Good morning, the pandemic has made us numb towards the number of body bags.
On an average 83,000 new confirmed Covid-19 cases are being reported in the U.S. each day and over 1,000 Americans are dying of the disease every 24 hours, per a report by Bloomberg today.
Just a reminder that it's far from over. While we pick up the pieces and try to mend our own medical infrastructure, maintaining Covid safety protocols should remain our topmost priority.
Enough said, on to some freshly brewed blurbs then. . .
Black Money In Housing Deals Down By 80%
If you've been in residential sales long enough, you must have met a home buyer/investor who turned up with a sack full of cash to book an apartment.
The developer then was happy too to receive a major chunk of the home's value in cash - cold, unmarked and absolutely tax free at both ends.
Turns out, demonetisation has almost brought an end to that black era.
An 80% Shade Of White
Per Anarock, the carefree use of black money in Indian housing deals has reduced by at least 75-80% since November 2016 when the government demonetised the bulk of the country's currency.
In fact, demonetisation has changed the very basics of why and how residential real estate is bought and sold in India.
Today, home sales happen because of actual demand for housing, not as a means to wash black money to more acceptable shades of white.
The Demand Supply Story Has Reversed
Per the same report, between 2013 till demonetisation in 2016, the top 7 cities saw a launch of nearly 1.615 million new homes, while home sales in this period stood at about 1.178 million homes..
However, from the time of demonetisation till Q3, 2021, the same cities saw cumulative new launches of 904,000 homes while home sales stood at around 1.037 million homes.
🎙 Anuj Puri, Chairman of Anarock told the press, "One major driving factor behind this is that branded, listed players - who now attract a significant majority of housing demand to their projects - play by the book and avoid unaccounted monies in their transactions."
Now to hope and pray for white all the way.
Real Estate Inc. Needs A Helping Hand
We've flagged this issue earlier and it just seems to be getting worse with time.
Real estate developers are sweating it out big time as construction cost is making projects unviable at current prices.
And this time, they are urging the government to help stabilise raw material costs.
How Bad Is It?
In 2020, the cost of a tonne of steel was INR 43,000, today it costs nearly INR 70,000. A cement bag which was going for INR 230 last year has touched INR 400.
Towing the line, the cost of bricks, sand, tiles and the kitchen sink have all seen over a 50% hike in rates.
Home prices, however, cannot go up right now as that might collapse the deck of cards - that is the home buyer sentiment - which has just breached some new levels after many years.
You Can Feel The Effects
Across the country, home prices in certain localities with high demand have gone up between 5% - 10% silently.
Housing is already unaffordable in many parts of the country and a further increase in price (as a direct result of increasing costs), is shooing away home buyers just when things for the sector are looking up.
While discussing the impact on individual buyers, CREDAI members of Andhra Pradesh said that an additional cost burden of INR 500 per sq. ft. had impacted the sale of apartments in the Fort City.
Many CREDAI members were also vocal about the fact that builders would not dare to take up new ventures if the prices of raw materials did not stabilise.
Half A Cup Extra
- Some RERA, GST provisions mar real estate, feel industry stakeholders.
- On a bumpy road to recovery post the pandemic, office space operator, Workspace bets on flexible leases to lead growth.
- It's been a record shattering quarter for industrial real estate.
Froth In The Market
The stock market valuation of certain startups is waving the middle finger to decades of innovation, manufacturing, sweat, blood and tears.
Don't believe us? Sample this.
Since going public last week, EV startup Rivian has more than doubled in value. With a USD 146.7 billion market cap, it’s now the third-most valuable automaker in the world behind Tesla and Toyota.
Sorry Volkswagen, you got overtaken by Rivian (who?) yesterday.
Here's The Memo You May Have Missed
Rivian has no material revenue and has delivered 156 electric pickup trucks as of October 31.
In contrast, the folks at Volkswagen crank out 10 million vehicles per year, generating annual revenues of around USD 300 billion.
And we should not get all personal with VW because Rivian is also more valuable than nearly 90% of S&P 500 companies, like, hold your breath, Starbucks, Boeing, and Goldman Sachs.
And then there’s another startup - Lucid Motors. This EV maker, founded by a former Tesla exec, surged nearly 24% in market cap yesterday after the company reported its first quarterly earnings.
As Lucid As It Can Get
Its first model, the Lucid Air, just won MotorTrend’s 2022 Car of the Year award. The Air has a range of 520 miles—the industry’s best.
Compared to Rivian, Lucid is a revenue-generating machine, bringing in USD232,000 in sales in Q3.
With a market cap of USD89.9 billion, it’s worth more than Ford.
This Boggles The Mind
Market experts following this bizarre trend warn that this surge of EV stocks with little-or-no revenue is a sign of “froth” in the market.
Per Bloomberg, EV startups are very popular with individual traders: Tesla, Rivian, and Lucid were at the top of Fidelity’s list of most bought assets yesterday.
With many stock market investors aspiring to become millionaires overnight, no one wants to miss out on the next Tesla.
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Probably inspired by the Aatmanirbhar Bharat movement, China is accelerating plans to replace American and foreign technology, quietly empowering a secretive government-backed organization to vet and approve local suppliers in sensitive areas from cloud to semiconductors.
And we are still calling for our Chai. 🙈
Have a great day ahead. 💚
☕ The Crew@Ginger Chai