One of our contributors on the Livewire Platform is coming to the end of a two week tour of India. Dean Honan is a Stockbroker at Morgans Financial and has been taking and small number of clients on an exploratory tour of India to see what is changing on the ground. I have also included a few of the photos that he sent along with his notes. Thanks, Dean. "A week into my tour of India and it’s easy to see why economists are tipping the country to record 7% growth in FY16, a mark that would see it outpace China. From Mumbai to Ahmedabad to Delhi, the country is soaked in positive sentiment and investment. The new Modi government has outlined a 17 point agenda to move India forward, focusing on large scale infrastructure projects, labour reforms and a crack down on corruption. After touring the development rich areas of Gurgaon and Ahmedabad it’s hard not make comparisons with China and I’m immediately taken back to my tour of Shanghai in 2006. What makes this growth even more staggering is the fact residents are doing it with the burden of 12% home loan rates. These are 15 observations from my trip: 1. Facebook COO Sheryl Sandberg believes India has the potential to become the largest economy in the world. Facebook has seen exponential growth in India which is its second largest market as far as user base is concerned. 2. India's new prime minister has an impressive pedigree - in his previous role as head of Gujrat state he oversaw huge economic expansion on the back of infrastructure investment. Gujrat is the only state in India to have sealed roads and 24 hour electricity to every village in the state. Even in Delhi there are power outages every hour, they last about 1-2 minutes. 3. Travel in India continues to improve as millions are spent on airport facilities and new aircraft. There are now direct flights between Sydney and New Delhi. 4. While cricket remains the national sport, there is huge growth in the number of people playing soccer. India's new soccer league kicks off later this year and I spotted more soccer balls than cricket bats on this tour. 5.You'll notice most apartment buildings in India are run down and in need of serious investment - owners are reluctant to spend any money on the properties as the rents they receive are set at 1940 levels due to the Bombay Rent Control Act 1947. 6. While property prices are currently depressed due to high inflation and high interest rates, property in most parts of India has increased 100% over the past seven years. The design and construction quality of these homes is fantastic and the developers cannot keep up with demand. Delhi alone is forecast to have a shortage of about 24 million dwellings by 2021 7. Indian policy in the past has tended to be short sighted and often ill thought out. An example being aspects of the National Rural Employment Guarantee Scheme. The scheme which guarantees rural workers 100 days employment has some glaring holes. Firstly, many of the workers have no skills meaning the 100 days pay becomes unproductive wages, adding to inflation. Secondly, many businesses have found loopholes, recording fictitious employees and collecting 100 days pay. Earlier this year Sachin Tendulkar was revealed to have been listed as a 'casual labourer' by a manufacturing business. 8. Property development is on a scale comparable only with China, and driving through the cities I'm taken back to Shanghai in the mid 2000's. All properties are sold off the plan with a 20-25% deposit and ongoing payments. The developers use this money to fund the projects. Makes sense with interest rates at 12%. 9. Speaking to developers and investors alike most off the plan buyers expect a 100% return when selling upon completion and buyers tend to invest within their home state. Areas with significant growth and development include Gurgaon, Ahmedabad and Mumbai. 10. Sectors worth a look on the Indian exchange; Utilities, food and beverage, consumer staples. The country's largest conglomerate by revenue, Tata Group has outlined plans to invest $35bn over the next 3 years for expansion into new areas such as retail and defence. 11. Private companies already making their mark in India; Di Bella Coffee (growing at a rapid rate), Sporting Edge Communities (bringing world class sports facilities to the Indian market), Magic Bus (a not for profit out of Mumbai changing the lives of 250,000 kids). 12. 'Slum property' is big business in India. Although unable to take legal title of slum land, the blocks change hands regardless. There are slum 'houses' in Mumbai worth over $100,000 and most slum communities have WIFI, air-con and TV. Infrastructure remains an issue. (see photo below) 13. The Indian middle class will drive global growth for the next 5-10 years. They are uniquely optimistic and have money to spend. I am very bullish on the India story moving forward. 14. Leighton's built the worlds first billion dollar home in Mumbai. They then wrote off $500 million when the owner didn't agree with the bill. 15. In 2015/16 the IMF has projected India's economy to grow at 6.4% - this figure would be closer to 10% if it included the 'unorganised sector' i.e. cash labour, cash paid for Goods & Services.
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