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15/09/2014

Indian Investments in London

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Indian billionaires pumped in nearly £1 billion ($1.7 billion) into buying up luxury homes in the heart of London over the last 18 months alone. 

These Indian mega-rich are expected to spend another £500 million ($850 million) on redevelopment in the next five years, says a new report from UK luxury property agents Wetherell released this week.

According to the analysis, Indian ultra high net worth (UNHW) individuals are buying up super flats, estates and hotels in London against the backdrop of a faltering real estate market back home in India.

This group of investors, second only to British-based buyers, spent almost £450 million ($760 million) purchasing 221 residences in prime central London in 2013, with the top three most popular locations being St. Johns Wood, Belgravia and Mayfair.

British buyers accounted for 30% of property in Mayfair, while wealthy Indians have snapped up 25%. Middle Eastern, continental European and Russian buyers all accounted for 13% of purchases each in the exclusive London borough.

An estimated 3,000 UHNW Indian families escape the heat of India in the summer and relocate to their homes in London – also seen as a global investment safe haven.

Despite a strengthening pound, which is eroding the currency advantage of buying in Britain, the UK capital is still perceived to be a stable investment, and has attracted funds since the global financial crisis when investors started to turn from complicated financial structures towards tangible investments.

Peter Wetherell, founder of Wetherell, said: “Many have chosen to invest in Mayfair, especially in Grosvenor Square, because they can see that currently the district is undervalued compared to neighbouring locations such as Knightsbridge and Belgravia.”

“There has been a spectacular 314% rise in sales values in Grosvenor Square since 2000, surpassing values such as Eaton Square and Cadogan Square."

Aside from private money, Indian developers are also entering the London market. The Lodha Group, one of India's largest residential developer, had recently purchased the Canadian High Commission in Grosvenor Square for £306 million ($515 million). The group plans to turn the seven floor 135,000 sq ft building into 18 to 20 luxury homes. 

Peter Wetherell, chief executive of Wetherell Estate Agents, said: 'Indian investment in luxury property in London goes back to the Edwardian era.

'This was when some of India’s richest Princes owned mansions in the capital, most notably HEH The Nizam of Hyderabad who owned Hyderabad House at No.6 Palace Green in Kensington and purchased properties for his family in Mayfair and Belgravia.

'In more recent times in 1972 Idi Amin ordered the expulsion of Uganda’s Indian business community from the country, and some 27,200 people emigrated to Britain, with the wealthiest families buying homes in Mayfair, St Johns Wood and Holland Park.'

The Flemings Hotel is owned by the Veladail Hotels Group, headed by Satinder Gulhati. The Washington Hotel on Curzon Street is understood to be owned by the Sanga family and The MayFair Hotel is believed to be owned by Jasminder Singh of the Radisson Group.

This report on foreign direct investment into London property coincides with news from UK agents Knight Frank who have today warned that the Capital needs to spend £154 billion ($260 billion) on new homes to match the expected surge in population taking it to from 8.3 million now to 9.4 million by 2022.

11/09/2014

There is No Magic-Wand Solution to India’s Problems

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IndusView Chairman Bundeep Singh Rangar on India’s Macro Trends and Why the Country Remains Favourable as a long-term Investment Destination...

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03/09/2014

Modi’s 100 Days in Office: Kaizen Not Magic Wand

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IndusView, Wednesday 3 September 2014 (London): A visit to Japan is perhaps the best statement of Narendra Modi’s 100 days as Prime Minister of India, a honeymoon time typically used by new governments to push symbolic and substantive changes capitalising on voter sentiment that ushered them into power.

Accompanied by some of India’s top business leaders, Modi wooed Japanese corporate investors and promised Japanese Kaizen management style, noted for rigour and efficiency, in his own bureau, the Prime Minister’s Office.

For those expecting a shimmery display of new reforms, there was little to cheer. But for those awaiting deeper structural changes, the effects of which would be felt over months and years but not necessarily within 100 days, numerous observations were to be made.

“Modi is managing expectations against a magic wand solution to India’s problems,” said IndusView Chairman Bundeep Singh Rangar. “Expect deeper structural and slower policy changes, even painfully slow involving consensus building, rather than cosmetic quick-fixes. The blue print for such Kaizen style changes were spelt out in his party’s election manifesto five months ago.”

The first 100 days of the Bharatiya Janata Party (BJP) marked changes in tax policy, land acquisition, environment approvals, financial inclusion, manufacturing and labour laws.

Modi wishes to emulate Japan in terms of quality, zero defect and delivery systems while carrying out skill development. He’s outlined single window-clearances as a way to ease business, simplify procedures, quicken processes and use technology. 

Kaizen, Japanese for "good change," has been applied in business to continually improve all functions across the corporate chain of command. It also applies to processes, such as purchasing and logistics. By improving standardized activities and processes, kaizen aims to eliminate waste and improve productivity.

Modi’s reputation for effective and honest administration, built over a decade running the state of Gujarat, has won support in India's business community. Some of the prominent business leaders accompanying Modi to Japan include Sunil Bharti Mittal, Chairman and Group CEO of Bharti Enterprises that owns India’s largest mobile network Airtel and is partners with Wal-Mart Stores Inc.; Kumar Managalam Birla, Chairman of the Aditya Birla Group, one of India’s largest conglomerate multinational corporations and partner of Canada’s Sun Life Financial Inc.; and Mukesh Ambani, Chairman and Managing Director of Reliance Industries Limited (RIL), ranked last year at No. 99 on the Fortune Global 500 list of the world's biggest corporations. RIL contributed about 14% of India’s $300 billion worth of exports last year.

There have been a number of key structural reforms over the past 100 days even as India announced 5.7% growth in gross domestic product (GDP) in the latest quarter, the fastest in two year. These include higher foreign direct investment (FDI) in insurance and defense; agreement on Goods and Services Tax (GST) in FY15; a number of reforms to boost manufacturing, including creating Special Economic Zones (SEZs), single window clearance, excise duty cuts for labor intensive sectors such as food processing and footwear, reforms to the Apprenticeship Act, the inclusion of 15 million people into the banking sector and an $1.65 billion venture capital fund for small and medium enterprises.

Reforms for capital markets, include allowing American Depositary Receipts (ADR) and Global Depositary Receipts (GDR) for a larger group of securities, make it easier for foreign portfolio managers to set up shop in India by taxing their gains from transactions only as capital gains, and the lower withholding tax of 5% on corporate bonds extended till mid-2017 from mid-2015. Further, Indian bonds are now allowed to be cleared internationally, which takes them a step closer to the process of including them in international bond indices.

Since coming into office, Modi has demonstrated his commitment to restoring India’s leadership within the subcontinent and on the world stage. Aside from Tokyo, he has visited Bhutan, Nepal, and Fortaleza, Brazil for the Brazil, Russia, India, China and South Africa (BRICS) Summit. He has also invited all the South Asian Association for Regional Cooperation (SAARC) leaders to his inauguration. Modi has shown that India’s foreign relations are a priority for his government. A trip to Washington DC is also planned on September 30.

"The more integrated India is into global markets and the economic architecture of Asia, the more India’s economy will grow and benefit the entire global economic system," said Rangar. “Investors expect policy measures from the new government to put India on a high-growth path on a sustainable basis.”

Modi’s silence on troubling domestic phenomena, including communal violence in Uttar Pradesh and other social issues across the country, is seen by his critics as a leader poorly suited to lead a pluralistic country. Opposition politicians have similarly alleged that since Modi’s rise to power, communal violence has spiked across India. That assertion, however, is apparently not supported by the latest data from India's Home Ministry. 

“On domestic issues, both economic and social, Modi’s approach is looking to be quieter and more gradual,” said Rangar. “It’ll take far longer than just 100 days to nurse a country of 1.2 billion people into good economic health”.

Prime Minister Narendra Modi has claimed in his speeches that he does not believe in setting 100-day goals or agendas, as his government is here to govern for its full term of five years. But his government, aware that its performance will be judged by the media and myriad experts as it nears 100 days in office, is preparing for a series of press conferences to showcase its achievements since taking charge on May 26. 

As soon as the PM took the oath of office, a website was up and running with constant updates of thoughts, speeches, and movements of the PM. The Finance Minister has been tweeting regularly about policy, as have other ministers. The greater use of technology and social media for public interaction is also one point on the Prime Minister’s 10-point agenda announced on May 30. Instead of press conferences and media events, the new government is communicating through tweets, Facebook, and websites. E-auctions for government projects has also found mention in the 10-point agenda.