Passage to India’s heart

By Neeraj Mahajan

Haryana today, is not a state – but real estate. Why? Well, the simple answer is that Haryana is closest to Delhi and envelops Delhi on three sides with well defined roads, rail, national, international airports and other infrastructure. Almost 29 national highways covering over 1461 km, 2,494 km long state highways and South Asia’s oldest major road Grand Trunk (GT) Road pass through the state. Gurgaon is today the hottest, fastest growing and most talked about business hub with the highest concentration of multi-national corporate offices. It is soon going to have the Rs. 1,000 crore Rapid Metro Rail —India’s first wholly private (IL&FS 74 percent equity share and DLF 26 percent) railway project.

Traditionally Gurgaon overshadowed areas like Faridabad, Sonepat, Panipat, and Karnal. This hierarchical imbalance is not going to last long. Even many insignificant and relatively unheard of places like Kondli, Manesar, Rewari, Hissar, Palwal, Bhiwani, Bahadurgarh, Jhajjar and Bawal are queuing up to break the economic glass-ceiling. The effect of all this, is a feverish pitch to acquire land, identify new areas for infrastructure development -- to meet the needs of 
the growing population for luxury, economy and low-cost housing, commercial and entertainment centers, public utilities, parks, and other urban civic facilities.

The biggest blockbuster of course is the 1483 KM long Delhi-Mumbai Industrial Corridor -- a mega USD 90 billion infra-structure project connecting Delhi and Mumbai -- the political and business capitals of India with Japanese financial and technical aid. The highlights of this project include a Golden Quadrilateral National Highway and a Multi-modal High Axle Load Dedicated Freight Corridor (DFC) running parallel to each other between Delhi and Mumbai. Starting from Dadri in Delhi NCR these would pass through six states of U.P, Delhi, Haryana, Rajasthan, Gujarat and terminate at Jawaharlal Nehru Port in Mumbai. Over 60% area of Haryana is directly or indirectly influenced by DMIC. Several top-of-the-line industrial estates, clusters, industrial hubs and investment regions like Sonipat-Kundli, Manesar-Bawal are being developed along this corridor with the help of grants and loans from Indian and Japanese government as well as investment by Japanese and Indian firms. The project area of this ambitious DMIC project extends up to 150 km on both sides of the Delhi-Mumbai Dedicated Freight Corridor and opens floodgate of opportunities along NH-8, NH-2, NH-1 and NH -10 for industrial, urban and supporting infrastructure. Already Bawal has evolved as a mega industrial hub with a large numbers of multi-national companies lining up to set up their manufacturing bases. Besides these, two investment regions at -- Manesar-Bawal-Nimarana and Kundli-Sonepat as well as two mega industrial areas are coming up at Faridabad-Palwal and Rewari-Hissar to capitalize on the locational advantages.

A 135.6 km long Western Peripheral Expressway or Kundli-Mansear-Palwal (KMP) Expressway is going to connect Kundli, Sonipat, Manesar, Gurgaon, Faridabad and Palwal. It will cross NH-1 near Kundli, NH-2 at Palwal, NH-8 at Manesar and NH-10 at Western Bahadurgarh. Many investors are investing in residential and commercial projects on both sides of the expressway. Since the commencement of work

on the Expressway land prices in Kundli have increased from Rs 25 lakh per acre to Rs 1.5 crore per acre.  Almost 242.55 acre land from 14 villages has been acquired for Dwarka Expressway also called Northern Express Road or Northern Peripheral Road which will cut down travel time between the Delhi, Gurgaon and Manesar.  This is going to be the lifeline for major housing projects in Gurgaon-Manesar. Almost 26 new sectors (99 to 115 and 58 to 67) are being developed along this Expressway. Phase III of Metro rail on this route will link IGI Airport and Dwarka. Apart from this twelve specialized hubs, including education city (5,000 acre), Sample township (8,401 acre), cyber city (470 acre), bio-sciences city (1,370 acre), Jahangirpuri-badli township (14,226 acre), fashion city (544 acre), entertainment city (346 acre), world trade city (650 acre), dry port city (1,770 acre), leather city (691 acre) and leisure city (1,853 acre) would be developed along the KMP Expressway. Both Southern Peripheral Road and Northern Peripheral Road (Dwarka Expressway) will form a ring around Gurgaon allowing long distance inter-city and inter-state vehicular traffic to bypass the current Gurgaon expressway (NH8).

That’s not all, on the anvil are a Delhi Gurgaon expressway with the largest 32 lane toll plaza in Asia on NH8, a 8 lane flyover on Badarpur- Faridabad stretch of Mathura road and a 4 lane highway in Yamuna Nagar and Panchkula – connecting Haryana to Chandigarh (without entering Punjab). Haryana already has Metro Rail connecting Gurgaon, Faridabad and Bahadurgarh to different parts of Delhi. Many universities and colleges are coming up in Khanpur, Murthal, Karnal, Mewar and Faridabad. A Women’s university and Rajiv Gandhi University on the pattern of Oxford University in Sonipat, a central university in Mahendragarh, Lala Lajpat Rai University of animal sciences in Hisar and the first defense university in Gurgaon should transform Haryana into an international commercial and educational hub in 5-7years.  Half of Haryana’s over 20,412 sq km are – equal to Delhi, UP and Rajasthan combined forms part of NCR India's largest and world's second largest agglomeration with a population of 22,157,000. Haryana also takes pride in the fact that large part of its area is covered under the NCR for which NCRPB is providing soft loans upto 75% of the project cost. 

It is a pity… fourteen years after its launch the much touted Golden Quadrilateral (GQ) infrastructure project - connecting Delhi, Mumbai, Kolkata and Chennai - is running behind schedule. When the Manmohan Singh government took over almost 80% of the stretches were done. Since then things began to slow down and in the last seven years only 5% of the Highway Project could be completed. 

These delays are mainly due to land acquisition problems, delay in environment and forest clearance, approval for road over bridges and poor performance of some contractors due to cash flow constraints and law and order problems in some states.

On the other hand already there is talk of how this highway when completed will shorten the travel time. For instance, it will be possible to reach Kolkata in 36 hours instead of 48 hours. Already districts that lie between zero to 10 km on both sides of the Golden Quadrilateral network are experiencing substantial improvement in productivity and connectivity.

The overall length of the quadrilateral is 5,846km consisting of four / six lane express highways. The project was estimated to cost INR 600bn but was completed at half the cost INR 308.58 bn.

India has a large network of highways maintained by the National Highway Authority of India (NHAI). An efficient road network is essential for a large country like India to maintain national integration and socio-economic development.

These highways altogether account for just two percent of the country's total road infrastructure but they carry 40% of the total national traffic.

The Golden Quadrilateral has four sections. Section I is a 1,454km stretch of National Highway 2 (NH2) from Delhi to Kolkata. It runs through Delhi, Haryana, Uttar Pradesh, Bihar, Jharkhand and West Bengal and connects Delhi, Faridabad, Mathura, Agra, Firozabad, Kanpur, Allahabad and Varanasi. The 1,684 km long Section II from Kolkata to Chennai passes through West Bengal, Orissa, Andhra Pradesh and Tamil Nadu along NH6, NH60 and NH5. Section III is a 1,290 km long stretch from Chennai to Mumbai on NH4, NH7 and NH 46. It passes through Maharashtra, Karnataka, Andhra Pradesh and Tamil Nadu. Section IV is a 1,419km stretch between Mumbai and Chennai covering NH 8, NH 79A, NH 79 and NH 76. It passes through the states of Maharashtra, Gujarat, Rajasthan, Haryana and New Delhi.  

The project executed through a Public Private Partnership (PPP) between NHAI and contractors has been financed from taxes on petrol and diesel (Rs 200bn), external assistance (Rs 200bn), market borrowings (Rs 100bn) and private sector participation (Rs 40bn). To recover their cost the contractors are allowed to collect toll taxes for a specified concession period.

Though smaller in scale, this Highway Development Program is similar to the National Highway System in U.S. Under the program more than 20,000 miles of highways are being developed. The government is also planning to upgrade another 20,000 miles of highways besides building over 10,000 miles of expressways over the next decade.  

Most Indian cities lack even basic road network and other infrastructure. As a result there is traffic congestion and pollution on the city roads. Apart from this volume of goods is to be transported across the country to keep the wheels of the economy moving. Over the last few years India has emerged as the second fastest growing economy in the world as a result the demand for trucks, buses, and other commercial vehicles substantial has increased substantially. Bulk of the bulk of the commercial goods need to be shifted by road even though India has one of the world’s largest railway networks. The new highways constructed highways can accommodate large multi-axle tractor-trailers. Apart from this development in the building, construction and infrastructure have also accounted for the increase in commercial vehicles.

To ease traffic congestion in cities, modern buses offer a comfortable and safe journey to encourage commuters to switch from personal to public vehicles in cities. Migration of large number of labour to the cities and industrial belts has also pushed up demand for long distance buses. As long as people in villages and small towns migrate to the big cities there is a need for commercial transport services.

For long Tata Motors has been the uncrowned king of Indian roads with domination over nearly two-thirds of the market with the broadest dealer network and widest product range. Tata Motors has tied-up with Brazilian firm Marcopolo to build buses in India. In Thailand, the firm is marketing pickup trucks in collaboration with a local company having truck manufacturing facility in South Korea and bus and coach manufacturing unit in Spain.

Ashok Leyland is a distant second has nearly 13% market share in all commercial vehicles, including small goods carriers. Ashok Leyland is a market leader in buses and a leading vehicle supplier to the Indian armed forces. The company has recently tied up with Nissan for manufacturing light commercial vehicles and engines.

In the last decade several Japanese manufacturers have entered the Indian market with light commercial vehicles. But apart from Volvo which has gained market share in the bus and large truck segment most foreign manufacturers have met with limited success. German manufacturer MAN has tied up with Force Motors, Navistar of USA too has entered into partnership with Mahindra & Mahindra to launch large trucks in India.

The Golden Quadrilateral highway is running behind schedule. Large tracts of it are only single lane wide and need repairs. The infrastructure gap is one of the main reasons behind India’s  poverty and non realization of potential, even though India has one of the world’s most extensive and vast transport network. Only 20 percent of the national highway which carries 40 percent of traffic) is four-lane and one-fourth of the rural population does not have access to an all-weather road.

At this rate the transport sector alone will require an investment of nearly US$500 billion over the next 10 years.  

The 5800km long Golden Quadrilateral project is one of the largest public works in modern Indian history but not without its own share of bad-publicity. For instance a project director in Bihar who tried to raise a voice against corruption was done to death.

All this is part of a plan to integrate the country and siphon of wealth from the cities into the towns and villages. The Golden Quadrilateral will eventually connect all of the major points of India like Delhi to Kolkata, Kolkata to Chennai, Chennai to Mumbai, and Mumbai to Delhi.

The day is not far when Golden Quadrilateral will ferry more than 60% of the road passengers. A highway close to India’s heart, the Golden Quadrilateral – will transform travel and mobility in the next decade.

Male Gods or female Goddesses -- Who is more powerful?

Is someone more powerful than God- 2

By Neeraj Mahajan

Hinduism is possibly the only religion in the world where God is worshipped in the male as well as female form. Ganesha, Krishna, Rama, Hanuman are among the most popular male Gods while Lakshmi, Durga, Kali and Saraswati top the popularity chart among goddesses worshipped by the Hindus all over the world.

Worship of the male and female sexual organs is an important ritual in Hinduism. The phallus (Linga) is worshipped as Shiv Linga – which symbolizes Lord Shiva, similarly the vulva (Yoni) is worshipped as symbol of Mother Godess Shakti or prakriti. In Hindu Mythology Shiva is the extreme male power of the universe. Sati the extreme female power of the universe too has manifested from him.

Another interesting aspect of male and female co-existence in Hinduism is the concept of  Ardhanarishvara or fusion of Purusha and Prakriti symbolizing that each is incomplete without the other.

At the root of the concept of Ardhnarishvara is the story of Sage Bhringi – a worshipper of Lord   Shiva who kept ignoring his wife Parvati in his prayers. While praying the sage tried to go around Shiva without circling Parvati. So Parvati sat on Shiva’s thigh so that Bhringi had to encircle her too. But Sage Bhringi was adamant and took the form of a bee and tried to circle Shiva through the small gap between Shiva and Parvati. Infuriated by Sage Bhringis attempts Parvati fused her body limb to limb with Shiva. Thus Sage Bhringi had to worship her as well as Shiva in the form of Ardhanarishvara.

This is the essence behind the concept of Ardhnarishvara is to indicate the interdependence between Man and Woman. While a Man symbolizes manhood, strength, discrimination, righteousness, intellect and decision making skills, a Woman possesses sensitivity, emotions, compassion and passion which complement each other. Only a woman like Nature has the power to give birth and sustain life.  They are both incomplete without the other.

Curiously the Aryans used to worship the basic elements of nature like fire, water, earth, sky. Each had a presiding deity like Indra (rain), Agni (fire), Pavan (air) and Varuna. These Devas were simply helpers of the Supreme Being. They were spiritual beings often represented in human or partial human forms. But still the basic distinction between Devas and Gods was that though they were also worshipped –the  Devas or angels were not of the same status as god.

The most prominent of them are appointed "loka palas", or guardians of the world and given the authority to preside over a particular aspect. For instance Indra, the King of the Devas has control over rain, Kubera is the god of wealth while Yama is the lord of death, Shani dev if the Lord of Justice. Kamadeva – the Lord of Love, tried to play match maker and fired a magical arrow to make Siva fall in love with Parvati that is why he is also called Ananga or bodyless, because, Shiva’s angry glance reduced him to ashes.

According to a Bani in Guru Granth Sahib, “God is the creator of all. “He created air, water, fire, Brahma, Vishnu and Shiva (Guru Granth Sahib, 504).

Among the Tridev or Trimurti-- Shiva and Vishnu are regarded as Mahādevas ("great gods") and worshipped most while Brahma the creator is not regarded as a God in Hinduism.

(To be completed)

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Is someone more powerful than God- 1

Is someone more powerful than God? -1

The God of all Beings...

By Neeraj Mahajan

Is there one Supreme power that controls or masterminds everything that is happening or about to happen in this universe? Is there one Supreme God the omnipresent, omni-directional, all-knowing and all-powerful – one who controls everything from the sun, moon and stars down to our lives on planet earth? Is there someone who is the One-Above-All – Almighty-- strongest and the most powerful being in the universe? Who is this all-powerful, supreme, absolute, unlimited, invincible and omnipotent - Ishwar, Parambrahamn, Paramatma (Supreme Self), Parameshwar (Supreme Lord), Parampita (Supreme Father) Bhagawan, Purushottam Purush, Akal Purukh, Adonai [my Lord], Allah or God Almighty? Different people in different civilizations call him by different names.

According to Hebrew tradition God exists by himself, for himself, and is the uncreated Creator who is independent of any concept, force, or entity. In the Hebrew Bible, when Moses asked for his name God replied, “I am who I am." Each of the major world religion has a concept of a Supreme Being – who is the originator, preserver and ruler of the universe.

He is the one who created the universe. He is the ultimate, the ideal object of worship and the source of all freedom and justice. He is the Lord of the world, the creator of love and all beauty. And the one who protects the heavens and earth; one on whom every atom in the universe depends for survival. One without whom, the whole world, the whole universe will perish. This Almighty— the ultimate and infinite source of all energy, power, capacity, activity, wisdom, or goodness and origin of the universe and all life form. According to Hindu philosophy He is not God of one world but represents the entire known and unknown Universe -- the past, present and the future as well. 

Little is known about this Ishwar or Supreme force. Different people all over the world, worship this Supreme Being and know him by different names. There is no uniformity about the identity of the Almighty or controller of the universe.

In Sikhism the Supreme Being or Akal Purakh literally means "Timeless, eternal being – someone who never dies." The word Akal is extensively used in the Sri Guru Granth Sahib and Guru Gobind Singh, in his poetic compositions Akal Ustat.  Guru Arjun Dev wrote, “Akaal purakh agaadh bodh”, meaning the wisdom of the undying personification is beyond understanding".

In Christianity there are references that Jesus had a God, a supreme God, higher and stronger than him. Jesus was the Son of God or God's servant who prayed to God to strengthen and reinforce him with the patience and desire to continue his mission of spreading the word of the Almighty God. "And he (Jesus) withdrew himself into the wilderness and prayed to his God."  Luke 5:16. In the Bible God is supreme: "For the Lord your God is God supreme and Lord supreme, the great, the mighty and the awesome God" (Deut. 10:17).  He is subject to no laws or limitations. Another interesting revelation in the Bible is that God displays emotions like – he gets angry (Ex. 22:23), is pleased (Gen. 1:31), sad and disappointed (Gen. 6:6), has pity (Jonah 4:11), loves (Deut. 23:6) and hates (Amos 5:21). Above all "he speaks in human language"

In Islam the Qur’an says, “"We created man out of an essence of clay, then We established

him in a firm place in the form of sperm. Then We made the sperm into coagulated blood, and then into a formless lump of flesh. Then we made it into bones, and then clothed the bones with flesh. Finally We brought forth a new creation. How well did God create, the best of all creators!" (23:12-14). Elaborating a little further the Qur’an says, “He it is Who creates and brings forth (the totality of parts), Who separates (the parts belonging to each organ), and Who gives form (to different aspects)." (59:24)

The holy Qur’an adds: "Say, O Messenger, 'You worship one other than God who has no power to help or to harm you. It is God Who is all-hearing and Who knows the state of all of creation." Dwelling on the issue a bit further the Qur’an adds, "Your God is but one God. There is no god other than Him, Compassionate and Merciful." (2:163-164)

Interestingly the Holy Qur’an says: "He is God, the One God Who is free of need for all things and of whom all beings stand in need. No one is his offspring. He is not the offspring of anyone, and He has no like or parallel." (112:14)

In Hinduism people worship some 33 Crores (330 million) Gods and Goddesses but the trinity of Brahma, Vishnu and Mahesh (Shiva) are considered primary deities. As per Hindu scriptures Brahma is the Creator, Vishnu is the Protector, Maheshwar or Shiva is the Destroyer. They are all are all manifestations of the Supreme Being – all equally powerful.  

(To be Continued)

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Is Someone more powerful than God -2

Real Estate: Asian Residential Returns an a roller coaster ride

 By Ashutosh Limaye, Head - Research & REIS, Jones Lang LaSalle India

Residential rental yields* across Tier I cities in Asia have an interesting story to tell. While yields in India are higher than in Singapore, Hong Kong and Beijing, they are lower than in cities such as Jakarta and Manila. Several factors are responsible for this – the local demand-supply situation, macro-economic scenario, end-user demand, local land-related policies, etc.

Does this yield variation in Asian cities clearly reflect the risk-return trade-off? The World Bank’s Registering Property index (part of its Doing Business index) provides some insights.

The Registering Property index ranks India at 94 among 185 surveyed countries. China, Hong Kong and Singapore rank higher than India, while Indonesia and Philippines rank lower. Both Indonesia and Philippines are perceived as having relatively weak legal frameworks. This clearly shows that weakness in the legal framework is directly indicative of higher the risk - and therefore higher yield: 

This differential in rental yields is a crucial consideration for global investors for whom the diversification of markets is an important criterion. Also, higher yields in Asia might tempt global investors, particularly from the West, to invest while they have access to cheaper funds onshore. Local investors also benefit, because higher yields mean a rising rental value, offsetting moderated capital values - the former rise faster than the latter.

Rental Yields - Emerging Asian Vs. Developed Markets

The intra-regional comparison of various Asian cities reflects a logical differentiation between rental yields. However, the same logic does not seem to apply in developed markets. It is widely believed that emerging Asian countries are relatively more risky for real estate investment than developed economies. Yet, the rental yields in emerging Asia do not reflect the relative risk-return differential.

For example – residential yields in Mumbai, which are currently around 3.5%, are lower than those observed in London, Tokyo and New York. All these cities rank quite high on the World Bank’s Registering Property index.

Despite stronger regulations and a better legal framework in the developed economies, comparison with emerging Asian yields reveals a different picture. Lower penetration of financial markets, higher inflation and larger population creating a constant demand for housing could be reasons for this.

Also, households in emerging nations generally prefer to channel a large proportion of their savings into physical assets such as gold and real estate. According to India’s central bank data, the country’s household investments in physical assets are over 50% of the total household savings. In a country like the United States, the figure is below 30%.

Based on yields, global investors do display a degree of scepticism over investing in Asian residential property markets. However, domestic investors continue purchasing at lower yields purely for the capital appreciation (typically around 10% p.a. - and definitely higher than inflation) and because of the savings culture.

The question is – how long will this continue? Can the existing yield differential between emerging Asia and developed markets sustain?  Over the past few years, rental yields have been on a decline across various Tier I cities in Asia. So far, it has been the faster rise in capital values over rents across much of Asia that has led to a compression in yields.

In Mumbai, yields have fallen by 50-90 basis points (bps) across various precincts during the period 2007-2Q13. After property prices took a beating during the Global Financial Crisis (GFC), they bounced back quickly, resulting in yield compression. More recently, during 1Q11-2Q13, yields have risen moderately, owing to marginally higher growth in capital values over rental values.

Similar trends have been witnessed in Hong Kong, Singapore and Beijing, where rental yields fell by 50-100 bps during the same six-year period. Manila and Jakarta exhibited a similar trend, though the rates of fall were quite different. While rental yields in Manila fell 30-35 bps, the fall was much sharper in Jakarta at 250 bps. This is attributable to the steep rise in capital values beginning 2Q10, which was the result of escalating cost of transaction and construction material.

Rise in capital values occurred even when economies were slowing down from peak growth rates. Mumbai has seen residential property prices surpass the previous peak of 3Q08, and they continue to remain high despite a slowdown in the Indian economy (FY13 GDP growth fell to 5.0% level after averaging ~8.0% growth during FY10-FY12). This has led to concerns about affordability and overheating of the property market in a scenario wherein job creation and income growth have slowed.

Stemming the Tide

Several Asian governments have started taking steps to cool down property prices. In China, the measures have included raising the minimum down payment, raising the interest rate for second home purchase, restrictions on property purchases by non-Chinese buyers, etc.  In India, measures to curb speculative buying include the approval and visible fast-tracking of the Real Estate Regulatory Bill, which intends to checking demand-supply imbalances and bring more transparency to the sector. The Singapore government has introduced similar measures to curb the irrational rise in property prices.

In such a scenario, it is hard to foresee further price escalation unless the economies revive or restrictions ease.

Yields Must Reflect True Investment Rationale 

In the near term, residential yields in Asian Tier 1 cities will either stabilise or rise marginally as capital value appreciation begins to drag. This is good for the real estate sector in Emerging Asia on the whole, since the current prices and yields do not correctly reflect the actual macro-economic scenario. Any or a combination of three possible scenarios could prevail in the near future –

1.     Existing high capital values could instigate authorities to further step up efforts to curtail speculation, resulting in a price corrections - or at least stabilisation. Rentals would probably remain unchanged, thereby halting further yield compression.

2.     Further rise in capital values could boost demand for rental housing, leading to increased rental values. This would stabilise yields if both capital and rental values grow in tandem.

3.     An increasing number of individual investors hitherto focused on Emerging Asia could switch to investing in other regions (especially developed markets), attracted by higher yield and better amenities. So far, the likelihood of such a sea-change in investor orientation was remote, largely due to the strong cultural preference of Asians for local real estate. We are now looking at a different scenario.

Though the RBI has now curtailed investment by Indians into offshore property, many HNIs and non-resident locals in other Asian countries have already displayed an increasing preference for investing in properties on foreign shores. In Asian countries other than India, such a trend can still lead to fall in domestic property prices, thus putting a floor to yield compression or fuelling gradual rise in yields.

(* Residential rental yields = monthly rental x 12 months / capital value of the property, or the annual rate of return an investor can earn from his capital invested in a property.)