Category

Modular Construction

The Age of the City…Rural Migration has Reshaped India’s Real Estate Markets

By Affordable Housing, COVID-19, Housing Need, India, Mainstream Impact Investment, Modular Construction, News, Real Estate Markets

Increased levels of urbanisation in India (and elsewhere) are both an opportunity and a challenge: we have to learn to build homes better, faster and smarter, which is why Modular Construction is becoming so important: It will be a key part of addressing homelessness across the globe.

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A Time to Build and Buy…Indian Real Estate is facing a Perfect Storm of Opportunity

By Affordable Housing, COVID-19, Housing Need, Housing policy, News, Real Estate Markets

If it walks like a duck and quacks like a duck, it’s probably a duck: which is good news if you’re looking for a duck. And the same faithful formula applies to commercial markets: forget all the background noise, if it’s growing and looks like growing more, it’s probably good to invest in. You don’t need to be Warren Buffett (or Aristotle) to work that one out, and right now the needle for Indian Real Estate is reading high on both counts. Despite the (to put it mildly) dampening effects of COVID lockdown restrictions, the subcontinent’s property markets are facing a perfect storm of growth and opportunity…so this is a time to build and buy.

The sector has grown by 11.2% over the last two years and market analysts now predict pre-COVID levels will be reached again before the third quarter of this year, with the Affordable segment expected to perform especially well in areas including Hyderabad, Bangalore, Mumbai and Pune. 

So what exactly are the factors combining to make this perfect storm?

Disruption and Acceleration

Well, first of all, there’s COVID itself. Like most major market disrupters, the pandemic (beyond its obvious short term impact) has not delayed growth: it has turbo charged existing trends. With more time locked down at home, people are spending more time searching for (and buying) new properties online, which has created a sharp spike in demand. Competitive bidding thrives when there’s little else to look at and nothing else to do, and prices are shooting up as a result. Then, of course, that old (new) favourite Zoom has brought us virtual viewings as well, so you didn’t even need to leave home before splashing your cash. And when you bear in mind that India has the fastest growing population of any large economy on the planet, that’s a lot of cash to splash.

High Yields, Low Interest

The Reserve Bank of India has held the all important repo rate at 4% for several months, and last month announced its intention to keep it there as long as necessary to support future economic expansion, which means two things for real estate. First, the consequential fall and resulting long term hold in deposit rates makes it more attractive than ever to invest in rental properties where yields are holding up at 3% annually: making even a relatively modest appreciation year on year increasingly attractive. And, secondly, tax breaks will bring down still further the real time cost of borrowing for those in higher income brackets, making the move to property investment still more advantageous. With a characteristic sense of understatement, Prashant Thakur (Director and Head of Research at the influential Anarock Property Consultancy thinks “buying now means buying at the lowest possible price”.

He might be right there…

The REIT Revolution

Prime Minister Modi’s Government introduced the Real Estate Investment Trust (or REIT) to the subcontinent in April 2019, with the aim of expanding commercial and property investment, and the pandemic has done little to dilute its impact. Even during the most stringent lockdown restrictions, rental collections, the lifeblood of any REIT, still remained strong through to the first quarter of this year at 97% saturation (according to Motilal Oswald Real Estate): underpinned, of course, by GST and RERA initiatives that have progressively improved liquidity levels within the financial system as a whole. 

Overseas investors haven’t been slow to pick up on the opportunities either, with a surge in levels of FDI likely to drive an even strong recovery in commercial and residential assets over the course of the year.

A Brighter Future

All of which is good news for the future of the subcontinent as a whole: real estate accounts for 7% of India’s economy, the second biggest employer in the country (after agriculture) and a cornerstone for employment in more than 220 ancillary industries. And current growth trends within the sector are projected to increase real estate’s share of the economy to 13% within the next four years.

So now is the time to build in India…now is the time to buy.

Executive Overview

Indian Real Estate has always been a key area of focus for us, and I’m genuinely excited by the trends emerging on the subcontinent as lockdown restrictions are eased. It is, indeed, a perfect storm for growth and opportunity.

 Invest in Red Ribbon Asset Management 

Red Ribbon is committed to identifying and building on investment opportunities that are fully in compliance with its core Planet, People, Profit policy: not only offering above market rate returns for investors but also protecting our Natural Capital.

If you would like to know more about joining our Mainstream Impact Investment journey click here

Building in Sustainability…Modular Construction has long-term answers for the Planet

By Affordable Housing, Construction Technologies, COVID-19, Housing Need, Modular Construction, News

What can you do with a broken brick, clotted with mortar and torn from the heart of a demolished building? Well, you could get more bricks, lay them in a line and offer them to the Tate Gallery as an “Installation”, but short of that (frankly unlikely) option, the brutal answer is “not very much”. And the same goes for all that twisted, rusting steelwork, left scattered behind on the demolition site. Like the broken bricks, it is almost impossible to recycle and will almost certainly end up in a landfill site. And at the other end of its clunking life cycle, traditional on site construction currently accounts for an extraordinary 36% of worldwide energy consumption and 40% of global CO2 emissions: all those trucks belching out exhaust fumes, crawling to and from inner city developments to feed the daily demands of dumpers, drills and jackhammers.

Across the World four billion tonnes of concrete are poured every year, adding 2.8 billion tonnes of CO2 to our precious and fragile atmosphere, which is more than double the 1.04 Billion tonnes of CO2 produced annually by worldwide aviation, even in the years before Pandemic restrictions more or less shut it down (www.ourworldindata.org).

You get the message…Dinosaur Construction isn’t good for the Planet.

Sustainable Construction

On the other hand, Sustainable Construction can put a stop to all that: making use of renewable and recyclable materials, reducing energy consumption and creating a healthy, environmentally friendly environment…not to mention protecting the Planet in the process.

So why, according to the 2018 World Green Building Trends, Smart Market Report (www.worldgbc.org), do more than 50% of construction companies still believe sustainable construction technologies are more expensive? Perhaps they simply prefer laying broken bricks in a line…in which case (to save them looking it up) the contact number for the Tate Gallery is +44 20 7887 8888 (its closed at the moment by the way).

But whatever their business plan, they couldn’t be more wrong…

Less Expensive, More Efficient

Sustainable Construction is not only less expensive than dinosaur construction technologies, it also supports lower operating costs once the building is completed: all of which feeds directly into the bottom-line.

Take Modular Construction for instance: pre-assembled units are manufactured off site in climate controlled conditions, which means fewer trucks choking their way to the site every day and fewer days lost with workers sheltered in huts from the rain. Buildings constructed using advanced Modular systems are 30% lower in price than their conventional equivalents and they typically re-use 80% of their components, which fits in perfectly with the demands of the Circular Economy (www.oecd.org): prolonging the useful lifespan of key components.

That all adds up to annual savings of more than £400 Billion across worldwide markets, added to which waste levels are lower too, so you may not need to contact the Tate after all…

Smart builders are already factoring these costings and efficiency savings into their tenders, offsetting front-end construction costs and reducing environmental impact as part of the new Circular Economy. 

What’s not to like?

Modulex Construction

Modulex Construction (www.modulexglobal.com) is the World’s largest Steel Modular Building Company. It was established by Red Ribbon (www.redribbon.co) to harness the full potential of fast evolving technologies and deliver at pace to meet the evolving needs of the community.

Executive Overview

I don’t think it’s sufficiently understood how energy hungry and polluting conventional construction technologies can be. So given current demands for affordable housing and new infrastructure projects, it really is time to look for some sustainable alternatives.

 Invest in Modulex

Modulex Construction is the World’s largest Steel Modular Building Company. It was established by Red Ribbon to harness the full potential of these fast-evolving technologies and deliver at pace to meet the evolving needs of the community

If you would like to know more about joining our Mainstream Impact Investment journey click here

Can Unprecedented Demand Create a Slump in Property Prices…Of course not, Global Real Estate is as Strong as Ever.

By Affordable Housing, COVID-19, Housing Need, News, Real Estate Markets

Buying an average London house would have set you back £55,000 in 1985: but the same house would cost £84,000 five years later, and by 2010 it was selling for £283,000. Last year it was worth £490,000. That’s an aggregate increase of 890%, which is a pretty good going, bearing in mind £55,000 invested in equities over the same period would now be worth £359,700 (240% less): added to which you can’t live in a pile of share certificates, and (unless you happen to be married to him (or her)), your broker won’t be cooking Sunday lunch any time soon. With bricks and mortar consistently outstripping equity markets for decades, it’s no wonder Englishmen (and women) treat their home as their castle: because their castles are more like Fort Knox…but that seemed set to change last year.

With gruesome inevitability, we are (of course) talking about COVID…

Economic growth slumped dramatically in the aftermath of the Pandemic: in the third quarter of 2020 the US Economy suffered a precipitous 31.4% fall in GDP (the biggest since the Wall Street Crash), and in the UK GDP fell by 16% over the same period. In India the equivalent figure was 23.9%. All of which had an immediate impact on property prices across the globe, with forecasts from March 2020 predicting a deep and sustained slump in real estate…because, so the theory goes, it’s hard to buy a new home if you’re locked down in the one you’ve already got.

All that changed in six short months…it was, after all, only a theory.

Property Markets on the Rise

By the end of the 2020 US real estate was already looking at record-breaking returns (in the right direction): according to Zillow (www.zillow.com), a total of 5.64 Million homes were sold in the United States up to the end of last year, a 5.6% increase on 2019; and average house prices rose by 8.4%. India had an even more spectacular year, particularly in the tech heavy, Chennai and Bangalore sectors… ESR Group (www.esr.com/en) predicts sales will continue to increase by a steady 3.8% going into 2021: the most optimistic projection since 2016.

And part of the reason for all this is, of course, the Internet which has become a much bigger and more ubiquitous part of all our lives: stuck at home and glued to the screen, buyers are more competitive these days, forced to move quicker to snap up their new home at the speed of an electron. And then there are lower interest rates too, the lowest for over three hundred years: the Reserve Bank of India is now widely expected to reduce its benchmark repo rate by a further 50 basis points by the end of 2022, expected to bottom out at 3.5%.

So however difficult the times might be (and there’s no denying they’re difficult), there’s never been a better time to buy a new home…

Over on the supply side, and largely as a result of the same criteria, construction companies are finding it increasingly difficult to keep pace with the demand for new homes and houses, all of which has contributed to higher prices: demand has increased by 50% since 2010, but supply has fallen by 33%, with a particular shortage in supply of previously owned properties. 

Affordable Housing

Sounds like good news then … but there’s a problem.

A combination of reduced interest rates and rising property prices is also likely to create a shortage in affordable housing. For those in housing need, escalating prices only exacerbate the problem, which in turn places an added burden on construction companies. That’s why more and more suppliers, every day and supported by government programmes and incentives are turning to Modular Construction to deliver that most basic of human aspirations:  the home of their dreams. 

A Castle they can call their own…

Executive Overview

As Mark Twain might almost have said, rumours of the death of Real estate have been greatly exaggerated: despite COVID restrictions, global property markets are booming and seem set fair to prosper over the course of the coming years.

 Invest in Red Ribbon Asset Management 

Red Ribbon is committed to identifying and building on investment opportunities that are fully in compliance with its core Planet, People, Profit policy: not only offering above market rate returns for investors but also protecting our Natural Capital.

If you would like to know more about joining our Mainstream Impact Investment journey click here

There’s Nothing New under the Sun…Modular Construction meets the Needs of Public Infrastructure

By Construction Technologies, COVID-19, Mainstream Impact Investment, Modular Construction, News, Productivity

In the Nineteenth Century our forebears used a wood based search engine, called a Catalogue: and, in the days before Amazon, it was surprising what you could get. Farmers in New Zealand (and anywhere else for that matter) could buy a Church in a crate from Isaac Dixon & Co, whose 1896 catalogue offered to box it all up, ship it over (in as little as four months (the Amazon Prime of its day)), and drop it off for collection “at your local railway station”. A top of the range, 500 seat church cost £875 in new money, but you had to dig your own foundations: and if you wanted lights and heat that was an extra £70.  For the more ambitious, you could also buy a School in a crate, a Clubhouse (gin and tonic extra) and even a Billiard Hall (cues and balls included)…all boxed up and delivered to your local station platform.

So there’s nothing new about prefabricating public infrastructure…its all about public need.

Schools and Hospitals

A hundred years ago colonists scattered across the British Empire didn’t have much if anything by way of local builders, never mind materials to build with, but they still needed Schools and Hospitals (perhaps not Billiard Halls but, hey, everyone needs a hobby): and today Public Infrastructure Projects have rarely been so important, think Nightingale Hospitals, COVID Vaccination Facilities and Schools. But, with such unprecedented public pressures currently created by the COVID pandemic, how can we hope to deliver to those needs at the pace required? 

Just Imagine you could construct a fully functioning Intensive Care Unit inside a month. It’s not science fiction… it’s science fact. Modular construction has never been so important as it is now… Building on more than a hundred years’ experience.

Facing up to the Future

Working through the Crown Commercial Service (www.crowncommercial.gov.uk) the UK Government has now introduced a Modular Building Service to provide public sector bodies with facilities to buy or lease pre-designed, pre-fabricated and ready to install modular buildings: everything from Schoolrooms to Hospital Wards as well as Housing, Defence Installations, Commercial Units and Retail Shops. So-called “Framework Prices” are fixed for two years with design minima to help ensure high product quality. Social value and sustainability are important too: customers can ask suppliers to tailor the product to match their individual priorities.

Just like other Governments and private construction companies across the globe, the UK is waking up (again) to the full potential of Modular Construction: a ready-made and more effective alternative to costly and drawn out traditional building techniques.

Low Cost, High Quality

Public Buildings and Facilities created using advanced Modular systems are 30% lower in price than conventional equivalents, delivering space, people and technology at the core of the asset itself: with added inbuilt digital technologies, think life support systems in those new Nightingale Hospitals put together in less than a month. And Modular Construction also typically re-uses 80% of its components, which fits in perfectly with the demands of the Circular Economy (www.oecd.org): prolonging the useful lifespan of materials by combining modularity with durability and reducing embodied energy. 

Executive Overview

To secure the public services we all need in these difficult times, we have to learn to build better, faster and smarter: and that has inevitably increased reliance on Modular Construction technologies by public bodies across the planet. The latest UK design initiative is just part of a much larger process.


Find out more about Modulex

This image has an empty alt attribute; its file name is Modulex-Logo-300x77.jpg

Modulex is setting up the world’s largest steel modular buildings factory based in India. It was established by Red Ribbon to harness the full potential of fast-evolving technologies and deliver at pace to meet the evolving needs of the community.

If you would like to know more about joining our Mainstream Impact Investment journey click here

New Year, New Horizons… Modular Construction is Flexed for Success

By Affordable Housing, Construction Technologies, Housing policy, Modular Construction, News

It’s called Flex Space: adaptable real estate solutions for the home and workplace, addressing rapidly evolving changes in demand and product standards. No longer is it enough just to build a twelve story concrete block in the centre of town, hoping (praying perhaps) to fill it with residential and commercial tenants: because business owners don’t want (or need) those vast fields of space anymore, and those in housing need can’t wait two years for the monolith to be built up in a field of mud, steel and bricks. In the wake of COVID 19, office workers have become home workers, and there’s a worldwide shortage of affordable housing too. COVID has changed everything…

That’s why some of the world’s leading real estate companies are now re-formatting their platforms and services to embrace new technologies, staying on the front foot to add value and flexibility in these fast changing times.

According to a recent report from JLL (www.us.jll.com), 67% of decision makers in construction are either planning to, or already have, embraced Flex Space as part of their strategic objectives: so for sure, if ever innovative construction was a niche sector, it’s not a niche anymore. Optimising that crucial mix between asset efficiency and speed of delivery has become a priority.

Plug and Play Technology

The next step involves offering a more expansive and responsive product, so technology is predictably part of the equation: digital solutions that radically enhance standards by plugging directly into environmental systems, real time access to value added spaces and critical add ins, like life support systems in those new Nightingale Hospitals. It’s a “plug and play” operating model…and when it comes to Technology, Modular Construction is at the centre of everything: with an operating model that delivers space, people and technology at the core of the asset itself.

Sustainability and Durability

Modular Construction also typically re-uses 80% of its building components, fitting in perfectly with the demands of the Circular Economy (www.oecd.org): prolonging the useful lifespan of materials by combining modularity with durability and reducing embodied energy. A bio-composite exterior panel, for example, can reduce energy levels by up to 50% compared with conventional construction materials.

Speed of Delivery

And as for speed of delivery, modular buildings can be completed three times faster than their conventional counterparts: helping meet the needs of millions of people across the planet who are currently homeless or in housing need.

Affordable Homes

In their snappily titled report, “Build Homes, Build Jobs, Build Innovation”, Cast Consultancy concluded Modular Construction was flexed to deliver up to 75,000 new homes every year in the UK alone (www.cast-consultancy.com): Chief Executive Mark Farmer concluded that, unlike mud, steel and brick alternatives, Modular Technologies not only increase the pace of delivery in these unprecedented times, but also boost productivity, increase quality and significantly reduce carbon emissions. A Paper produced by Herriot Watt University found adoption of Modular technologies reduced emissions by 40% compared with conventional systems.

With COVID clearly in mind, Cast also drew attention to the significant additional benefits of offsite construction, which can be more readily adapted to the demands of lockdown restrictions and social distancing measures.

So all in all, as Mr Farmer said, Modular Construction is “the single biggest game changer when it comes to building more homes”: unsurprisingly the UK Government has taken up the theme and now plans a major new investment programme based on modular construction. The UK Housing Secretary, Robert Jenrick, is publically committed to Modular becoming “a significant part of our future housing investment plans”.

Who can blame him? Modular Technologies are all flexed and ready to go…

Executive Overview

The world is changing beneath our feet; we need to make the most of what we have. Every passing day makes it clearer that when it comes to the future of global housing policy, Modular Construction has the answers: faster, sustainable and better adapted to the needs of our changing world.

We need to build better…we need to do the best for our future

If you would like to know more about joining our Mainstream Impact Investment journey click here

All Set and Ready to Lead…India will be at the Head of the Pack for Post-COVID Growth

By COVID-19, Housing Need, India, Mainstream Impact Investment, News

In last month’s Asia 2021 Outlook (www.nomuraconnects.com), Nomura forecast a 9.9% growth in Indian GDP by the end of 2021: that’s more than China (9%), and way more than the UK (5.5%) and the United States (4.7%), all of which are running off historically low recovery platforms as a result of the Pandemic.

The UK’s forecast, for example, may be the highest since the 1980’s, but according to the Office for Budget Responsibility (“OBR”) the economy will not return to pre-Pandemic levels until the last quarter of 2022. Investors would do well to remember that even a dead cat bounces…

On the other hand, India is expected to go on to deliver GDP growth of 11.9% by the first quarter of 2022, far higher than pre-Pandemic levels.

None of which should come as any surprise.

Post-COVID Growth

Before COVID gripped its chill hand on economies across the planet, GDP on the subcontinent was growing at a rate of 5.02% annually, barely half of the figure now being forecast by Nomura for the coming year. So unlike the UK there’s certainly something more than bouncing back at work here. Just look at the underlying data…in the second quarter alone, Nomura expects Indian GDP to grow by 32.4%, which means the so-called “base effect” of COVID will be completely eliminated on the subcontinent within six months (as opposed to two years in the UK).

Ten years ago the comparable (World Bank) figure for growth on the subcontinent was 8.5%, and in 2016 it was 8.26% (www.worldbank.org). So the latest Nomura forecast is well within the parameters of an already established, upwards growth trajectory. In fact, at 9.9%, it even foreshadows a sharp(ish) upwards tick over the near term.

And once again, that can be usefully contrasted with comparable trends for the UK economy over the same period. In 2010 GDP grew in the UK by 1.95%, but by 2016 it had fallen back to 1.92%. And before COVID struck, it had fallen back again to 1.41%. That’s why even on the basis of the latest OBR data (www.obr.uk), any UK recovery will still be two years behind India, heading for a downturn on what are already historically low figures. There’s no sign of an upward tick any time soon in the UK, sharp(ish) or otherwise.

So what’s the reason for those stark differences, and what does COVID have to do with it?

Well, there are three key indicators.

First of all, the UK has built up a staggering Budget Deficit of £394 Billion for the year to March 2021: struggling to balance massive recovery spending with dwindling tax receipts.

As a whole, UK national debt currently exceeds £2 Trillion, which is more than 100% of GDP, and its expected to stay that way for at least the next five years. Putting it mildly, none of this is a healthy foundation for future economic growth.

But even allowing for post COVID growth and recovery programmes on the subcontinent and an unprecedented level of public infrastructure spending, India’s deficit is only 17.9% of projected GDP (less than a fifth of the UK figure), so it has vastly more headroom for growth.

And then, secondly, there’s that tried and trusted bellwether of growth: Inflation.

As Keynes once said, there’s no inflation in a junkyard: upward pressure on prices is usually a reliable indicator of healthy levels of consumer demand, and demand is a significant driver for growth.

In 2020 the UK inflation rate slumped to 0.3%, which is the lowest level on record. And there’s a double whammy too: as the economic strictures of COVID are eased, inflation is likely to rise with a parallel increase in interest rates: so it’s not a good time to be holding £2 Trillion in debt (see above). On the other hand, inflation on the subcontinent is currently 4.95%, which is slightly higher (but not disturbingly so) than the midpoint 4% target maintained by the Reserve Bank of India since 2016, and in turn that reflects a robust level of consumer demand as a result of a burgeoning, increasingly wealthy and product hungry population.

And then, finally, there’s Housing: an Englishman’s home isn’t just his castle, over the years it’s been a pretty good investment too.

Despite the shocks of COVID and the worst recession for three hundred years, house prices in the UK rose to a six-year high at the end of 2020, which speaks to a certain confidence in the future…or does it? Across the board, analysts in the UK are now predicting a sharp decline in house prices.

Halifax (the country’s biggest mortgage lender) expects a fall of between 2% and 5% over the coming year, and the OBR is even more of a Cassandra: forecasting an 8% drop in prices during 2021. That’s certainly not a trend reflected on the subcontinent…house prices are going through the roof from Mumbai to Chennai.

So with strong fundamentals in Housing, Monetary and Macro Economic policy, India seems all set for further growth; and despite the fact that the traumatic impact of COVID must induce a necessary caution into any forward looking analysis, there’s little reason to doubt Nomura’s figures. After all, history has given us the compelling lesson of Spanish Flu: a hundred years ago we were also socially distancing, wearing masks and watching fearfully as old certainties crumbled away. But within two years global economies had bounced back with a vengeance… there’s no reason to doubt that they can (and will) do it again.

Expect India to be at the head of the pack when they do.

Executive Overview

The World has come a long way since March 2020, and we’ve learned a lot of lessons along the way: but with effective vaccines now on the horizon, and signs of economic recovery emerging across the Planet, it’s time to look to the future. All of the data now suggests India will be playing a leading part.

If you would like to know more about joining our Mainstream Impact Investment journey click here

The Future is Already Here… Bitcoin’s Surge in Value is Proof of a Connected Global Economy and India is Crucial to its Development

By Blackstone, COVID-19, Emerging Technologies, India, Mainstream Impact Investment, News

Suppose you live in the South of France: the Boulangerie (and every other shop for that matter) is Brexit sceptic, but you’re being paid in Pounds. Naturally you convert to Euros. It makes life easier. It makes sense. But why would anyone convert Sterling, or any other currency for that matter, into Bitcoin? You can’t buy bread with Bitcoin, it won’t get you a ticket on the Underground and Amazon doesn’t take it for any kind of lockdown delivery. As a non-fiat cryptocurrency, it’s about as much use in your purse or wallet as an IOU signed by Donald Trump.

So why is the value of Bitcoin skyrocketing?

Last week it was trading against the US Dollar at a staggering $27,000 …and there’s no sign of it slowing down any time soon. The aggregate value of Bitcoin is now more than $500 Billion, which exceeds the market capitalisation of MasterCard and it’s twice as much as IBM. Over the last ten years a single dollar invested in Bitcoin has consistently returned more than $100 invested in the S&P 500.

BlackRock (www.blackrock.com) now predicts Bitcoin will replace gold as a reserve of last resort. 

What’s that all about then?

Part of the reason, for sure, is the limited number of Bitcoin in circulation: when the cryptocurrency was launched in 2009 (we still don’t know who did it) the number of “wallets” was restricted to 21 Million, and latest estimates suggest the number of unique users is now hovering at something in the order of 18 Million. The rate at which new Bitcoin reserves are released decreases by half every four years, so naturally investors believe its value can only go up as demand increases. Economists call it Says Law (www.investopedia.com), where increased demand combined with limited supply means a higher price. And functioning as it does through a decentralised Blockchain ledger, the Bitcoins in this restricted wallet can be converted into other currencies, products and services on the Internet, so it gives them “real” market value.

Trust comes into it too…

Those same Blockchain ledgers that act as the locked vault of the currency have proved to be highly safe and reliable, like…well, just like a locked vault. Exactly like a Pound coin (or a Euro for the man in the Tabac and the lady in the Boulangerie with flour up to her elbows), it doesn’t require either party to a transaction to trust in the good faith of the other. It’s the coin itself, or the Bitcoin in this case, that makes the transaction work. Just like fiat currencies (issued by Governments), Blockchain gives Bitcoin an elaborate system of checks and verification systems to make sure the payment will actually go through. And because there are no intermediaries it costs less too, as well as being exceptionally difficult to counterfeit.

With that substructure of trust and certainty, and with all 21 Million Bitcoins in circulation, the price of one Bitcoin would be $514,000 (adopting traditional monetarist M3 (store of value) modelling), and that’s more than twenty times higher than its current market value of $27,000. Small wonder then that the market price is so resurgent at the moment…it has a lot of headroom to catch up on.

It’s not something that’s been lost on the world’s most vibrant distribution hub either. Sitting at the very heart of the planet’s trading networks, India is making the most of Blockchain technologies to turbo charge future economic development, not just across the subcontinent but in global markets too.

You can expect Bitcoin to be a key part of the process…

Executive Overview

Economic commentators have concluded that the pandemic has brought ten years of technological innovation in six months, and looking at the exponential changes brought about by Zoom and Amazon, Bitcoin and Blockchain, I wouldn’t be at all surprised if that was right.

If you would like to know more about joining our Mainstream Impact Investment journey click here

The Lessons of History…Indian Real Estate and Equity Markets still go Hand in Hand

By COVID-19, Housing policy, India, Mainstream Impact Investment, News, Real Estate Markets

For every action there is an equal and opposite reaction: that’s why you can expect a reaction (quite a powerful one actually) if you present your loved one with last minute flowers from the service station. But not so fast, not every action produces pushback: some move together, following the same trend in lockstep. And nowhere is that more true than economic markets. Take equity and real estate for example: history tells us that in the long term, stock and property prices will tend to move together in the same direction (up or down), and in the short term an increase in residential property prices will also push stock prices up.

But before you get on the phone to your broker, a word of warning about what history can tell us about the future…

Although the 1960’s were written in Technicolor, the 1970’s were distinctly beige: the sixties swung, landed a man on the moon and gave us the Beatles, but the seventies limped through Watergate to the music of the Osmonds (I’m using the word “music” loosely here)…and they also gave us Stagflation. Anyone who studied economics in the dark days before Kylie Minogue recorded “I should be so lucky” will be familiar with the Phillips Curve: the theory that high rates of unemployment couldn’t co-exist with high inflation, because higher unemployment meant less earned income, and less earned income meant lower inflation. It all made sense on paper and for a while it worked in practice too, but there was a small flaw in the theory…it was nonsense. Stagflation reminded us that unemployment and inflation could be delivered together, at unprecedentedly high levels as part a beige coloured double whammy. The Phillips Curve said it couldn’t happen…but it did.

So is economic orthodoxy equally flawed when it comes to that important correlation between short-term housing and equity markets?

Well, to test the theory, let’s take a look at trends in Indian markets over the last six months (which, as the short term goes, is pretty short term).

After the initial shocks of COVID 19 had been absorbed and lockdown measures eased, there has been a marked increase in confidence across the subcontinent’s real estate sector, driven in substantial part by the Indian Reserve Bank’s fiscal stimulus package and interest rate reductions, as well as tax breaks and incentives introduced by Prime Minister Modi’s Government. And that old perennial was helping too: moving into your new home by Christmas. Knight Frank India reported “improved sentiment” (www.knightfrank.co.in) and the mid (affordable) segment saw bellwether rental prices increase sharply by up to 9% year on year. After the COVID enforced lull, developers are also resuming and accelerating construction projects to pick up the slack, with 90% of the labour force now back on site. Property prices are rising across the board.

That’s all well and good, but what about India’s Equity Markets? What were they doing over that same six-month period?

The answer is that since June of this year 95% of BSE500 stocks have risen in price, with the benchmark BSE Sensex Index surging by 37% (after hitting a 52 week COVID low in March). And tellingly for present purposes, Indiabulls Housing Finance more than doubled returns for investors in Q4 (www.indiabullshomeloans.com), further fuelling demand for India’s burgeoning demographic and bringing closer the dream of owning a home of their own.

All of which means that when it comes to Indian Real Estate, it looks like economic orthodoxy still holds good after all: Property Markets and Equity Markets are moving upwards together. But even so, think twice before bringing home those service station flowers for Christmas…you might not get the reaction you were expecting.

Executive Overview

As someone who works on a daily basis in financial markets, I know economic theory can go wrong as often as it sets us right: but keep an eye on that key variable between property and equity markets, it’ has to be a core part of our forward planning.

And the variable is working better than ever in India.

Have a great Christmas and a prosperous new year from all of us at Red Ribbon.

If you would like to know more about joining our Mainstream Impact Investment journey click here

Red Ribbon

At Red Ribbon we understand that the transition towards a resilient global economy will be led by well-governed businesses in mainstream markets, striving to reduce the environmental impact of their production processes on society at large and on the environment as well.

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