Friday, January 30, 2009

David Swensen's interview on Charlie Rose

As Yale’s chief investment officer, he manages more than $20 billion in endowment assets. During his tenure at the school, he has contributed more to Yale’s finances than anyone ever has to any university in the country. His new book is called "Pioneering Portfolio Management," and it is an update of his 2000 book of the same name.
Video link here

Monday, January 26, 2009

Where to invest in 2009 in ITndia

The soothsayers are back with predictions. Not where prices will drop, but where prices will rise.
Jones Lang LaSalle Meghraj, the sophisticated marketing arm of the building industry are making new predictions. Here is the link for the pdf on's site. The analysis seems pretty straightforward as it proximity to the IT/ITES industry as the main drivers and I've headlined this post to reflect that.

Mumbai has witnessed some of the highest selling prices in the residential market till the
beginning of this year. Clearly, those prices were not sustainable, since buyers for super
luxury homes are shrinking fast.

One of the focal areas was central Mumbai (specifically Lower Parel and Worli) that
witnessed the highest price escalations. These now faces the challenges of the slowdown.
The current slowdown has curtailed the investor segment in the residential property market.
The driver for what demand exists now are real end-users.
In Mumbai, there is no dearth of those desperate to find homes within an affordable range -
affordable housing is therefore now the silver lining on the dark cloud of today’s slowdown.
Mumbai has three different directions in which growth can still be observed. Appreciation is
not a factor currently, but these are the areas that will sustain their prices – while other areas
in Mumbai will correct.
The extended western suburbs; Vasai-Virar sub-region
1. Economic drivers such as the MP SEZ by DHL, BIO tech SEZ by Mahindra
and IT SEZ
2. Connectivity is going to increase by introduction of additional suburban trains
from next year
Prices are in the range of Rs2,500-3,500/sq.ft
Area adjoining Panvel
1. This region is benefiting significantly from trunk infrastructure enhancements
such as the upcoming new airport, the Trans-Harbor Link, a railway terminus,
mono rail etc.
2. Positive impact from the upcoming Mega SEZs by Reliance and others.
3. The expansion of JNPT.
Many developers have already initiated large township projects in this region. The price range
are Rs. 3000-3800/sq.ft.

Bandra-Khar area
Prime property hunters are still focused on this area.
1. It will witness increased connectivity by the Bandra-Worli sea-link, the
proposed Metro Line 2 and also the upcoming Santacruz-Chembur Link road.
2. This region is always a preferred destination for prime property seekers
because of its elite profile, and because of the high level of available
shopping, healthcare, education and recreation facilities. Developers there
are offering products in redevelopment schemes.
The prices range from Rs18,000–25,000/sq.ft.

Currently, there is a definite slowdown in growth in the suburban residential market.
Construction has stopped on new projects, resulting in a stabilization of rates for readypossession
flats. This scenario also reflects in Delhi, where the rates for good properties rates
are now stable.
However, the areas around the 150-meter road that will eventually connect Gurgaon to
Dwarka – specifically, Sectors 103-111 – have significant growth potential.
1. Sufficient developments will come up in this area, and one can expect a year-on-year
appreciation of at least 5-7% even now.
2. The area is currently under-developed – however, when residential projects there
reach completion in 2-3 years, the appreciation will be between 30-35%.
3. A lot of this depends on the ability of developers to raise enough cash to complete
their projects. Those who do not have the requisite finances will miss out on an
extremely lucrative opportunity.
The current rates in this belt range between Rs. 2200-2300/sq.ft. In Dwarka, the rates are
between Rs. 4000-4500/sq.ft and in the further locations of Gurgaon between Rs. 3500-

Chennai’s residential real estate scenario is considerably depressed at the current time.
Developers who have projects along the once booming IT corridor are all set to reduce their
rates by as much as 20%.
However, the Mogappair-Porur composite region continues to hold mid-to-long term
investment potential.
1. This overall location is very close to the prime residential catchment of Anand Nagar
and also to Chennai railway station and the bus terminus.
2. The fact that it is not near the IT corridor also increases its potential.
3. The rates there are competitive at Rs. 2800-3000/sq.ft.
The expected appreciation for residential properties here is between 20-30% long term).

Bengaluru (erstwhile Bangalore) is surely feeling the brunt of the IT slowdown. However,
established suburban areas like Koramangala, Outer Ring Road and Bellari Road continue to
be good investment destinations.
As in the case of Mumbai, appreciation is not a focal point in the current scenario - these are
the areas that will sustain their prices, while other will correct.
Apart from these, Mysore Road –which encompasses the upcoming NICE corridor, has lots
of future promise thanks to good connectivity to Mysore and many commercial developments
being planned there.
1. No scope for fresh developments
2. Close to Electronics City
3. Residential demand is high
Rates are between Rs7,000-8,000/sq.ft.
Outer Ring Road and Bellari Road
1. Close to IT hub
2. Outer Ring Road is close to Whitefield and is a commercial area.
3. New developments are coming up on Bellari Road, which is also close to the
Devenhalli airport.
Rates – Rs3,500 – 5,500/sq.ft. Appreciation potential between 5-8% short term. Long term

With Talegaon not picking up in the anticipated manner, Pune’s new growth corridor now
encompasses Kharadi and Nagar Road. This can be safely considered as the most lucrative
real estate investment zone for 2009-2010.
1) Eon IT Park – 4 million square feet of prime IT space in the last stages of completion
2) Other IT SEZs as well as commercial ventures also on the anvil
3) Proximity to revamped airport
4) Improved connectivity, largely via the opening of the VIP Road connecting Viman
Nagar to the airport
5) Imminent arrival of 5-star hotels such as JW Marriott, Grand Hyatt and Leela
6) Reasonably low entry costs:
Rates – Rs2,700-3,500/sq.ft

Hyderabad continues to hold its own in the current slowdown scenario, though significant
growth has now been restricted to certain specific areas.
Residential real estate investment growth potential in Hyderabad will center primarily around
Gachibowli and Tellapur.
1) Proximity to the financial district, which is where the highest growth of IT and other
commercial projects is happening
2) Could become another CBD over the next ten years
3) Outer Ring Road (Phase 1 in advanced stage, phase 2 scheduled after six months) in
the vicinity will reduce commuting time of residents to key workplace locations
Appreciation in these areas will be about 5% in 2009 and might increase in further years.

Residential rates at Chandigarh have gone through the roof, and there is little scope for
appreciation for now. Moreover, because Chandigarh is a planned city conceived on certain
density specifications, which give rise to limitations on development.
It is therefore not dynamic in real estate terms, which means it will not change much with time.
Chandigarh could not partake in the IT boom for these reasons. However, adjoining Mohali
presents a completely different picture. The area called Greater Mohali, which encompasses
the fast-developing Landra-Mohali Road area, is a very promising residential nexus.
Pan-India developers such as Unitech, Emaar-MGF, Ansals and DLF have snapped up land
there for development into mega, multi-sector residential hubs. These will be highly organized
cluster projects, and all the right drivers are in place:
1) International airport coming up
2) Indian Business School coming up
3) Multi-terminal bus stand soon to be commissioned
4) 120 acre township with IT SEZ coming up
The investment opportunity here is in land, which currently sells at between Rs12,000-
14,000/square yard. After 3-4 years, the land rates in these areas will surpass those in central
Mohali, which currently stand at Rs30,000-35,000/square yard.

Kochi has the fast growing residential market in Kerala. The NRI investments has caused
sudden spurt in residential demand in Kochi City.
Apartment units have the highest demand owing to affordable prices and availability. In
addition, high ranking of Kochi as IT/ITES destinations which resulted in demand generated
by the infrastructure initiatives like the Smart City Project, Cyber City project, Infopark,
International Transshipment Container Terminal Project, etc.
Waterfronts are the most sought out residential real estate destinations and usually get a
premium. The prime residential areas adjacent to M.G. Road and along Marine Drive still
command a premium with landmark projects asking for Rs7,500/sq.ft
1) Close to CBD
2) Attractive Water fronts
3) Huge demand for waterfront apartments
Peripheral areas of the city such as Kakkanad, Edapally and Kalamassery currently face a
short-term oversupply of mid-range flats that are selling in the Rs. 2,500-3,000/sq.ft range.
1) Close to the existing InfoPark
2) Positive impact from the upcoming Proposed Smart city and Cyber city in Kakkand
3) Good infrastructure has lead to a diverse and robust economy and job creation.
Commercial trade, a traditional sector of the economy, is being complemented by growing
sectors such as IT/ITES (due to large scale IT parks and SEZ), BFSI activity and tourism.
4) Excellent connectivity resulting from a combination of airport, sea port, road and rail,
has positioned the city for long term growth and competitive advantage.
5) A disproportionately large number of NRIs, or non-resident Keralites to be more
specific, are investing from abroad and have increased demand for residential space.
Appreciation in the peripheral areas of the city will be about 5% in 2009. We expect a 5-
10% increase over the long term.
Rates: Rs2,500-3500/sq.ft.

Ahmedabad, which has recently started leveraging its real estate potential for ‘real’ now, has
some real residential hotspots coming up.
For instance, there will be considerable economic activity with the arrival of the Tata Nano
project, which will definitely boost the value of real estate in and around the corridor of
1) Located in an industrial region rich with SEZs
2) NANO plant coming up
3) Infrastructure upgradation in process
4) Good connectivity due to S G Highway and SP Ring Road
5) Good land availability
6) DMIC investment region
7) Low land prices (Rs. 650/sq.ft)
Some of the reputed developers active in this region include Pacifica Sahara, Savvy and
Safal. Residential units are primarily villas, selling at rates between Rs2,600-3,000/sq.ft.
Prahlad Nagar is another good area to consider. It is surrounded by premium areas, has a
high income population and the prices are still relatively low. It is also close to the new
business district on SG Highway and has good connectivity to the core city. Rates range
between Rs. 2300-3000/sq.ft
One should also mention the Sabarmati-Gandhinagar highway, which is close to the airport
and Gandhinagar as well as the upcoming GIFT city and Ecopolis, has good connectivity and
infrastructure and will soon see many institute campuses like NID, IIT and DAIICT coming up.

Jaipur has witnessed some of the best-planned and balanced real estate developments in
commercial, retail and residential space.
While affected by the current slowdown, Jaipur still manages to sail through on account of its
growing population and sound purchasing power.
While residential projects within central locations of the city have witnessed high absorption,
the city seems to be expanding towards two new prime destinations for residential
Two key destinations with the highest investment potential in residential real estate include
Ajmer Road and Jagatpura (both suburban locations).
Ajmer Road (NH-8)
1) Availability of land parcels to support large expansive townships as against low land
availability within city limits
2) Low land prices
3) Proximity to Mahindra World City; Mahindra’s SEZ being developed close to Ajmer
Road having campus developments by Wipro, Infosys, Deutche Bank, among others;
this makes the region a potential business hub of the future
4) Rapid connectivity to neighboring towns of Rajasthan as well as the prime city of
Jaipur with NH-8
5) Presence of numerous townships being developed by established developers like
Vatika, Omaxe, Ansal among others provide multiple options for sound investment
Rates - Rs2,500-3,000/sq.ft.
1) Proximity to South Jaipur, the hub of upcoming institutional, commercial and retail
developments. The location is also close to the new airport coming up, which
provides good connectivity
2) Availability of land parcels to support large expansive townships as against low land
availability within city limits
3) Low land price points and entry costs attracting good investor interest
4) Rapid residential development accruing to large number of townships and group
housing projects and townships in and around the area
5) An upcoming destination as a residential hub, with a large concentration of
government housing projects as well; a new expansion zone for the city population
Rates - Rs 2,000-2,500/sq.ft.