Good morning, last week, rating giant Moody's found that a measure of risk level for debt in Asia has quietly overtaken its 2009 financial crisis high.
Why: Mostly, thanks to a surge in downgrades of Chinese property developers since late last year.
What: The share of debt with the most speculative rating of “B3 negative” or lower has nearly doubled from last year — to a record high of 30.5% as of May.
So: That’s higher than the 27.3% share reached in May 2009, during the global financial crisis, when only 3 Chinese real estate firms were part of that risky share of debt. Come May, 2022 and the number of such Chinese firms stands at 24.
⚠ Is a financial meltdown imminent? Well, Moody's ain't saying a word on that.
– Rahul Mishra and Anuvab Chattopadhyay
Higher Housing Sales = Higher Employment
Listed Indian real estate players are on a hiring spree, fuelled by record sales in the residential market. Reports indicate 20-50% more hires at these firms in H2, FY22 as compared to H1, FY22.
Most personnel were recruited at junior levels, especially in marketing and sales departments. Most realty firms have also outlined plans to hire more professionals in FY23.
Key developments in the space
Here are the people trends at leading cos;
1️⃣ Godrej Properties - 372 new hires and a growth of 56%, 80% in junior-level roles, 10-12% increments in pay on average.
2️⃣ Brigade Enterprises - 176 new hires and a growth of 53%, 20% in senior/mid-management functions, a 15% workforce growth targeted in 2022.
3️⃣ Shriram Properties - 180 new hires and a growth of 20%, 125 more new hires in the pipeline for 2022, 10-20% increments in pay on average.
4️⃣ Puravankara - 30% hiring growth in six months.
💡 Most hiring happened in the engineering/projects, sales, marketing, and customer support departments.
What’s ahead?
With new launches, rising demand, and increasing digitalisation of real estate operations, the hiring spree should continue, say industry watchers.
Thailand's Interest Rate Blues Decoded
The REIC (Real Estate Information Center) has forecasted two hikes in policy rates by the Thailand MPC (Monetary Policy Committee) in H2, 2022.
🔮 With rising mortgage rates, will housing demand fall further?
What’s expected?
1️⃣ 6% inflation and 3% growth of the real estate market in 2022.
2️⃣ More potential Thai home buyers, especially those looking for mortgages, are likely to put off their transactions in the interim.
Latest market tidings
Home transfers slid by 30% (YoY) in Q1, 2022, with the pandemic playing its part. Interestingly, however, resale demand has gone up by 9.3% (YoY) due to Government incentives and lower rates.
Housing resale transactions could achieve newer records going forward, with increasing NPAs (non-performing assets), distress sales, stagnant prices, and higher supply.
Until demand improves, the authorities are relying on mega home sales, exhibitions and expos to attract buyers, but will they bite? Global cues tell otherwise.
Tuesday Treat
‘Girls in the Windows’ is an iconic photograph taken by Ormond Gigli in 1960 in NYC. Btw, this building was knocked down the next day.
💡 Ormond Gigli had an illustrious career as a photojournalist over the course of some 40 years and took many magnificent photographs-but this one photograph has eclipsed all the others. This was a photograph he conceived for himself, without an editorial assignment.
😳 Why would anyone knock down a building where so many girls lived?
Banks As Promoters - The RERA, IBC, and SARFAESI Collision
It was a Valentine’s Day with a difference as a Supreme Court division bench upheld a Rajasthan High Court judgment from December last year.
What was the case?
Union Bank of India v. Rajasthan Real Estate Regulatory Authority & Ors.
What is the conflict all about?
A collision in provisions of the SARFAESI (Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act) 2002 and RERA 2016.
Here’s how:
1️⃣ The Supreme Court gives RERA jurisdiction in cases where a complaint is filed against a bank (secured creditor) if the bank seeks relief under provisions of the SARFAESI Section 13 (4).
2️⃣ This section deals with secured debt recovery measures allowed for banks, including taking possession of secured assets/sale, taking over business management, appointments for managing these assets, etc.
3️⃣ RERA was aimed at safeguarding homebuyer interests against promoters. SARFAESI sole aim is safeguarding banks against defaults of realty promoters. Now, banks will be considered promoters, subject to RERA jurisdiction.
Bones of contention:
➕ Lenders cannot easily recover debts from developers.
➕ The provisions of RERA will prevail in case of a conflict with SARFAESI.
➕ RERA will have no retrospective effect on financial institutions.
What’s ahead?
🔖 Promoter responsibilities under RERA for banks.
🔖 Difficulties in filing Section 13 (4) cases.
🔖 Delays in recovering developer debts.
🔖 Prior consent for selling mortgaged properties.
What this creates is a yawning legal vacuum between RERA, SARFAESI and even IBC. RERA as the infringer? While you decide, the homebuyer can rejoice.
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There's no way you can skip your lunch today after reading this, because turns out, a chappie just paid USD19 million to break bread with Warren Buffet.
🥪 An anonymous bidder dished out a fortune to dine with the Oracle of Omaha in the 21st—and final—year of the charity fundraiser.
Fyi, this year’s winning bid set a record, topping the amount paid in 2019 by crypto mogul Justin Sun by more than 4x.
See you tomorrow, usual time. 💚
☕ The Crew@Ginger Chai