Home buyer's sentiment across the country!

Economic times reports: Home buyers across the country expect real estate prices to fall over the next six months, according to the Housing Sentiment Index (HSI). Developed by IIM Bangalore and MagicBricks, the index is based on an online survey of prospective buyers. Here are the other findings of the survey:

Sentiment based on age The older buyers are more bearish on price than the younger ones.

 

Location Buyers across all cities expect the prices to drop. Hyderabad buyers anticipate the steepest fall, while Bangalore is the only city with a slightly positive sentiment.

 

Property Preference

Except for land buyers, all others expect the prices to fall in the next six months.

Budget The buyers who are on the lookout for more expensive property or land expect the prices to fall more.

Profession The sentiment for IT sector respondents and retirees has dropped this quarter.

Recession proof sectors in India

As every business sector is affected by present global crisis and everybody is talking of slow down in business, still in India there are few sectors which will grow in this adverse situation. Lets have a look at Azaz Motiwala's list of top 10 sectors that would continue to grow even in recession.

1. Food
2. Railway
3. PSU Banks
4. Education
5. Telecom
6. IT
7. Health care
8. Luxury products
9. M&A & Marketing Consultants
10. Media and Entertainment

Economy limps back

Imports moved back to the positive terrain for the first time since the financial crisis, clocking a 27% growth in December,indicating that the domestic economy was well on its way to recovery, aided by rapidly improving exports that grew for the second successive month.

“Trade has now fallen in line with all other indicators of the economy that had already started improving,” said Crisil chief economist D K Joshi, adding that trade was the last indicator to improve as it is linked to the global economy. The strong 22.4% rise in non-oil imports, after a steady fall for more than a year, reflects an increase in manufacturing and investment activity in the country, as the bulk of imports is industrial inputs and capital goods.

Economic Times reports capital goods accounted for nearly 16% of imports in the year 2008-09. The near double digit growth in exports in December 2009 from a year ago, albeit from a low base, suggests a demand pick-up in the Western markets, including both the EU and the US. The pick up in exports should boost manufacturing and thereby the overall industrial growth, which was a strong 11.7% in November, 2009.

Next hub of luxury consumption

Brands such as Cartier, Christian Dior, Louis Vuitton, Armani and Versace are among the retailers that have entered India in the past two years to chase the country’s growing class of super rich.

Asia is fast emerging as the world’s largest market for luxury brands, accounting for as much as half of the total US$80 billion (Dh293.84bn) global luxury industry.

Data from Luxurion World 2009, a trade event focused on the luxury market that was held in Mumbai last November, showed that India’s luxury market is worth about $4.35bn and should grow to $30bn by 2015. “The luxury retail sector in India is at an all-time high,” said Mark Stepen, a consultant with the India Retail Forum who specialises in retail brand management. “This will be the next hub of luxury goods consumption.”

The World Wealth Report 2008, produced by the international IT and management consultancy Capgemini, said that India had 167,000 millionaires and that the number was growing steadily. The number of Indians with more than $1 million in net assets grew by a roaring 22 per cent in 2008 on the previous year, despite the recession. Additionally, 141,000 Indians belong to the so-called “super rich” category, earning more than 10m rupees (Dh797,286) a year.

A 2008 survey by the global management consultancy AT Kearney said Indians spent as much as $2.9bn on private jets, luxury homes, cars, yachts and art. They spent $953m more on luxury services and $377m on other high-end goods.

The luxury boom has debunked the myth that India is a rapidly growing market only for fast-moving consumer goods because of its conspicuously consuming middle class; that middle class accounts for less than 30 per cent of India’s 1.2 billion people.

The country’s “super rich” are a monied class largely comprising entrepreneurs, wealthy farmers and political middlemen whose fortunes depend on the domestic economy, which grew at 7 per cent even during the slowdown.

“Recession or no recession, there is no arguing the fact that there are Indian consumers with very fat pockets,” Mr Stepen said. His research shows that Lladro, a Spanish company dealing in exclusive porcelain figurines, grew by 75 per cent in the past financial year, while international brands such as Swarovski and Art d’Inox, dealing in crystals and home lifestyle products respectively, have grown by 25 per cent each.

But as the economy returns to growth, the recovery in business is swift, he says. In the past two months alone, business has grown by 15 to 20 per cent, and the company is considering expanding.

“For luxury retailers, the sky is the limit in India,” Mr Dewan said.

Organised retail in recession

India's retail industry boom gave way to despair in 2009 as consumers held back big spending, forcing some companies to restructure finances, while recession-battered western retail chains would have felt glad they were not allowed to set shop.

Although the UPA government returned to power, minus the push and pulls of Left parties, it decided to keep western multi-brand retail chains off from the country's USD 450-billion retail market. But nobody was complaining, as the recession-battered global majors were busy securing existing operations elsewhere.

One estimate suggests that nearly 5,700 retail stores would close down this year in the US alone. That slowdown had got to the domestic retail trade became evident when one of the earliest players, budget-retail chain Subhiksha, went bust. Not long after, north Indian chain Vishal Retail went for corporate debt restructuring. Others such as Mukesh Ambani-run Reliance Retail and Kishore Biyani-led Pantaloon went slow on expansion or even downsized operations.

Though the last quarter saw a bit of marketplace confidence returning, overall, the year remained challenging. There were no estimates, however, of how mom & pop stores fared through the year.

While Indian companies tread cautiously, the world's largest furniture maker Ikea scrapped plans to enter the country, citing government's restrictions on FDI. The Swedish retailer was planning to enter the single-brand retail segment, where 51 per cent FDI is allowed but it wanted further relaxation of the rules.

The last quarter, around the festive season, saw a bit of consumer confidence returning, with some retailers player announcing expansion plans for the coming year. The year started with Chennai-based retailer Subhiksha Trading Services Ltd going bankrupt and downing the shutters of all its 1,600 odd stores across the country due to severe liquidity crunch.

With its lenders running for the company's skin and over 5,000 employees on the street, Subhiksha sought a corporate debt restructuring (CDR) exercise. But, that remains inconclusive and the firm now faces a slew of cases by its suppliers in the Madras High Court on winding up petitions. Reeling under Rs 730-crore debt, Delhi-based supermarket chain Vishal Retail also went in for a CDR in November. Earlier in the year, it had already halted all expansion. Even the country's largest retailer, Kishore Biyani-promoted Future Group, faced crunch and went in for restructuring of its operations and merging them under six verticals.

Incredible India!

India's growth rate over the next couple of years will be 8-9 percent, World Bank president Robert Zoellick said here Friday.

'India's growth rates could over the next one to two years see a return to the 8-9 percent envisaged in the country's 11th (Five-Year) Plan,' Zoellick told reporters at the end of a four-day visit to India.

The government has been pegging the economy's growth rate for this fiscal around 6.5-7 percent.

'India has emerged from the economic crisis with a clear vision of what it will take to accelerate back to earlier growth rate and beyond,' said Zoellick, who also met Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee during the visit.

'Its strong fiscal and monetary policies had helped counter the decline in exports and withstand some of the external shocks brought on by the multiple food, fuel and financial crisis.'

Read on.

Rising costs and saving mantra

Consumers cope with soaring inflation by making significant lifestyle changes. Statistics are like bikinis. They reveal less than what they hide. Never has this been truer of India's inflation. Months of exorbitantly priced vegetables, fruits and pulses, and weeks of crippling supply constraints are wiping the smiles off the faces of the Indian consumer. What's more, they now have to make adjustments in lifestyles to cope with the monetary measures taken by the government and the Reserve Bank to curb the 'recalcitrant' inflation. Spiraling loan interest rates have sent the equated monthly installments for housing and consumer durables sky-high. The hardest hit are those with existing loans.

Even while the cash crunch continues, the future outlook is not bright. According to Federation of Indian Chambers of Commerce and Industry, the demand for refrigerators, television and two-wheelers, largely supported by personal loans, has shown stagnation. This could lead to a mismatch in supply and demand of transportation, which could lead to increase in transportation costs.

Chandigarh-based Rohini Trehan, a senior software development manager in an MNC, illustrates the effect of inflation in her household. "Our leftover food used to go to the dustbin. When things got costlier, I gave it to the maid. Then, when the dals became really costly, I started keeping the leftovers in the fridge for the next meal. Now there are no leftovers, because I'm conscious about the quantity I cook," she says. Her costs have gone up by more than 20 per cent. "A half kg of dal used to cost Rs 20, now it is Rs 50," she says. Factor in a 25 per cent hike in her son's school fees and the family's performance-related compensations, and they are still counting money. "There are so many hidden costs," says Rohini. The Trehans are in the process of renovating the driveway of their home. "If I had done this last year, I would have paid only Rs 180 for a bag of cement, now it is Rs 226. And labour cost has gone up by 25 per cent," she says.

"A salaried person has already divided his pay between the EMIs and other household expenses. How will he manage an additional 50 per cent increase in expenses on account of the hiked interest rates?" asks Alka Chawla, a lecturer at Delhi University. Alka had plans to sell her house for a new one. "We have shelved our plans," she says. "I have cut down on non-vegetarian food. Then there are expenses of education and health. You can't compromise on those," says Alka. Her daughter's school has just raised the tuition fee and things seem to be spinning out of control for Chawlas. Their new investment mantra is short-term savings.

---Nivedita Mukherjee

Much to be done

K. Seetha Prabhu examines Financial Inclusion as a path to rural recovery in WSJ... read on...

To be sure, the global financial crisis and related emerging issues such as the large scale return of migrants who have lost their jobs in towns, prospects of a drought in many parts of the country due to insufficient and irregular rainfall, and the continuing rise in the prices of commodities for daily consumption have cast a shadow on prospects of rapid growth that is difficult to ignore.

In these times of distress, what could have offered succor is a well-established and functioning financial sector that offers a range of products suited for the rural clientele and enables and supports those with meager incomes to tide them over tough times and secure their livelihood. The crisis may offer just the incentive needed to forge a much more active financial sector that will lead a resurgence of the rural sector and, in turn, the entire economy.

There is much to be done. While India aggressively pursued bank nationalization way back in 1969 to widen the reach of banks leading to a network of around 70,000 bank branches, the country continues to flounder on all the indicators of financial inclusion - ease of access, availability and usage of the formal financial system. The overall reach of the banking system has been unsatisfactory. The latest report of the Reserve Bank of India, released last month, indicates that only 59% of the adult population has bank accounts. For the insurance sector the picture is dismal. The insurance density ratio -- defined as the volume of premiums to population -- was only 33.2 in India in 2006. In Europe, it is over 30 times higher.

In rural India, the picture is even grimmer. The RBI study shows that among the 89.3 million farmer households in the country, more that half do not access credit either from institutional or non-institutional sources. Only 27% of farm households borrow from formal sources of credit. Despite several measures to expand banking services to rural areas, rural branches of banks continue to be avenues for deposit collection rather than the active deployment of credit for productive use. The cooperative banking system is also in a state of disarray which limits its reach. In 2006, around half of the Primary Agricultural Credit System, which comprises grass-root-level institutions catering to the credit needs of farmers, was loss-making and the situation has only deteriorated further since. The situation in the poorer states with larger rural populations is even worse.

Damn recession! My price just went down

How can I not call it a selfish act on the part of the company when they want to get “much more for much-Much less!”.

And especially today when the term “RECESSION” is being thrown around like the spit on an Indian gully. The idea of desperate measures is being sold like hot cakes.

For example: I get a call for an interview… 1000s of questions are asked, insights gained, skills, abilities and personalities assessed over a series of innumerable interview sessions. Then there is one specific meeting where I am highly praised and fawned upon. I am termed as the biggest asset that the company can ever possess. It is then that the long awaited yet, ironically, the most dreaded question is asked, “What is your salary expectation?”. The answer comes as 20-25K in hand per month (this thanks to the spit(e)ful Recession, otherwise it would have been much more and acceptable). Spat! The atmosphere changes! I should not have such high demands/hopes during these dire situations, these are times when I should grab any opportunity that comes my way since the market is in a bad condition. I should not show arrogance in my abilities. The maximum they can offer is 8 or 10 or 12 K. And it would be better for me to accept it.

These are the lines from my friend Swetha's blog. This is not just her feeling but what all the graduates, post graduates, parents are thinking about the firms. This is the best time to invest in HR potential of the companies and hence they are expanding. But what are looking for? Great brains? I frankly think no. Many firms are looking for what they can get for peanuts. You know what comes for peanuts. Don't you.

I can totally understand that the company is hit financially and is looking for a cut in costs but offering salaries that demean a person's stature, ridicule his/her capacity is not fair. At least come to me and speak to me with a decent offer in future which would rise as you pick up your stuff and start walking on the recovery path. HRs are supposed to hire the best talent in the lot for their respective firms but very few actually make an extra attempt to rein in a candidate with 'potential'.

This is no market where if you don't get a drumstick long enough for the price you want buy two small ones and still cook the soup. Ever heard of the term long term investment? You might succeed in bringing my price down... but my value? It is going North.

Barack, The Swatter

Obama is more closer to normal people. And he is doing it day in and day out. Associated press mentions a latest incident when Barack Obama smacked a fly during a live interview with CNBC correspondent John Harwood, left, in the White House on Tuesday June 16, 2009 in Washington. The best part is he warns it saying, 'get out of here' and then decides to smack it.

No retakes, editing or assistance... just as he is expected to... handle everything alone and settle once and for all. The Economist reports that US President Obama's likeability factor amongst Americans is nearly 70%.

If only things were so simple and easy. Hope is still on Obama about what he can do - turnaround the economic crisis and bring everything on track once again. Time is ticking. All the rhetoric & promises aside, brand Obama's delivery time has come. Will he succeed or collapse? I am starting to question.

Here it is on youtube, the original one before other funny versions crop up.

Opt for Viral marketing

Business Week: During February and March, "Respondents were by far the least happy with ad networks, with half saying that the results did not meet expectations," according to the survey of over 100 senior level executives. Over the next six months, a majority of senior marketing executives -- 53% -- plan to spend less on ad networks, according to the results of an "Ad Effectiveness Survey" released by Forbes on Monday.

"Ad network spending is all about demand fulfillment while direct-to-publisher display is much aligned with the traditional advertising goals of demand creation," said Forbes.com president and CEO Jim Spanfeller. "It is interesting to see the shift of dollars toward demand creation as we see signs of life in the economy." Viral marketing and search engine optimization, meanwhile, are expected to see the biggest increases in spending in the coming months, according to Forbes, while behavioral targeting spending is expected to remain steady.

Indeed, among $1 million digital spenders, 54% expected to spend more on viral marketing, while 50% expected to spend more on SEO. With regard to behavioral targeting, the greatest concern among respondents was its effectiveness, followed by fear of customer backlash.Among the pool of senior marketing executives, the tools seen as most effective for generating conversions were SEO -- 48% -- email, and e-newsletter marketing -- 46% -- and pay-per-click/search marketing -- 32%.

Overall, respondents reported their appreciation for the halo effect that a Web site or publication can have on their brand, while 43% said that sponsoring a Web site, page or digital publication is the most effective digital tool when it comes to affecting brand perceptions.

Statistics & Bikinis

Can we trust the statistics and surveys? Months of exorbitantly priced vegetables, fruits and pulses, and weeks of crippling supply constraints are wiping the smiles off the faces of the Indian consumer. What's more, they now have to make adjustments in lifestyles to cope with the monetary measures taken by the government and the Reserve Bank to curb the 'recalcitrant' inflation. Spiraling loan interest rates have sent the equated monthly installments for housing and consumer durables sky-high. The hardest hit are those with existing loans.

Read the full story here about fighting recession and lifestyle changes consumers adopt to fight recession.

Creatively escaping recession

While most of the world is cursing the present economic turmoil for all its evils, head hunters for The Great Barrier Reef's caretaker thought to do otherwise. In what is being called a global search like never before on July 1st Ben Southall will become Tourism Queensland's newest employee as caretaker of the Islands of the Great Barrier Reef.

The competition titled 'The Best Job in the World' had already generated more than $110 million in international publicity. "The whole idea of this promotion is to find the perfect person to help us sell Queensland and to tell the rest of the world we really are open for business."

The answer when things are going tough is you can complain about it or you can be more creative and more aggressive and try and get more people to come.

Dance out of depression

LA Times reports that song and dances in movies improve a persons mood and this might be one of the reasons why economic recession was bailed out. Studies of the 1930s have shown how the economic meltdown was accompanied by psychological depression: loss of morale, a sense of despair, grave fears for the future. Going to the movies or listening to the radio could not solve these problems, but they could ease them in the same way that President Franklin D. Roosevelt's intimate fireside chats boosted morale and restored confidence.

If we look at the arts as a life-giving form of social therapy, many other fads and fashions of the 1930s fall into place. Once they dance, a swirling poetry of movement takes over. The public also loved comedies about the very rich. Everyone could feel superior to their silliness, the weightlessness of their lives, yet live vicariously through their energy, irresponsibility and freedom, the snap of their delicious dialogue. Meanwhile, musical standards created a seductive dreamland, somewhere "over the rainbow," a better world where cloudy skies and rainy days somehow promised "pennies from heaven."

Movie-going has already increased by almost 16% this year. The arts can be a lifeline as well as a pleasant diversion, a source of optimism and energy as well as peerless insight, especially when so many people are stymied or perplexed by the unexpected changes in their world. As our troubles worsen, as stress morphs into anxiety and depression, we may desperately need the mixture of the real and the fantastic, the sober and the silly, that only the arts can bring us.

Do your own chores

People are taking on chores that only a year ago were hired out to someone else. They're dyeing their own hair, shoveling their own snow, washing their own cars and taking up paint brushes to brighten their living room walls. The do-it-yourself trend has hurt some businesses and created opportunities for others. While every shirt ironed by you is one fewer for the local cleaners, it also means your family will be buying more detergent and fabric softener. Multiply the chores the people are doing by the millions of people like them who are changing their habits and the future looks bright for the do-it-yourself market.

The research firm Mintel International, which follows a narrow segment of the market from tool rentals to building and decorating supplies, predicts the sector will make steady gains over the next two years, ultimately growing to a $15.1 billion market in 2013, or about 50 percent over a decade. It is a wonderful outcome. The mechanics of the purchasing and utility are changing.

Windows vs Mac

Microsoft got it right this time with its marketing efforts paying off. Its $300 million marketing campaign for Windows helped it reap huge rewards. U.S. retail Windows PC unit sales rose 22 percent year over year in February compared with a 16.7 percent Mac sales decline. By revenue, Windows PCs posted modest 1.4 percent growth, compared with a stunning 23.3 percent Mac revenue decline.

Many financial analysts point to pricing as the major reason for Mac declines. In February, the average selling price for Macs was $1,500, down from $1,628 a year earlier but up from $1,482 in November. Consumers and small businesses must pay more to join the Mac club than to continue using Windows PCs during a recession.

There's a spirit of entrepreneurship that many Americans associate with Windows and Microsoft. The recession is bringing it out.

Back to Books

For the first time in more than 25 years, the proportion of adults who said they've read at least one literary work in the previous 12 months increased, according to the National Endowment for the Arts. The reason is they are more realistic and constant. More people are turning to books to keep themselves occupied.

So this is the best time to read that book you always wanted to.

Slowdown encourages blogging

Malik, Mullenwerg and Nirav Sanghvi feel that at a time when economic activity is slowing down, the blogging world is buzzing with action. It would seem that with more time at their disposal and the cost of creating and writing a blog minimal, people are turning to this new medium to express themselves. 

There are lots of new blogs in the whole community. But 30-40 percent die-off because an event inspired them to do something and once that something is gone.

No travelling this year

Hoteliers should brace for a tough year in 2009. The continued drop in U.S. consumer confidence has a profoundly negative effect on demand, which causes increases in layoffs and joblessness. Lack of demand causes a slump in manufacturing, which in turn creates a slowdown in global commerce. This has a massive trickledown effect on business travel. Among the hundreds of thousands of layoffs reported in the United States alone, there are thousands of business travelers now removed from business travel circulation. Results of new survey from the Association of Corporate Travel Executives Tampa Bay are as expected. Seventy-one percent of respondents to the ACTE poll will spend less on travel in 2009, 21 percent said they will spend the same and only 8 percent said they will spend more. 

The ACTE 2009 Business Travel Spend Survey illustrates that the hardest hit area of business travel is internal meetings, which can constitute up to 40 percent of a travel budget. The growing popularity of electronic business travel alternatives is enabling companies to reclaim as much as $10 million from their travel budgets, without compromising their travel objectives. 

Garibh Radh

Vijay Mallya's loss is Lalu's gain. Aviation industry is witnessing a huge slump as the economic crisis hits Indian shores. The cost of travelling by plane is very high when compared to rail and hence rail is the new fashion. Lalu is ensuring that the ambience in first class matches to the taste of the elite executives who are habituated to the service on the plane. Clean linen, 24*7 water, AC, security, power sockets, quality food and Internet connection are in the offing. The passengers are not complaining. 

The same applies to roadways. 

Bus ticketing company Ticketvala.com has also seen a 15-20% growth across all networks in weekend bookings in December and January compared to the same period a year ago. “Due to the tightening of budget, people are now travelling more and more in buses as it is one-third the cost of an air ticket,” says Mr Haranath Lokanathan, CEO, Ticketvala.com. 

With the economic slowdown, people are becoming a lot more conscious about their travel budgets. Consumers cascade when certain changes effect the market. This is a strategic inflection point and the firm should be ready for the same. Are you ready for the inflection?