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Real Estate in India – Now is the time October 28, 2008

Posted by Bipin Agarwal in IT offshoring and Real Estate development, Politics and economy, Real Estate Development in Global Economy.

India is going though the growing pain as there is slow down in the world economy and the domestic economy is not well developed. There is no country in the world that has done well in the long run without developing domestic economy. Japan, US, Korea, US, Part of Europe.

De-valuation of the Rupee is a blessing for India to stay competitive in the export market while making a concerted effort to develop local economy. From a practical point of view, China, Japan are not having the advantage that India currently has. If India does not make use of the opportunity, it will be missed opportunity.

Real Estate sector in India is going through a needed correction. All the high end market, Mall development, high end hotel, these were wrong headed focus in the real estate development. It is about twenty years too early for that to happen. Good news is that correction is happening when most of the inventory is either with the developers or with the people who have paid for the property in cash.

What are the Real Estate opportunity in India moving forward?

  1. Affordable housing in an organized development using the concept of township that will include housing, commercial, retail, entertainment, etc. for domestic business development
  2. Mid-price hotel, Rs 1500 to Rs 3000 per day price
  3. Logistic and warehousing
  4. Infrastructure development

Real Estate development opportunity in India will have the benefit of export and domestic Economy of India. This is a great time to acquire large parcel of land at strategic location. Suburb of tier-one city with highway or Rail connectivity,  Good location in tier-two and tier-three cities. We have keep in mind that the price point for real estate are different depending on the city. When DLF starts building in Chandigarh, that is a concern. They do not understand the price point issue, they are a public company and when the Market expectation starts driving the business strategy, company is usually doomed. That is already reflected in DLF and Unitech share price. Local company that are not public are best positioned to take advantage of the opportunity.

if you have a question, about Global economy, Real Estate, and Politics correlation, feel free to ask


Bipin Agarwal



US Energy Indepedence – Twenty Minute Lifestyle approach October 19, 2008

Posted by Bipin Agarwal in Global Economy, IT offshoring and Real Estate development, Politics and economy, Real Estate Development in Global Economy.
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Large part of US trade deficit is because of the import of oil. There is no question about it. Energy independence of US from imported oil has significant impact on the fixing the US economy and making it a world economic power and regaining the world power status.

You can not be a world power without being a economic power. Just having nuclear weapon does not do it, Ask Iran, north Korea, Pakistan and host of other countries.

There are three legs to this stool:

  1. Increase oil production in US through drilling
  2. Increase alternative energy production through Solar, Wind, Biofuel, Nuclear
  3. Dramatic reduction in the consumption of the energy (Twenty Minute Lifestyle)

Everybody will talk about the one of the other approach depending upon the party affiliation, personal view of priority and area of concern (read environment, global warming, professional and academic qualification).  While first and second point will help in the incremental way, third point is really the solution.

Both Democrats, and Republican are taking about the issue but not providing the solution. Alternative energy as promoted by Democrats, from different sources including Biofuel, solar, hydrogen, other sources of energy or Drilling as promoted by Republican will not solve the problem or have insignificant impact on energy independence.  Anybody who wants to really understand this can send me note or just spend two hour thinking and will know it. In summary, time it will take for either of these approaches to solve the energy problem will take at least 30 to 50 years and most of us may be either on social security and not live till then.

How to solve the problem now in next four years. Good thing I am not running for President otherwise problem has to be solved in ten years.

Twenty Minute Lifestyle TM is a approach to build all new communities using a self sufficient township where as most of the need for daily living can be met by walking.  This eliminates use of transport (oil) for most of the needs, more capable of using the alternative energy including solar and natural gas because people if at all need to travel only short distances. Apprach will also significantly improves the waste re-cycling because of the concentration of the people in a cluster as approach to spread out living that is currently prevalent in US. This will also lead to significant new jobs in real estate, clean energy, and public transport sector. In of the study published, each Twenty minute lifestyle community built around 500 to 600 acres of land to accomodate 100,000 people ( about twenty five thousand families) will reduce oil consumption by seventy five million gallons of oil over five years. If we built 500 such communities to accomodate fifity million people ( about 15% of the population at the end of four years), that will save thirty sevel thousand million gallon of oil every five year. compare this with current consumption of oil and you will understand , why it will work.

Twenty Minute Lifestyle TM and Real Estate – Another question worth answering is that how Twenty Minute Lifestyle solution to Energy independence will effect Real Estate in US, India and all over the world and will it help solve the current problem in real estate and financial market. Depending on the country, local culture and lifestyle, each community will result into real estate development of 30M sq ft to 60M sq ft. Significant migration of the population that will happen to cities or just the growth of population in cities, can result into building such communities for 100M people all over the world. That is about one thousand such township. WE are now talking about 30 to 50 Billion sq ft real estate development.

Big problem requires innovative thinking not big rescue that is being promoted by US Europe government. This is not surprising given that solution are being proposed by the Politician whose focus is to get re-elected in next election.

This is the approach that need to be adopted by all the countries in the world including developed, developing, emerging,  and poor countries every where including America, Europe, Africa, Asia.

if you have a question, about Global economy, Real Estate, and Politics correlation, feel free to ask.


Bipin Agarwal bipin.agarwal@redhawkinvestments.com


Bold action needed to stop the slide in US and world October 8, 2008

Posted by Bipin Agarwal in Global Economy, Politics and economy, Real Estate Development in Global Economy.
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We all know that incremental step do not work when there is panic. Several actions taken in last six to eight months have not worked, including:

  • Bear Stern, AIG bailout
  • Lehman, Indy Mac, Wamu, and other failure
  • Merill, Wachovia takeover and recapitalization by almost all financial institutions
  • 700 billion dollar bailout
  • coordinated interest rate cut
  • liquidity injection, coordinated activity by so called rich nation

What is more surprising that the brain power of Fed, Treasury, and Washington is not able to get its hand around the problem and put a plan in place. IT seems like they are using this opportunity to take care special business interest group (remember there are only few months left int he current administration to pay back to the business lobby industry). Unfortunately there is no lobbies work for Main Street.

How to solve the problem. What are the top three action US and others can do to re-build the confidence

  • De-Value the currency of US, UK by fifty percent against China, Russia
  • Let Middle east invest heavily in US market
  • US bailout money should be used to buy huge stake in the financial company using pfd stock with reasonable dividend (like prime plus half point)

One last thing, put a court injection so the presidential candidate are not making irresponsible promise to get elected.

if you have a question, about Global economy and Politics correlation, feel free to ask.


Bipin Agarwal

Bailout – begining of the end for US solo Super Power in the world. October 1, 2008

Posted by Bipin Agarwal in Global Economy, Politics and economy, Real Estate Development in Global Economy.
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I am sure lot of my friends here in US will not appreciate it or understand it, but that does not mean I will not be truthful about my views.

Why this bailout is needed – We can blame the Wall Street, and politician love to do it to get elected. Main Street person is in so much debt that he has no choice but to believe it. If they do not believe it, the alternative is not pretty, they have to declare bankruptcy. None of us like to go through that if there is a way out.

Real person who is causing this bailout is the person on the Main Street, not Wall Street. I do not think, there are lot of people living in mansion are filing for bankruptcy. This bailout was needed to salvage the bank from the loan that were given to common Main Street person, who does not have the capacity to pay the interest on the loan, forget about the actual loan. Main Street consumed the money, why cry about paying for it. Person taking the loan has to pay it back some day. There are two ways to do it. Either the person responsible for the loan pays it back (bankruptcy), or everybody chip in to pay it (bailout) or the bank declare bankruptcy (Given there are there are only three major bank left, this would mean government goes bankrupt)

What Main Street has done to American banking system, America is doing to rest of the world. We borrow 2 B (B as in billion) every day to support our economy. Where is this money coming from – other countries, certainly not coming from the saving that our society in US has created.

Let us draw some conclusion. When guy on the Main street can not afford to pay (after he has sold all of his other asset), he or she declares bankruptcy. Some point of time other credit holder countries will start demanding collateral for their debt,  after we sell our asset (by the way what are these assets? land, home, diamond rings, made in china pens, made in japan cars, worthless IOU notes provided by US gov to domestic and international institutions), what option we will have?

There is an interesting observation. In most of the countries, rich person is the one who lends money to others, Are we a rich country with 11 trillion (yes eleven trillion) in debt? and what assets?

How do we solve the problem:

  • We are a country that has lived beyond our means for too long. We have mortgaged future of our kids. We need to stop it right now. No bailout, let people on the main street pay the price. Wall street is already paying the price, look at AIG, Wachovia, Lehman, GE Capital, Countrywide, Bear Stern, etc. If anything Bailout will help wall street.
  • Beggars can not be choosers. Easy solution that other country did, devalue the dollar to 25% to 50% of its value against china and russia. There will lead to significant investment in the manufacturing sector. Thank god, we can make our own laptop.
  • Increase oil production in US, and work hard to maintain the oil price at $150 per barrel, that is the only way to increase sales of next generation car in US, and manage trade surplus in Asia.
  • Massive immigration of educated engineers, doctors, educated work force. It will solve the housing problem and will provide the work force needed for manufacturing and support services
  • Significant investment in infrastructure that is planned based on usage of public transport system both railway and light rail. Reduce our dependence on oil. Planned community development around the concept of Twenty Minute Lifestyle (TM) to reduce oil consumption, provide quality living. New housing infrastructure should be less maintenance oriented meaning more concrete and steel and not dry wall and wood.
  • Cut down the defense spending and entitlement program such as social security and medicare.

America is country with lot of brain power and resolve. We can solve the problem.

If you have a question, about Global economy and Politics correlation, feel free to ask.


Bipin Agarwal