Every morning I walk the air cooled corridors of my company. The icy blast of air from the ceiling provides welcome relief from the oppressive heat outside. I walk quietly, afraid of disturbing the early birds, already at work. I think about my work and begin to plan my day. I also think about how I am going to do this for a long time to come, an unbreaking ritual till the day I am broken by age or my uselessness.

I try not to think of the world outside, the insane collapse that is happening all around! This is the time I feel grateful for my situation. I have a job, tons of work to complete and more in the offing. I feel good batting on a stable wicket. Sounds like a dream, but could have been a nightmare too, as it is for many unfortunates who have been ruthlessly awakened from their starry eyed dreams of a career in the IT world.

The same corridors of the IT world are now fraught with tension and uncertainty, the twin enemies of the software engineer. Wannabe employees are tense with thoughts of not being able to get in anymore. veterans are tense with thoughts of finding themselves outside! Gone, gone, gone – the damage done.

The prevalent global meltdown of economies and subsequently corporations has hit the IT industry the hardest. What was once a roller coaster ride for Indian IT firms has come to a screeching halt now. From the merry days of huge paychecks, mega bonuses and hikes to almost nothing!

Everybody wakie wakie, the party’s over!

I have been in the fortunate situation of knowing no one who has lost his or her job but I know enough people who are on the edge. Heck, I could be one of them too, if things slide down further! I look around me and only see anxious faces. I wonder when it will get over. The signs of the recession are around me. I reach for a cup of coffee to soothe my aching mind and I notice the coffee machine is a new one. The old one, a familiar swanky chap, has made his exit. Instead, all I get are sound and fury from the new machine and bad coffee. I drink it nevertheless, convincing myself that it is good.

In the name of cost cutting lay offs, reduced onsite stay, and near 100% billing are the norms adopted by corporates to keep the recession at bay. Hiring has been frozen at some levels, but a few new employees do trickle in. Unnecessary expenses like cab services & corporate parties have been done away with. Employees are urged to put in as many hours as possible.

The idea is to keep the ship afloat by trimming excess fat which is not so bad if see one sees the big picture. Some win here and some lose. It depends on which side of the fence you are.Words of wisdom about surviving the crash/meltdown/slowdown are being given free of cost everywhere. It is a classic case of buy one piece of wisdom and get 10 free. Learn new skills, change your industry, do an MBA, pick up a hobby, travel and ‘discover’ yourself -as if this tragedy is not enough to discover that we are helpless and don’t matter! This is also an interesting time for a reason – for the first time in history, I have the power and the freedom to blame the other guy for my situation. The other guy here being the sub prime guys, the greedy corporates honchos whose greed now lies at the root of the American economy and is giving me sleepless nights and days! But, as a fortunate job holder and one who has staked his career on a resurgent IT industry, I can’t help feeling that this phase is temporary and the industry will get back on it’s feet.

I base my faith on the fact that our IT industry is capable of building new markets in new geographies. Europe, Japan, SE Asia and countries down under are emerging markets waiting to be explored. Once these markets are built, we are back in business. As long as this is not a death blow to the world economy, there is hope. It will be a long inevitable wait but  IT will be worth it.

Image Credit: Derrick T

Popularity: 11%

They say it all started after 09/11,
When they were looking for a diversion;
In an attempt to boost the economy,
Lenders started opening up some money!

As the markets were looking for ways to expand,
The housing sector seemed primed for demand;
Construction industry soon became hot,
And they took over every vacant lot!

With all the money being made available,
The bigger house suddenly seemed more affordable;
Jack went to the bank with his honey,
They came back home with double the money!

Everything seemed hunky dory,
For every house had more than one storey;
It was good while it lasted,
For very soon, the problems started!

Jack couldn’t keep up with his monthly payment,
The banks started realizing their predicament;
Supply started exceeding the demand,
New home prices started reflecting this stand!

As price corrections started to happen,
Home ownership started to dampen;
The existing buyers owed more than they owned,
Per the sub-prime term, it was equal to being drowned!

Everyone started to realize their folly,
Suddenly it wasn’t as easy to obtain a lolly;
It seemed simple enough for all to benefit,
But it will take a lot more to get out of it!

Image Credit: Woodley Wonderworks

Popularity: 14%

Whenever people have asked me, or I’ve spoken of the “Indian culture”, I have always wondered to myself as to the single most important thing that defines my upbringing. I was looking too deep, trying to read too much into every part of my life, while it lay there all along – it was too simple to miss, and yet it was the quality that had the most profound impact on me. The differentiating attribute was the one I am grateful to my grandmother for ingraining in me.

While growing up in the Bangalore (Bengaluru just to the locals, then) of the 80′s, I had a penchant for fountain pens. There were various brands then – Chelpark, Bril, Luxor, etc at the lower end with Hero, Parker, etc making up the higher end price points. I had such a fetish that I was keeping track of every brand and model that came out – in hindsight, a very materialistic obsession with buying newer fountain pens. It was affordable enough for my parents and granny to buy me a few every year, but it wasn’t keeping up with the pace at which newer models were coming out!

To inculcate a lesson that would hold me in good stead for life, my grandmother seemingly came up with a plan: if I came in within the top-3 ranks in my class (the much berated Indian schooling system then, of monthly evaluations followed by a top-to-bottom ranking within the student populace!!), she would give me 10 rupees every month, as a reward. I could use this to fund my hobby, but it came with a rider – I could only take up to 5 rupees every month from her, for she would deposit the rest into my bank account for future use. I was too naïve then to be made to understand the benefits of saving, so this was her way of helping me understand and inculcate the saving habit. Her reasoning for stashing away half of the money was to enable me to upgrade to the next level of fountain pen collections i.e. the more expensive ones, but fortunately or unfortunately, I outgrew the hobby before I got to that stage.

For what its worth, if I remember correctly, her educational qualifications till date remain as having completed 3^rd grade of schooling. That had no bearing on her attitude in life, or what she has passed on to the next generations (that’s a new post altogether). She’s probably handed me by biggest lesson in life, and one that very likely defines a good part of the Indian / Asian cultures.

People may argue that the Asian economies are no different today when compared to the Western ones; my counter to that would be that we live in too small a world economy today that its hard to be isolated from international influences. Dug deeper, the saving mechanisms would probably be the grace factor or the deterministic index of how wide the schisms are, or in simpler and more common terms: how big a bail out we need!

Image Credit: Gemma Amor

Popularity: 10%

If 2008 is considered to be the year of the frog, then will 2009 be the year of the bull ? It better be…and I have my own reasons that it will be one, although I must admit I have been an eternal optimist.

Wall Street is getting ready for a new US President. Will the new President translate his promises into convincing actions? Will the Stateside see the 2.5 million jobs that he promised ? Will there be enough consumption to bolster the economy ? Will the serial bankruptcies of 2008 end ?

All these, pretty much depends on the confidence that the new President is able to build in his newly formed team and how they are able to effectively drive for results. If President Obama is able to deliver what he promised and if the consumers and investors show signs of renewed confidence and increased spending, then there would definitely be a rally witnessed.

Will the Obama magic work wonders for India? – Some say yes, some say may be but I haven’t heard many people say “No”. Gives me good enough reason to believe that there is some HOPE for India too.

Consider this – During his campaign Obama promised 2.5 Million jobs and over a trillion dollar in spending. What would that mean ? Better purchasing power, better imports for US and bigger exports for the rest of the world including India. That itself is one solid reason for the possible bull run

There are other factors too which would affect fuel India’s growth in 2009. The world economy has learnt a big lesson – it can no longer depend on the world’s greatest economy. So what if the United States go wrong, the world still needs to go on. And so it will.

P Chidambaram is very optimistic. He sees India at 9% growth in 2009. Although I think it might be slightly utopian to come at this stage where the world is just picking up from what it has lost last year, I think the mood says it all. PC is confident than ever.

Irrespective of whether Chidambaram’s predictions come true or not or India witnesses growth owing to Obama influenced rally, the long term solution definitely is being self dependent.

India needs to be more depended on its internal affairs, its commercial set ups, its infrastructural development, its agriculture, banking and finance reforms, its exports etc. Only then can we predict India’s growth to near accuracy.

Until then it’s a story of clinging to the wagging tail.

Image Credit: Herval

Popularity: 9%

Mark Twain very famously once remarked

Buy land, they are not making it anymore

Personally, I feel, never has any real estate investments been better advised than above.

My good friend, Ajay Dabas returned from the USA in 2005, and we huddled together to identify the areas where he could invest his hard earned money. The brief was clearly to focus on three factors, on which to scale the investment strategy.

Risk

On a 5 year horizon, how much would each investment avenue Grow / Stagnate / or depreciate

Terms

Entry level pricing to be benchmarked against the stay-in period of investment over a 3-5 year window

Liquidity

How easy would it be to profitably exit, in parts or in whole?

Our detailed study & exercise led us to the conviction that land is less volatile compared to mutual funds, stocks, equities, investment trusts etc. Haven’t we all experienced and witnessed the massive erosion of wealth & valuation in the past few months, on most investment instruments mentioned above?

Ajay Dabas is not one of them. He is rather happy for his strategic decision to choose land over the other mediums, as the preferred investment three years ago. As for valuations, his investments have already  ppreciated over 300%, and still going strong.

It would be a good idea to share the seven reasons why we feel that investing in land is the best option within real estate compared to the much more “touted & publicised options” of built up spaces in buildings.

1. Land is an evergreen, ever-growing asset. Brick & mortar assets like buildings (mall space / office blocks) deteriorate with time, whereas land only appreciates with time. Remember, some studies confirm that the value of any commercial building becomes ‘Zero’ in 27 years. Even when the building is useless & demolished, what is left behind is land.
2. Land is an asset from day one. It has very little lead time to mature from purchase to progress. For e.g. If you are an early bird buyer for a residential or commercial property, it typically takes 3-5 years for your asset to be registered in your name, and to draw returns from them. One keeps investing money & time for 3-5 years, without returns. Land can be registered immediately, and can start delivering returns.
3. Land is one asset which affords the most flexible options, within the real estate products. You can choose to buy any size & dimension, any value, anytime. Besides, land can be put to multiple use during the period of ownership. Let me elaborate. Agricultural land if invested into; can be used for farming. Post zoning, land use can be changed and commercially used. Anything build on it can be redeveloped, for e.g. the same piece of land could end up being used as warehouse premise, commercial, residential, etc.
4. Land affords simple investment management. Once bought, it doesn’t incur high costs compared to built-up products. It is most likely that the land bought is self sufficient in deriving the maintenance cost, whereas, the other products attract a continually incremental maintenance.
5. If we analyze the supply vs demand for real estate products in our country, land as a commodity would remain in demand for the next couple of decades. There is an acute demand for finished products, which would have to be constructed on LAND. Hence, investments in LAND are bound to grow, provided the buying strategy is right. For e.g: Delhi as a city state is forecasted to grow from 136 lakhs to 240 lakhs of population in the next decade. That necessitates almost another few thousands of hectares to be brought under development. Hence, invest in land today, rather than wait for appreciation at a much later date; at much lower returns.
6. With the economy projected to grow at a fast rate, and with disposable incomes being higher, aspiration of green living, bigger houses, better amenities, affordable luxuries etc. would take over. Those can be achieved on bigger land chunks being brought under development. Hence, invest in land today.
7. Land affords the “right balance in your real estate portfolio“. While investing in real estate, one needs to have a right product mix to hedge the risk, with one or two products which are low on risk and high on returns. That is what land promises to be.

Having said the above, we also advise our clients to exercise the right amount of caution and source expertise while buying land. Seek out experts rather than take the ‘gut-feelapproach’.

Analyze-understand-replicate success stories in land as a portfolio rather than try to re-write a success story. Remember, all leading developers in our country grew at this scorching pace on valuations, using land as the growth engine.

Happy Land-ing!!!

Popularity: 16%