 more than 40% of the country’s population will be living in urban areas. This, together with the fact that the average household size in India is fast decreasing, has fostered residential demand in recent times.
Also, salaries in India have been rising at the rate of 10-15% per year and the per capita disposable income that has increased manifold in the past decade is expected to further grow by 8-13% in the next five years. Thus, improved affordability and the increased penetration of housing mortgage finance have led to the unprecedented housing acquisition drive both by end-users and investors. Over the last few years, unabated demand and supply-demand gap has led to spiraling of capital values across locations and cities.
Dealing with a slowdown
However, after a dream run of close to 36 months, the residential sector has been exhibiting signs of slowing down in the last few quarters. In response to the Reserve Bank of India’s measures to control credit growth and liquidity in the economy, interest rates on home loans have increased by several basis points in the last year. This came at a time when the rising residential values and compounding inflation had started to negatively impact the affordability of many end-users. Shrinkage of demand and retreating of end-users and investors from the market had closed the gap between demand and supply, resulting in correction in values. On the other hand, developers are facing a cash crunch due to diminishing sales, expensive credit and drying up of private equity funding as a result of the current global investment conditions. New project launches have been put on hold and under-construction projects are facing delays.
Within such a scenario, developers and stakeholders in this sector are looking at optimizing their resources and employing befitting strategies to tide over the current times. With buyers adopting a wait-and-watch stance, developers are taking various steps to bolster sales. These range from giving early-bird discounts on bookings to freebies such as semi-furnished homes and cars. Apart from the above, in line with quickly changing external conditions, some structural changes are also underway in the residential sector, with affordable housing or mid-end becoming the new mantra. Until now, most of the developers focused on constructing high-end housing, and there has been a dearth of mid-priced, affordable units.
Temporarily reduced buying power due to high inflation rates and stock market fluctuations—combined with the hike in interest rates—have impacted the demand for high-end residences. As such, venturing into affordable or mid-priced housing seems to be the appropriate recourse, as developers are realizing that the segment offers maximum opportunity and prospects on account of two key factors. First, the total estimated shortage of 26 million dwelling units, the maximum shortage is in the mid and low segment, and the demand here is relatively inflexible. Second, this segment will entail a volume game rather than value, and will serve to boost the topline.
With the builder fraternity moving in to fill the existing gap in affordable housing, some constructive steps need to be (or are being) taken by the government to facilitate this movement. These would primarily include introducing progressive reforms like repealing the Urban Land Ceiling Regulation Act (ULCRA limits land holding quantum at a single entity level); and, increasing Floor Space Index (FSI restricts the built-up potential on a plot of land), micro-financing and removing restrictions on credit availability for such kinds of projects. Also, mobilizing funds from various agencies, encouraging private-public partnership, subsidization of construction inputs, and above all developing land and providing infrastructure facilities in locations feasible for affordable housing projects, will give it the required boost. A number of prominent developers are in the process of shifting focus to mid-end and affordable housing. Apart from affordable housing, integrated township developments are also increasingly gaining momentum.
Price corrections are inevitable
The Indian real estate market, including the residential sector, has traditionally been an under-supplied market. On the demand side, Indian consumers are informed, discerning and demand value. Corollary to the current economic conditions, demand has been compressed but is expected to spring back with interest rates softening, price reduction and property market sentiment improving. Price corrections are inevitable, particularly in markets where a demand-supply mismatch has been built up.
Under the current scenario, it is imperative that residential supply and demand are coordinated and that gaps, wherever existing, are filled. In the long term, current churn and shakeout in the Indian real estate sector is expected to lead to market consolidation, making it more attractive for foreign investors and PE funds, as the valuations will be more realistic.
With India’s strong economic and demographic fundamentals, real estate will remain a long-term attractive proposition. Hopefully, the next cycle we witness after the current slow down will be the one that is more efficient and self-sustaining.
Market Report: India Residential Sector Gears Up for an Overhaul
By M H Ahssan
The residential sector in India has undergone a far-reaching metamorphosis in the last decade. After years of unplanned and haphazard development, the sector is now marked by enhanced product offering, heightened investment including foreign capital, and augmentation of the national footprint of some prominent Indian developers. Modern apartments and villa and township projects have come up across the country and new city master plans have been drawn to include a number of suburban and peripheral locations within the city’s folds.
The Indian economy has been growing at an average rate of 8.8% in the last four fiscal years, with the 2006-07 growth rate clocking an impressive 9.6%. This stellar growth, augmented by the unmatched fundamentals that the country enjoys, has given strong impetus to the real estate sector in India. The residential segment leads the growth trajectory—nearly 75-80% of the total real estate space development across India is in the residential segment. Rapid urbanization, increase in number of households, rising income levels, and easy availability of housing finance are among the chief reasons cited for this trend.
According to United Nations Population Fund (UNFPA), India’s urbanization rate is higher than the world average, and by 2030 more than 40% of the country’s population will be living in urban areas. This, together with the fact that the average household size in India is fast decreasing, has fostered residential demand in recent times.
Also, salaries in India have been rising at the rate of 10-15% per year and the per capita disposable income that has increased manifold in the past decade is expected to further grow by 8-13% in the next five years. Thus, improved affordability and the increased penetration of housing mortgage finance have led to the unprecedented housing acquisition drive both by end-users and investors. Over the last few years, unabated demand and supply-demand gap has led to spiraling of capital values across locations and cities.
Dealing with a slowdown
However, after a dream run of close to 36 months, the residential sector has been exhibiting signs of slowing down in the last few quarters. In response to the Reserve Bank of India’s measures to control credit growth and liquidity in the economy, interest rates on home loans have increased by several basis points in the last year. This came at a time when the rising residential values and compounding inflation had started to negatively impact the affordability of many end-users. Shrinkage of demand and retreating of end-users and investors from the market had closed the gap between demand and supply, resulting in correction in values. On the other hand, developers are facing a cash crunch due to diminishing sales, expensive credit and drying up of private equity funding as a result of the current global investment conditions. New project launches have been put on hold and under-construction projects are facing delays.
Within such a scenario, developers and stakeholders in this sector are looking at optimizing their resources and employing befitting strategies to tide over the current times. With buyers adopting a wait-and-watch stance, developers are taking various steps to bolster sales. These range from giving early-bird discounts on bookings to freebies such as semi-furnished homes and cars. Apart from the above, in line with quickly changing external conditions, some structural changes are also underway in the residential sector, with affordable housing or mid-end becoming the new mantra. Until now, most of the developers focused on constructing high-end housing, and there has been a dearth of mid-priced, affordable units.
Temporarily reduced buying power due to high inflation rates and stock market fluctuations—combined with the hike in interest rates—have impacted the demand for high-end residences. As such, venturing into affordable or mid-priced housing seems to be the appropriate recourse, as developers are realizing that the segment offers maximum opportunity and prospects on account of two key factors. First, the total estimated shortage of 26 million dwelling units, the maximum shortage is in the mid and low segment, and the demand here is relatively inflexible. Second, this segment will entail a volume game rather than value, and will serve to boost the topline.
With the builder fraternity moving in to fill the existing gap in affordable housing, some constructive steps need to be (or are being) taken by the government to facilitate this movement. These would primarily include introducing progressive reforms like repealing the Urban Land Ceiling Regulation Act (ULCRA limits land holding quantum at a single entity level); and, increasing Floor Space Index (FSI restricts the built-up potential on a plot of land), micro-financing and removing restrictions on credit availability for such kinds of projects. Also, mobilizing funds from various agencies, encouraging private-public partnership, subsidization of construction inputs, and above all developing land and providing infrastructure facilities in locations feasible for affordable housing projects, will give it the required boost. A number of prominent developers are in the process of shifting focus to mid-end and affordable housing. Apart from affordable housing, integrated township developments are also increasingly gaining momentum.
Price corrections are inevitable
The Indian real estate market, including the residential sector, has traditionally been an under-supplied market. On the demand side, Indian consumers are informed, discerning and demand value. Corollary to the current economic conditions, demand has been compressed but is expected to spring back with interest rates softening, price reduction and property market sentiment improving. Price corrections are inevitable, particularly in markets where a demand-supply mismatch has been built up.
Under the current scenario, it is imperative that residential supply and demand are coordinated and that gaps, wherever existing, are filled. In the long term, current churn and shakeout in the Indian real estate sector is expected to lead to market consolidation, making it more attractive for foreign investors and PE funds, as the valuations will be more realistic.
With India’s strong economic and demographic fundamentals, real estate will remain a long-term attractive proposition. Hopefully, the next cycle we witness after the current slow down will be the one that is more efficient and self-sustaining.
The residential sector in India has undergone a far-reaching metamorphosis in the last decade. After years of unplanned and haphazard development, the sector is now marked by enhanced product offering, heightened investment including foreign capital, and augmentation of the national footprint of some prominent Indian developers. Modern apartments and villa and township projects have come up across the country and new city master plans have been drawn to include a number of suburban and peripheral locations within the city’s folds.
The Indian economy has been growing at an average rate of 8.8% in the last four fiscal years, with the 2006-07 growth rate clocking an impressive 9.6%. This stellar growth, augmented by the unmatched fundamentals that the country enjoys, has given strong impetus to the real estate sector in India. The residential segment leads the growth trajectory—nearly 75-80% of the total real estate space development across India is in the residential segment. Rapid urbanization, increase in number of households, rising income levels, and easy availability of housing finance are among the chief reasons cited for this trend.
According to United Nations Population Fund (UNFPA), India’s urbanization rate is higher than the world average, and by 2030 more than 40% of the country’s population will be living in urban areas. This, together with the fact that the average household size in India is fast decreasing, has fostered residential demand in recent times.
Also, salaries in India have been rising at the rate of 10-15% per year and the per capita disposable income that has increased manifold in the past decade is expected to further grow by 8-13% in the next five years. Thus, improved affordability and the increased penetration of housing mortgage finance have led to the unprecedented housing acquisition drive both by end-users and investors. Over the last few years, unabated demand and supply-demand gap has led to spiraling of capital values across locations and cities.
Dealing with a slowdown
However, after a dream run of close to 36 months, the residential sector has been exhibiting signs of slowing down in the last few quarters. In response to the Reserve Bank of India’s measures to control credit growth and liquidity in the economy, interest rates on home loans have increased by several basis points in the last year. This came at a time when the rising residential values and compounding inflation had started to negatively impact the affordability of many end-users. Shrinkage of demand and retreating of end-users and investors from the market had closed the gap between demand and supply, resulting in correction in values. On the other hand, developers are facing a cash crunch due to diminishing sales, expensive credit and drying up of private equity funding as a result of the current global investment conditions. New project launches have been put on hold and under-construction projects are facing delays.
Within such a scenario, developers and stakeholders in this sector are looking at optimizing their resources and employing befitting strategies to tide over the current times. With buyers adopting a wait-and-watch stance, developers are taking various steps to bolster sales. These range from giving early-bird discounts on bookings to freebies such as semi-furnished homes and cars. Apart from the above, in line with quickly changing external conditions, some structural changes are also underway in the residential sector, with affordable housing or mid-end becoming the new mantra. Until now, most of the developers focused on constructing high-end housing, and there has been a dearth of mid-priced, affordable units.
Temporarily reduced buying power due to high inflation rates and stock market fluctuations—combined with the hike in interest rates—have impacted the demand for high-end residences. As such, venturing into affordable or mid-priced housing seems to be the appropriate recourse, as developers are realizing that the segment offers maximum opportunity and prospects on account of two key factors. First, the total estimated shortage of 26 million dwelling units, the maximum shortage is in the mid and low segment, and the demand here is relatively inflexible. Second, this segment will entail a volume game rather than value, and will serve to boost the topline.
With the builder fraternity moving in to fill the existing gap in affordable housing, some constructive steps need to be (or are being) taken by the government to facilitate this movement. These would primarily include introducing progressive reforms like repealing the Urban Land Ceiling Regulation Act (ULCRA limits land holding quantum at a single entity level); and, increasing Floor Space Index (FSI restricts the built-up potential on a plot of land), micro-financing and removing restrictions on credit availability for such kinds of projects. Also, mobilizing funds from various agencies, encouraging private-public partnership, subsidization of construction inputs, and above all developing land and providing infrastructure facilities in locations feasible for affordable housing projects, will give it the required boost. A number of prominent developers are in the process of shifting focus to mid-end and affordable housing. Apart from affordable housing, integrated township developments are also increasingly gaining momentum.
Price corrections are inevitable
The Indian real estate market, including the residential sector, has traditionally been an under-supplied market. On the demand side, Indian consumers are informed, discerning and demand value. Corollary to the current economic conditions, demand has been compressed but is expected to spring back with interest rates softening, price reduction and property market sentiment improving. Price corrections are inevitable, particularly in markets where a demand-supply mismatch has been built up.
Under the current scenario, it is imperative that residential supply and demand are coordinated and that gaps, wherever existing, are filled. In the long term, current churn and shakeout in the Indian real estate sector is expected to lead to market consolidation, making it more attractive for foreign investors and PE funds, as the valuations will be more realistic.
With India’s strong economic and demographic fundamentals, real estate will remain a long-term attractive proposition. Hopefully, the next cycle we witness after the current slow down will be the one that is more efficient and self-sustaining.
Special Report: Economic Slide Fuels Fertility Business Boom
By M H Ahssan & Kajol Singh
Women renting wombs, donating eggs to tide over financial crisis Economic slide
Last year’s sealing drive took away her husband’s catering unit. This October, recession cost Anita her retail job.
Christmas, though, may finally bring some cheer — and money — to this 26- yearold retail management postgraduate.
No, she hasn’t found another job. But she will raise money by renting out her womb to an American woman who is flying in to India to start the procedure next week.
“ I have an MBA degree and have done several computer courses. But I didn’t look for another job after losing the one that I had. The job market is just too tight,” Anita says.
The mother of a two- year- old hopes to be pregnant by January 2009. She’ll be paid Rs 2.75 lakh, along with all expenses incurred on groceries and medicines, for the next nine months.
“ If she hadn’t lost her job, she wouldn’t have bothered to do this. You don’t generally get such well- educated surrogates or donors, unless they are from the paramedic profession,” says Dr Shivani Sachdev Gour, a fertility expert at Phoenix Hospital, Greater Kailash- I, where Anita will undergo the procedure.
It’s win- win for Gour’s American patient as well. She’d have had to shell out $ 40,000- 50,000 ( Rs 20- 25 lakh) to a surrogate in the US. The recession is fuelling a baby harvest. It’s evident from a visit to the Delhi In- Vitro Fertilisation ( IVF) and Fertility Research Centre at Bengali Market.
Reeta, a software engineer, has taken time off from her IT firm in Gurgaon to donate eggs to an infertile couple being treated at the centre. She decided to do this after her husband, a software engineer in the US, returned to India after being laid off.
Reeta’s eggs go for a premium, thanks to her high IQ profile, and she makes Rs 40,000 to Rs 50,000 each time. “ My husband is trying to raise money to open his own software training institute.
I want to help him, as well as help infertile couples have babies,” she says.
Confirming the trend, Dr Anoop Gupta, Delhi IVF’s infertility specialist, says: “ In the last two months, we have had seven or eight couples walking in with prospective egg donors and surrogates who are all white- collared workers affected by the economic crisis. People facing recession know about this opportunity that will help them and also assist infertile couples.” In Gujarat’s Anand — India’s surrogacy capital — Kaival Hospital’s infertility specialist Nayna H. Patel says the number of educated and middle- class surrogates and donors from towns such as Vadodara has shot up by 15- 20 per cent.
“ Many of these women come after losing money in the share market or after either they themselves or their husbands lose their job,” Patel adds.
One of the surrogates under her care is a 26- year- old woman who has an LLB and a BCom degree. The woman turned to surrogacy after her husband was rendered jobless because of the economic downturn.
For Mayur Vihar housewifeturned- tutor Mandakini, becoming an egg donor came as an alternative to suicide, which she was contemplating after her husband, a sound engineer, lost his Rs 40,000- a- month job.
“ We moved from a two- bedroom home to a one- room set with a kitchen,” Mandakini recalls. “ My son’s marks fell from 96 per cent to 64 per cent because we couldn’t afford his tuitions any more. We didn’t have the money to pay his school fees. I had gone to a chemist to buy poison, but didn’t know what to get. That’s when I saw an ad for a donor in a women’s magazine.” Egg donation is a long- drawn process, involving 9- 10 days of injections, and the subsequent removal of eggs under general anaesthesia. Specialists say the procedure is safe.
“ There are no cuts and the entire procedure is done with the help of a needle guided by ultrasound,” assures Dr Deeksha ‘ assists Dr Gupta of Delhi IVF. Unmarried women are turned away from donation, for it leads to the tearing of the hymen during the medical examination, which isn’t held in a good light in many traditional homes.
Dr Gupta recently refused an infertile couple who came with a prospective donor — a laid- off airhostess — because she was unmarried. “ We take women who are married and have already had a child. They prove to be fertile,” he says.
In some states in the US, even college students donate eggs to pay their tuition fees. “ Depending student could receive anything between $ 5,000 ( Rs 2.4 lakh) and $ 30,000 ( Rs 14.5 lakh),” says Dr Sulochana Gunasheela, who runs her own IVF centre in Bangalore.
“ Models and women with high IQ invite online bids for their gametes.” All this may seem somewhat futuristic, but the way urban India is moving, are we likely to see educated middle- class women catching up with their US counterparts? “ If not now, possibly some time in the foreseeable future,” says Dr Gunasheela.
Women renting wombs, donating eggs to tide over financial crisis Economic slide
Last year’s sealing drive took away her husband’s catering unit. This October, recession cost Anita her retail job.
Christmas, though, may finally bring some cheer — and money — to this 26- yearold retail management postgraduate.
No, she hasn’t found another job. But she will raise money by renting out her womb to an American woman who is flying in to India to start the procedure next week.
“ I have an MBA degree and have done several computer courses. But I didn’t look for another job after losing the one that I had. The job market is just too tight,” Anita says.
The mother of a two- year- old hopes to be pregnant by January 2009. She’ll be paid Rs 2.75 lakh, along with all expenses incurred on groceries and medicines, for the next nine months.
“ If she hadn’t lost her job, she wouldn’t have bothered to do this. You don’t generally get such well- educated surrogates or donors, unless they are from the paramedic profession,” says Dr Shivani Sachdev Gour, a fertility expert at Phoenix Hospital, Greater Kailash- I, where Anita will undergo the procedure.
It’s win- win for Gour’s American patient as well. She’d have had to shell out $ 40,000- 50,000 ( Rs 20- 25 lakh) to a surrogate in the US. The recession is fuelling a baby harvest. It’s evident from a visit to the Delhi In- Vitro Fertilisation ( IVF) and Fertility Research Centre at Bengali Market.
Reeta, a software engineer, has taken time off from her IT firm in Gurgaon to donate eggs to an infertile couple being treated at the centre. She decided to do this after her husband, a software engineer in the US, returned to India after being laid off.
Reeta’s eggs go for a premium, thanks to her high IQ profile, and she makes Rs 40,000 to Rs 50,000 each time. “ My husband is trying to raise money to open his own software training institute.
I want to help him, as well as help infertile couples have babies,” she says.
Confirming the trend, Dr Anoop Gupta, Delhi IVF’s infertility specialist, says: “ In the last two months, we have had seven or eight couples walking in with prospective egg donors and surrogates who are all white- collared workers affected by the economic crisis. People facing recession know about this opportunity that will help them and also assist infertile couples.” In Gujarat’s Anand — India’s surrogacy capital — Kaival Hospital’s infertility specialist Nayna H. Patel says the number of educated and middle- class surrogates and donors from towns such as Vadodara has shot up by 15- 20 per cent.
“ Many of these women come after losing money in the share market or after either they themselves or their husbands lose their job,” Patel adds.
One of the surrogates under her care is a 26- year- old woman who has an LLB and a BCom degree. The woman turned to surrogacy after her husband was rendered jobless because of the economic downturn.
For Mayur Vihar housewifeturned- tutor Mandakini, becoming an egg donor came as an alternative to suicide, which she was contemplating after her husband, a sound engineer, lost his Rs 40,000- a- month job.
“ We moved from a two- bedroom home to a one- room set with a kitchen,” Mandakini recalls. “ My son’s marks fell from 96 per cent to 64 per cent because we couldn’t afford his tuitions any more. We didn’t have the money to pay his school fees. I had gone to a chemist to buy poison, but didn’t know what to get. That’s when I saw an ad for a donor in a women’s magazine.” Egg donation is a long- drawn process, involving 9- 10 days of injections, and the subsequent removal of eggs under general anaesthesia. Specialists say the procedure is safe.
“ There are no cuts and the entire procedure is done with the help of a needle guided by ultrasound,” assures Dr Deeksha ‘ assists Dr Gupta of Delhi IVF. Unmarried women are turned away from donation, for it leads to the tearing of the hymen during the medical examination, which isn’t held in a good light in many traditional homes.
Dr Gupta recently refused an infertile couple who came with a prospective donor — a laid- off airhostess — because she was unmarried. “ We take women who are married and have already had a child. They prove to be fertile,” he says.
In some states in the US, even college students donate eggs to pay their tuition fees. “ Depending student could receive anything between $ 5,000 ( Rs 2.4 lakh) and $ 30,000 ( Rs 14.5 lakh),” says Dr Sulochana Gunasheela, who runs her own IVF centre in Bangalore.
“ Models and women with high IQ invite online bids for their gametes.” All this may seem somewhat futuristic, but the way urban India is moving, are we likely to see educated middle- class women catching up with their US counterparts? “ If not now, possibly some time in the foreseeable future,” says Dr Gunasheela.
Several Businesses in India Bucking Slowdown
By Rahul Mehta
For all entrepreneurs who feel that getting venture capital funding in times of downturn might be tough, here's a sunny story. Suresh Narasimha, chief executive officer of TELiBrahma, received venture capital funding of $2 million two months ago.
Narasimha who started the company around 2004 is seeing the positive side of the slowdown. ‘‘As an entrepreneur, this is the time to focus on the actual value of your business and differentiate it with more propositions,'' he says. TELiBrahma is a Bangalore-based mobile solutions company, which currently has 50 employees. The company powers solutions like bluetooth-based mobile advertising, promotions, enterprise solutions and locationbased social networking and appears unaffected by the slowdown.
Experts believe that there are other sectors too that are likely to do well, no matter what the current situation of the economy is. ‘‘Sectors like healthcare, education, consumer goods and retail as well as media and entertainment are bound to do well. The slowdown is not that severe in India as yet,'' says Pradeep Kanakia, national head of markets at consultancy firm KPMG. As for the IT sector, the focus has shifted from pure services to products, and technology in education and healthcare. At IDG Ventures, for instance, six of the nine companies that received funding from them are product companies.
‘‘We believe there are certain sectors that are truly recessionproof, like security, medical sciences and technology in defence and remote monitoring, says Sudhir Sethi, managing general partner, IDG Ventures India.
In the slowdown, companies will invest less in new capital and would like to extend the life of existing capital assets.
Hence demand for remote management and predictive maintenance technologies is expected to grow. ‘‘A major construction company has used such a technology from ConnectM and has already seen a 15% cost saving,'' says Sethi.
Energy management too is seen to be an area that will gain in such times, since it is a major cost for most companies.
‘‘Gifting is an area that might see downtrading, but will not stop. Hence our investment in the online initiative Myntra,'' says Sethi.
For all entrepreneurs who feel that getting venture capital funding in times of downturn might be tough, here's a sunny story. Suresh Narasimha, chief executive officer of TELiBrahma, received venture capital funding of $2 million two months ago.
Narasimha who started the company around 2004 is seeing the positive side of the slowdown. ‘‘As an entrepreneur, this is the time to focus on the actual value of your business and differentiate it with more propositions,'' he says. TELiBrahma is a Bangalore-based mobile solutions company, which currently has 50 employees. The company powers solutions like bluetooth-based mobile advertising, promotions, enterprise solutions and locationbased social networking and appears unaffected by the slowdown.
Experts believe that there are other sectors too that are likely to do well, no matter what the current situation of the economy is. ‘‘Sectors like healthcare, education, consumer goods and retail as well as media and entertainment are bound to do well. The slowdown is not that severe in India as yet,'' says Pradeep Kanakia, national head of markets at consultancy firm KPMG. As for the IT sector, the focus has shifted from pure services to products, and technology in education and healthcare. At IDG Ventures, for instance, six of the nine companies that received funding from them are product companies.
‘‘We believe there are certain sectors that are truly recessionproof, like security, medical sciences and technology in defence and remote monitoring, says Sudhir Sethi, managing general partner, IDG Ventures India.
In the slowdown, companies will invest less in new capital and would like to extend the life of existing capital assets.
Hence demand for remote management and predictive maintenance technologies is expected to grow. ‘‘A major construction company has used such a technology from ConnectM and has already seen a 15% cost saving,'' says Sethi.
Energy management too is seen to be an area that will gain in such times, since it is a major cost for most companies.
‘‘Gifting is an area that might see downtrading, but will not stop. Hence our investment in the online initiative Myntra,'' says Sethi.
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