GLOBAL ECONOMY
It has been a near-normal year after two years of pandemic induced challenges but the
global economy continues to face headwinds of rising in ation and tapered growth.
According to The World Economic Outlook (WEO) update, the world economic output growth
slowed down to 3.4% in 2022, after growing by 6.0% in 2021. The rise in central bank rates
to ght in ation and Russias war in Ukraine continue to weigh on economic activity with
its impact likely to spill over to 2023 as well. The rapid spread of COVID-19 in China
also dampened growth in 2022, but the reopening has paved the way for a recovery.
Stronger-than-expected private consumption and investment amid tight labor markets and
greater-than anticipated scal support helped the major economies.
The IMF expects growth in 2023 to be 2.8% with a gradual pick-up in 2024. The economic
activity is expected to remain sluggish mainly due to slow down in advanced economies. For
advanced economies, growth is projected to decline sharply from 2.7% in 2022 to 1.2% in
2023 amid financial sector turmoil, high in ation, ongoing effects of Russias invasion of
Ukraine, and three years of COVID. The growth in US slowed down in the second half of the
year to end at a mere 0.9% in 2022 and is expected to remain at 1.0% in 2023 due to the
steeper path of Federal Reserve rate hikes. Interest rate risk, the root cause of
financial sector turmoil could mean a tough road ahead. Growth in the Euro area is
expected to bottom out at 0.7% in 2023 reflecting the effects of faster rate hikes by the
European Central Bank, lower wholesale energy prices, and additional announcements of scal
purchasing power support in the form of energy price controls and cash transfers.
The baseline forecast is for growth to fall from 3.4% in 2022 to 2.8% in 2023, before
settling at 3.0% in 2024. Advanced economies are expected to see an especially pronounced
growth slowdown, from 2.7% in 2022 to 1.3% in 2023. With further financial sector stress,
global growth declines to about 2.5% in 2023 with advanced economy growth falling below
1.0%.
Global headline in ation in the baseline is set to fall from 8.7% in 2022 to 7.0% in
2023 on the back of lower commodity prices but underlying (core) in ation is likely to
decline more slowly. In ations return to target is unlikely before 2025 in most cases.
INDIAN ECONOMY
Indias growth continues to be resilient despite some signs of moderation in growth,
although significant challenges remain in the global environment, India was one of the
fastest growing economies in the world.
The overall growth remains robust and is estimated to be 6.9% for the full year with
real GDP growing 7.7% year on year during the first three quarters of FY 2022-23. There
were some signs of moderation in the second half of FY 2022-23. Growth was underpinned by
strong investment activity bolstered by the governments capex push and buoyant private
consumption, particularly among higher income earners. In ation remained high, averaging
around 6.7% in FY 2022-23 but the current account de cit narrowed in Q3 on the back of
strong growth in service exports and easing global commodity prices.
The World Bank has revised its FY 2023-24 GDP forecast to 6.3% from 6.6% (December
2022). Growth is expected to be constrained by slower consumption growth and challenging
external conditions. Rising borrowing costs and slower income growth will weigh on private
consumption growth and government consumption is projected to grow at a slower pace due to
the withdrawal of pandemic related scal support measures.
Although headline in ation is elevated, it is projected to decline to an average of
5.2% in FY 2023-24, amid easing global commodity prices and some moderation in domestic
demand. The Reserve Bank of India has withdrawn accommodative measures to rein in in ation
by hiking the policy interest rate. Indias financial sector also remains strong, buoyed
by improvements in asset quality and robust private sector credit growth. The central
government is likely to meet its scal de cit target of 5.9% of GDP in FY 2023-24 and
combined with consolidation in state government de cits, the general government de cit is
also projected to decline. As a result, the debt to GDP ratio is projected to stabilize.
On the external front, the current account de cit is projected to narrow to 2.1% of GDP
from an estimated 3.0% in FY 2022-23 on the back of robust service exports and a narrowing
merchandise trade de cit.
While the short-term outlook seems to be challenging given the rising interest rates,
external supply shocks and geopolitical tension, we do believe the government is doing the
right things to ensure a sustainable growth path for the country. The union budget
presented this year was very supportive of the long-term growth of the real estate sector
in India through its focus on urban infrastructure and the digital economy. The
governments sharply expanded capital expenditure target for the year is expected to
create job opportunities and higher economic activity.
REAL ESTATE SECTOR
The post-pandemic picture for real estate sector is a paradigm shift from before. The
pandemic has reinstated the importance of home ownership and the attitude of customers
towards residential properties has seen a substantial shift. Preference for larger sized
apartments, inclination towards reputed developers and a rising demand for townships
projects are just some of the emerging trends.
Fiscal 2023 was a milestone year for the Indian Real estate sector with all-time high
sales. The sector showed healthy growth on the back of a high base achieved in scal 2022.
The demand pick-up seen in the second half of scal 2021 has continued into scal 2023 and
is expected to continue in scal 2024. The number of launches are also increasing and
touched a decadal high last year, inventory is continuing to show a decline or stability
across Tier-1 cities, indicating a healthy demand momentum.
While the residential segment witnessed strong performance, commercial officesector
continues to remain sluggish with demand not yet reaching the pre-pandemic levels. The
challenges to officespace demand has been the work from home trend and slowdown in global
economic growth. The global slowdown directly impacts sectors like IT/ITeS which is the
major occupier of officespace in India. Retail real estate sector though, is back to full
swing with consumption recovering beyond pre-pandemic levels and should continue the
momentum.
BUDGET 2023 TAKEAWAYS
The union budget presented this year was supportive of the long-term growth of the real
estate sector in India through its focus on urban infrastructure and the digital economy.
The Governments rising focus on infrastructure capex will create a backdrop of
opportunity for the real estate sector. Some of the key measures include:
Housing for All
The Government allocated 79,000Crore, 66% higher than last years allocation, under the
Pradhan Mantri Awas Yojna (PMAY) initiative which will be used for both urban and rural
markets. The government plans to complete its target of over 4 Crore houses across both
urban and rural markets, which will be allocated to persons eligible under the scheme. In
addition, it plans to make the land and construction approval process more efficient.
Urban Development Plan
The Real estate sector is expected to benefit from emphasis laid on development and
urban planning in Tier 2 and Tier 3 cities in the budget. The National Housing Bank (NHB)
will oversee the proposed Urban Infrastructure Development Fund (UIDF). This will help
public agencies develop infrastructure in Tier 2 and Tier 3 cities. A 10,000crore budget
has been proposed for this fund. Furthermore, ve centres of excellence for urban planning
have been proposed, which will provide the sector with a channel to hire trained
professionals. A committee of urban planners, economists, and institutions will be formed
to make recommendations on urban sector policies, capacity building, planning,
implementation and governance.
Municipal Bonds
The budget also proposed property tax reforms to provide cities with incentives to
improve their credit ratings for municipal bonds. These bonds have the potential to
alleviate urban infrastructure woes while also improving real estate sentiment in these
areas.
OPPORTUNITIES AND CHALLENGES
Opportunities
Housing Demand
Sector Consolidation
A ordable Housing
Digital Real Estate Sales
Monetary Easing
Challenges
Regulatory Hurdles
Monetary Tightening and Funding Issues
Shortage of Manpower and Technology
Unanticipated delays in project approvals
Availability of trained labour force
Increased cost of manpower
Rising cost of construction
COMPANY STRENGTHS
Your Company continues to capitalize on the market opportunities by leveraging its key
strengths.
These include:
Strong cash ows: Has built a business model that ensures continuous cash flows from
their investment and development properties ensuring a steady cash flow even during the
adverse business cycles.
Significant leveraging opportunity: Follows conservative debt practice coupled with
enough cash balance which provides a significant leveraging opportunity for further
expansions.
Outsourcing: Operates an outsourcing model of appointing globally renowned architects /
contractors that allows scalability and emphasizes contemporary design and quality
construction a key factor of success.
Transparency: Follows a strong culture of corporate governance and ensures transparency
and high levels of business ethics.
Highly qualified execution team: Employs experienced, capable and highly qualified
design and project management teams who oversee and execute all aspects of project
development.
HUMAN RESOURCES
Employees are at the heart of your Company and the biggest differentiators. Its their
inexorable commitment that helps your Company to create spaces that enhance quality of
life. Keeping the spirits high at workplace needs a sound mental and physical tness and
deep-rooted culture which promotes work life balance.
HEALTH AND SAFETY
Your Company is always committed to the health and safety of its employees. Your
Company provides a clean, hygienic and conducive work environment to all employees and
doubled these efforts during the pandemic. While your Company has eased the covid
restriction at work, your Company is still very cautious and follows social distancing
norms, encourage virtual meetings and have place sanitizers at various locations. All
employees and their family members are covered under the Companys group medical insurance
policy to support hospitalization needs. Special medical leave and flexibility in working
hours are provided on case-to-case basis.
FOCUS ON MUMBAI AND BEYOND
Your Company continues to explore development opportunities in and around Mumbai and
also explore hubs in the nearby regions on a case by case basis.
INTERNAL CONTROL SYSTEMS
Your company has in place an adequate system of internal controls commensurate with its
size & nature of operations, along with well-de ned organisation structure &
documented policy guidelines & procedures, prede ned delegation of authority covering
all corporate functions and all operating units. These internal controls are designed to
provide reasonable assurance regarding the effectiveness and efficiency of operations, the
adequacy of protecting your companys assets from unauthorized use or losses, the
reliability of financial controls and compliance with applicable laws and regulations.
The Company has also focused on upgrading the IT infrastructure both in terms of
hardware and software. In addition to the existing ERP platform, the Company is presently
reviewing the process documentation to ensure effectiveness of the controls in all the
critical functional areas of the Company.
CAUTIONARY STATEMENT
This report contains statements that may be forward looking including, but without
limitation, statements relating to the implementation of strategic initiatives and other
statements relating to Companys future business developments and economic performance.
While these forward-looking statements indicate our assessment and future expectations
concerning the development of our business, a number of risks, uncertainties and other
unknown factors could cause actual developments and results to differ materially from our
expectations. These factors include, but are not limited to, general market,
macroeconomic, governmental and regulatory trends, movements in currency exchange and
interest rates, competitive pressures, technological developments, changes in the
financial conditions of third parties dealing with us, legislative developments and other
key factors that could affect our business and financial performance. The Company
undertakes no obligation to publicly revise any forward-looking statements to reflect
future/likely events or circumstances.
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