Clear as a Foggy Day - Indian Realty (Part 3)

Now here is another foreign view, that will make us all in India feel like engaging in a song and dance sequence - Bollywood style. "India is doing great. Nobody talks about it." Words of wisdom uttered by none other than the world-famous Mr. Donald Trump. Okay, I think what he meant to say was 'India is doing just great, better than the US for now. Maybe Indians should stay at home and buy all the "Trump" branded apartments coming up in practically every Indian city. Make me richer. I have an election to fight.' Be rest assured, unlike the Middle East, Mr. Trump can "Treat" or "Trump" India the way he wants, and none of his Indian partners will pull down the "TRUMP" brand from their developments. Please note, we are a very tolerant nation unless it concerns the cow, and Mr. Trump considers the cow holy (gathered from his frequent use of the term "Holy Cow").


As a courtesy to all those who fell asleep reading my previous blog (no worries it happens to the best for far more important things), I will reiterate some of my key learning(s) from the RICS 2016 conference:


1. The Indian RE space is going through a "Value Contraction" phase.

2. Last year, Mumbai City demanded some 2 million affordable homes, but saw sales of some 40,000 units, leaving an inventory of 170,000 affordable homes unsold. Clearly what developers call affordable are either unaffordable or built of a quality that the customers call unacceptable. Most of the affordable homes could give the SRA (Slum Rehabilitation Authority) buildings a run for their money in terms of crappy design and quality.


3. In general, prices unlikely to appreciate for next couple of years, and real inflation with the current tax structure will worsen the situation. I may add here that the introduction of GST (Goods and Services Tax) at close to 18% will drive up costs of essentials even further for those really in search of a home to buy. Oil may have become cheaper than milk and bottled water in the US, and possibly in India too, but petrol and diesel hardly qualify as household staples.

4. Fund boys will make friends with a very select list of developers, those who have delivered and are executing projects at select locations. So those eligible get ready to party (lots of money on favorable terms), others do whatever you want to do man (as Salman Khan says on Big Boss).

5. Hybrid financing (fixed + floating) will continue to rule the private equity space in real estate until the market reaches a point of distress.

Those who had read my previous two blogs on Real Estate in "alert" mode would surely know that none of what I have said above was stated earlier. Whatever I have stated above certainly should make the entire RE landscape so very clear to all the readers.  As clear as one can see on a foggy day.

To begin with, it was private equity that pumped money in RE without understanding ground realities. As a result, it inflated market values beyond what was sustainable. Naturally, everyone climbed onto the gravy train, right from the seller of the land to those involved in selling construction sand. Small brokers to small contractors began to earn so much out of real estate, that they too turned into developers. Not that it's bad for people to move up in life, but it was this class that began to build homes for the lower end of the spectrum without much understanding of what the market really wants. Not that the big and established ones understood that aspect fully either. For example, in the Mumbai zone, I cannot understand why premium developments in far out places like Thane or Virar and even Panvel were built as expensive - small as pill boxes - super tall buildings - in the middle of a concrete jungle, when the market was actually looking for premium affordable larger format homes (not condos), spread out in the midst of open greenery with a work play eco-system built around it. The old FDI norms were specially designed to promote satellite townships (the precursor to SMART cities). PE money did not influence developments to better quality of life, it just decided to bed with developers promising the best returns. No offence, it is a broad and sweeping statement, but when I look at the number of good and bad developments, bad wins hands down.


The market is in general agreement that too much and too quick infusion of private equity made a select few too rich too quick. Wealth did trickle down, but not enough to match the inflated rates at which a home was being offered to the end buyer. It became an investor game, invest now and 100% appreciation in 6 months to 6 years. Over time, a sluggish economy resulted in foreign PE money in RE to virtually disappear. A lack of primary sales forced the developers to borrow capital as debt from local RE funds to hold the price points intact, and so began the vicious cycle of contraction. I was astonished (actually I should not have been) to hear that many large developers are currently offloading stock to bulk buyers at a 30%+ discount to market. The developers say that these are not really sales but securitization deals to capital lenders. This may actually be true. If the inventory was sold at such a deep discount the builder would certainly loose. The high cost of land and regulations ensures it. But, the lender knows that the true value of the market is 30%+ lower to seek such a haircut in order to secure the investment.

So the next question is, why don't the builders voluntarily allow the market to crack to its real value and take a short term hit? It will help recapitalizing the market. I know that my question qualifies as a "catch 22". It is in no one's real interest to allow the market to go into a free fall.The tragedy is that the very funds that helped create this price bloat with pure equity are still funding it with skewed debt. Longer the hold, better the chances of distress. Ultimately, like in gambling, the house always wins. I know many developers who showed PE boys the middle finger when asked by the latter for an exit. Now, I don't see too many developers with an intact middle finger.


Dramatic as it may sound, but this is the current reality of realty. By the way, I have heard that many impatient foreign funds, unable to find "quality" distress deals (I am really going LOL LOL now) have started returning money back to investors

Ask around, not many are convinced about the revival in the commercial estate. Yes, occupancies are higher, but at what rate? Rates in most locations have corrected sharply. Higher occupancies will allow the unfinished inventory to see completion, that means rents may retreat too, hence returns. Warehousing is now the new retail and not malls. Will malls get converted to expensive warehouses, unfinished hotels converted to expensive office complexes, and unfinished hotels into high end residential? Residential? What about it? There is always AirBnB to turn to. The price of real estate never goes down in India, so we have learnt. If it does, nobody's talking about it.

The One Eyed King - Indian Realty (Part 2)

Does anyone like a naysayer? For one, they are never right, be it as old as Rev. Malthus (guys -economics-school) or any one of the new age prophets of doom. But, being wrong is exactly what they hope for, in the hope that predicting possible negative events hopefully wakes up those walking happily in their sleep - dreaming. That's how they become fixtures in the history books, for the wrong reasons.

Arun Nanda's keynote address at the RICS 2016 investment conference was conveyed more as an epitaph for an India story that is about to die, rather killed by risk aversion brought about by global circumstances. While he agreed that the global investment community does not have too many alternatives, India to them, appears as a "One eyed king in a world of the blind". When choices have to be made, and options are few, generally, the wise investors don't make decisions based on compromise, and India today does look like it is a big compromise. 


Last year, about the same time, there was talk of Europe's economy revving up despite Greece and Ukraine looming; Africa was the commodity bright star; oil was 60% down at US$ 50 a bbl and the world was cheering that would now stay in the comfort zone of $45 - $60 a bbl; the US Fed. was still playing wolf with the news of rate hike; Donald Trump was still not considered a serious candidate; China was showing signs of cooling its economy, but at 7.3% growth, was it really that big a deal? Then all of a sudden hell broke loose and we all know what happened next. Deflation, stagflation, recession, contraction, compression, expulsion and all the forgotten bad "ion" words in the English language are being retaught to the world. If Rev. Malthus was around today, he would once again have predicted "the end".



Yet India, kind of, does appear to be a bright spot when most of the world has switched off lights. It does have a real consumption story, real demand for building infrastructure, real thirst for quality homes, and a desperate hunger for foreign capital, and foreign capital too wants to flood this Country but..It won't until it sees real distress, real yields, real exits, real reforms, real execution capability, and real political credibility. I am already hearing many foreign tongues wagging that 2016 is the make or break for Modi Government, and 2019 may ring in the end of his "Acche Din" (happy days). This by no means is a negative sign, just one of a hypercorrection be it quantitatively in pricing and value, and emotionally in delivery and attitude.

JLL ran a survey with some 60 fund boys, both local and foreign were quizzed about what they felt about 2016 as a year for Indian Real Estate. In very short they feel; that Indian RE has a hope, especially commercial and ITES; affordable homes is a flop story; markets will consolidate. Investors will see more exits than entry; will see funds entering India from new sources - ones that have also been slaughtered by Dollar mania - like China and Japan; will focus on distress and grade A projects and grade A locations only. Money will align with yield, be it equity or debt;  pure equity deals will rise if valuations super correct and returns expectations would ease based on selectiveness on who it sleeps with. In all of the above, delivery would be key. Effectively, the big bad arrogant wolves in RE development will have to hunt elsewhere and the small good guys will have to learn to grow up to become the good big boys on their own or eat shit and die. Personally, I think the fund boys have lost the plot as the strategy is once again flawed as usual. But then, what do I know as a blind man in the ranks?

There was one man though in the gathering who decided to play the middle path Buddha. Michael Holland, the CEO of Embassy Office Parks (a Blackstone JV) felt that India is too large to be spoken off as one. The India average may look bleak, but if markets were isolated, there were great bets in quite a few pockets and sub-segments. Example Offices would be great in Bangalore and maybe Affordable Housing in Pune. Real estate investment cannot be seen as a year on year game but as a five-year plan to see a full cycle. He disagreed with Arun Nanda's view on India being a compromise destination for investors as institutional funding of real estate in India is a decade old and much has been learned about the market by all. It took China some two decades to win the trust of foreign investors, and on that front, India is well ahead because of tight regulators being in place. Okay, they are over tight at times, but then, that has saved India from suffering a Chinese style roller coaster too. He felt that the RERA (Real Estate Regulation Authority) that would be put in place once the "Real Estate Regulation Bill of 2015" gets fully passed is a great achievement for consumer protection and bringing in a much-needed discipline in the builder community. Such actions would help in jet starting real estate sales again. It's not like I am foreign struck but foreigners do have an out of the box view that cannot be set aside.

On RERA though, Arun Nanda, the veteran of some 40 years in business was busy shaking his head sideways in disagreement. According to him, it has now been engrained in the Indian consumer DNA that the builder community is full of crooks that commit more than it can deliver and then treats customers like shit. I agree with him that RERA will not really make much difference. Even with stringent regulations in place against "black" money, the practice of transacting with it is thriving, and now even more.

I don't know who the real Buddha is, and whatever may be your end belief, I certainly left this event seeing some light. Hallelujah! I may not be so blind, and just maybe, we are all looking at the King from one side, and that makes him look like he has only one eye.  Happy Republic Day - our 67th.

Down and Dreaming - Indian Realty (part 1)

I was pleasantly surprised to get an invite from the Managing Director of RICS (Royal Institute of Chartered Surveyors) South Asia to attend its Real Estate Investment Conference for 2016, themed "Ringing in the Realty Cash Register". There was no way I was going to miss this. Real Estate may not be formally recognized as an Industry in India, but it is probably the second largest employment and wealth creator in this Country, after agriculture and the stock market respectively. The health of this sector in a nation of over 1.2 billion people is a clear barometer of the country's economy. The relevance of this sector goes up even further with the Prime Minister's ambitious plan to create some 100 new SMART cities to take the load off the overpopulated urban centers of today. 

Off late, media sources do not really have too many positive things to say about this sector, despite a couple of large media houses having become the largest stock owners and financiers in this space. One may decide to ignore the smoke signals that indicate a fair level of stress in the industry, but the ground reality is speaking in the same language as well. Progressively rising stock of unsold inventory, financial stress, capital unavailability, dishonour of commitments, suicides by builders, property related murders, incomplete projects, consumer complaints, arrests of big name developers; a search engine will throw up tons of current stories to corroborate the same. 

Yet, if one was to talk to the common man, the end consumer on the subject, the response would be that this sector is not as troubled as it deserves to be. Despite slow sales, prices haven't collapsed as one would have expected. The Real Estate Regulation Bill is still some distance from being enacted as law. So there is nothing really exciting as of now for the end buyer to cut out cheques. If the first 2 weeks of 2016 are any indicator for the rest of the year, then we have just stepped into a scary reality. Is the real estate community running scared then? Would be good to know. 

There were quite a few people in attendance. That's a positive sign. As I went around networking, most were from companies that support real estate development; private equity, banking, planners, architects, consultants, project management companies, software vendors, equipment and machinery vendors - much of it for SMART cities, brokers, and curious guys like me along with the press. Where were the builders? The big and mid-size ones were visibly missing (except those there to speak), and the smaller ones were there to look for sales leads and funds. I thought they (the big boys) would be the most interested in figuring out how deep a shit they were in, and how to shovel out of it. Maybe, they were all attending the WEF at Davos either to de-stress or look for sales leads and funds. I should check with Anuj Puri of JLL on how his presentation was received at the event. 

If property tycoon billionaire Mr. Niranjan Hiranandani's keynote address represented the general mood of the builder community, then the notion of stress was unfounded. According to him, the good times ("Acche Din" touted to all of India by the PM during his election campaign) were just around the corner, as the world investment community has very few options left in the current global economic climate. His optimism is based on data that suggests commercial estate occupation is on the rise. That is certainly a very good sign, as residential uptake generally follows commercial space. It was his opinion that greed in the builder community made it take more money than required to allow land banking, and start off more projects than could be delivered, creating a credibility crisis for all. At the moment, the real estate sector is suffering from over leverage, and it is a situation affecting both big and small builders. The other big problem facing the industry he said was the deep dive by most in building luxury apartments. The major demand centers for real estate, namely Mumbai and Delhi, are thirsting for mid-priced and affordable housing, and that's not really being addressed by most builders. The obvious blame falling on low margins because of the high returns demanded by capital and high cost of real estate. I like this man. He is such a great optimist and believer in his own talk, even when the chips are down. 

I do not disagree with what he said, but I feel the industry is facing the same problem that China is. That is; over inflated value of assets that don't really deserve that price, as a result of too much capital being infused into the system at unsustainable returns expectations. Dubai faced a similar situation some years back and no one really believed it would correct. It did. Indian real estate too should theoretically correct, but there is so much of local capital (some of it with nil returns expectation) that prices will just stagnate for a couple of years waiting for demand and affordability to catch up. 

Factually, India has attracted very little foreign capital in this sector. During the peak of 2007/8, Some US$ 8 billion walked in. With the relaxation in Foreign Domestic Investment laws pertaining to this sector, it attracted some US$ 4 billion in 2015, which is about the same as what walked in between 2009/14 cumulatively. When one considers that real estate attracts some US$ 750 billion annually on a global basis, India receives a mere drop in the bucket. Yet, it is the second most populated nation in the world, it has some 80 million end users looking to buy their first home now, and paradoxically, it is counting some 7 million unsold homes when statistics report a current demand for 20 million.   

Pic. Credit India Today

Call it bad planning or pricing; too much greed or too little delivery; blame it on corruption or excessive regulations; whatever the reasons may be there is neither dearth of capital or demand. Capital, both Indian and foreign appears to be waiting for the market to crack, voluntarily or forcibly, and so is the end consumer. Until then, the real estate market is clearly down and its hope for a quick turnaround nothing more than a dream. 

But then, whoever said dreams never come true...

Until my next blog on this sector, happy reading. 


    

Jan 26 2016 : The Times of India (Mumbai)

Affordable housing finds few takers, only 41k units sold in 1 yr

Sell! Sell! Bye! Bye!

I always read the astrology columns at the start of the year. Don't know how it helps, except maybe acting as a morale booster, catalyzing an internal belief that this year "I shall overcome", and that "some day" of infinite success will happen sometime during the year. My chances, a great 50:50. With these kind of odds, I may as well play the lottery or become a professional gambler. But then, aren't we all are gamblers without knowing it?

Now, when it comes to making money, we sure are gambling, and like most gamblers, we all rely on predictions made by the "economologers" (those practicing the art of economic astrology). You must have read it all. The predictions for 2016 are depressing. The financial astrologers are calling it 2008 all over again - one with a vengeance. For RBS, a bank that never really recovered from the 2008 crash, the thought of another 2008 is so scary that it has warned its clients to sell off everything except high-quality bonds. Quite a justifiable stand from the bank's point of view, don't know if it was in the interest of its customers or self.


The world may or may not pay heed to the tons of gloom and doom articles floating around. In fact, why should it? Until November of 2015, the clever ones in financial matters were calling 2016 as the year that will trumpet the end of bad times. A year of slow but sure recovery so said the IMF. But then, why would one pay attention to what any authoritative organization or global bank has to say when there is a financial God called Goldman Sachs (GS). No one can afford to ignore what it has to say, even if at times it is completely off the mark. There are many who blame it for the 2008 crisis, the oil gold and commodity bubbles, the Greek debt crisis, the China problem, and even exerting undue influence on the US Senate members as well as the Federal Reserve. For them, GS is a financial terrorist and not God. But then, aren't followers of one God or the other are inflicting some form of terror or the other? Then, does it matter if GS stands guilty as charged? Rather, what matters is that it has painted a depressing but not an entirely gloomy doomy picture for 2016. In fact, the picture is akin to showing a silver lining that all the contrarians are micro focused on.

From a selfish perspective, GS has gone optimistic on India and has even put its money where is mouth is by making moderately sizable investments in the Indian hospitality, real estate and start-up segments; the riskiest ones at the moment. My own gambler mode view is that opinions like that of GS has set up 2016 as a match winner for India and the dirty politics of this Country will go all out to loose this victory.




Since I believe that my power to predict also sits on the 50:50 odds, let me do my bit of soothsaying for 2016 like a typical Indian astrologer.

1. The world famous in India GST (Goods and Services Tax) will not happen until 2017. I hope I am wrong, but the introduction of GST will further push up inflation for a couple of years until it starts tapering down. The current regime may be constrained to drive up the already climbing food and retail inflation (kept artificially low by lowering fuel prices and including it in the statistical basket). So it would rather hold off its introduction by blaming it on the opposition.The opposition on the other hand would allow passing of the GST bill in 2017 or thereabouts with a  hope to capitalize on a high inflation rate in 2019 (election year) and blame the existing Government for the mess. The current government may have little choice but to make people richer by lowering Corporate Tax and doing away with surcharges on Income Tax to compensate for the rising inflation which may become even more pronounced once GST is introduced. Taxing the rich at a higher rate has never made sense in India as less than a 100,000 pay personal taxes that are greater than Rupees one million. Tax reduction may also be the panacea for not being able to reduce interest rates any further based on existing economic ground reality.

2. Now that China has lost out to Japan on the bullet train, it looks unlikely that much of that US$100 billion commitment to invest in India will materialize. Especially, when the Chinese economy itself has gone defensive. However, China can become a major investor in India rather than continuing as a plain vanilla vendor for Solar Energy projects. Future transactions between India and China would be done using the Chinese Yuan (fixed rate) rather than in US Dollars for obvious reasons. Both nations will rely on each other along with Japan and Russia for economic growth, making the creation of AIIB more critical. It is good for China to have caught the flu. Hopefully, it will realize its economic vulnerability to the US and work towards curing it. Military and technological might is just not enough. It has a huge corruption problem - just like India - it's own Achilles heel.

3. European investment commitments to India too may be constrained based on the debt and refugee crisis it is currently facing along with the possibility of a Brexit. I don't think Britain has an option but to stay with Europe. In many ways, it has cleverly avoided full integration and that's the way it will stay, and it now has many more reasons to justify the same. If social media is anything to go by, many European leaders may also start talking like Donald Trump and that's the only and real danger of 2016 becoming a man-made catastrophe.

4. The rich Middle East nations will not wait to see if Donald Trump makes it as US President to pull back investments from developed markets. The withdrawn funds would go towards filling the void left by dropping Oil revenues in their operating budgets, and as investments in emerging markets with large Muslim populations (like Indian subcontinent, Indonesia, and parts of Africa)  that if developed may become bigger oil buyers. At least for the short term, as there is a New Energy Order in the making, where Oil will be replaced by near term expensive but cleaner energy sources, which the emerging markets have in plenty. Unless Oil is kept cheap, the progression towards developing the alternate sources will keep getting faster. (In a first, Qatar waived off penalties that it had imposed on India for off-take shortfalls). The US is more or less self-sufficient in oil (it's even exporting it). It may, if the need arises, once again switch to becoming best friends with Iran to fulfill any energy shortfalls it may have in the near term. Iran too may welcome the move as it realizes that it has a bigger devil than the US sitting at its every (yes every) doorstep, and it has many doors. The OPEC Oil basket is already at US $ 25; maybe like GS predicts, will hit $20 or less, but with demand rising, will touch $35+ by end of the year.

5. Bernie Sanders will take oath as the next US President and this may be good for India too. Trump to his credit has exposed the underlying sentiments of much of the US electorate. But the Americans will look for someone stable rather than a shrewd entertainer who is neither afraid of declaring monetary or moral bankruptcy. The US Fed will at best attempt a second rate hike by June 2016 to push world economics, just as it is improving, closer to the brink. Thereby, create the right conditions for a Liberal Democrat like Sanders to rally people to vote for him. Post which, it will hold off hikes until the next President is formally in the White House. I wish India too institute a constitutional change where a person cannot hold office for greater than 2 consecutive terms.

Maybe after reading this, you may want to follow RBS and go on a selling spree. Maybe that's exactly what every investment banker  would want you to do too. I am tempted to say BUY! BUY! But, for now, it's plain and simple bye bye. I may as well go on a vacation, at least, it is enjoyable even if fraught with terror.

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Smart Cities for Dumb People

Guess the concept of SMART Cities is catching traction. Our Prime Minister believes that developing such cities will control rapid urbanization. He could be right, though there are many smart people who feel that his plan may end up just driving up price of valuable agricultural land, make a select few very very rich, and on the whole create more socio-economic problems than it can solve. 

Then there are others who are concerned on how Smart the cities would be. The other name for "Too Smart" could be "Big Brother", as in the one George Orwell wrote about in his book 1984. Under the garb of making citizens safer from terror and crime, smart plans include surveillance  and data collection. I am kind of reminded of the movie "Enemy of the State". Heavens forbid, if the people appointed to protect or govern us go rogue. There is enough smart technology with even the most backward of governments to cause hell for anyone daring to stand up to oppose it, and moving in the smart direction may end up surrendering more and more of us each day. 

credit: 
http://www.davidicke.com/headlines/india-plans-to-build-100-smart-cities-for-the-elites/

Okay, in a population of some 1.2 billion and climbing, how many really care about privacy in their lives? Nearly 70% of Indian houses have internal privacy issues based on number of residents to rooms available within a single habitable unit. This is true not only in slums, but an issue that affects much of the lower middle class too, be it villages or cities. Now despite the overcrowding and loss of intimacy space, the procreation process seems to be in a thrive mode, and that just is an indicator of how much importance is accorded to personal or private aspects of life.

Credit
http://homesfy.in/blog/smart-city-the-government-of-indias-plan/

Let's then give the PM and his team the support clean, green, self powered, self sustaining, info and logistically connected SMART cities. There is only one issue that wakes up the skeptic in me. Are the people in this country ready to accept the smartness? Each day, when I am off for a walk or go cycling at 6 am, I am a witness to the incessant honking of cars, buses and autoricks (for no real reason except habit I suppose); traffic indiscipline (people in a rush like they need to take an urgent pee or have discovered that they were F1 drivers in their previous birth); trash strewn on the road (not because there are no bins, but inconveniently placed a few feet ahead or behind the spot a person decides to lighten the load, and also because the government collects a "Clean India" tax over and above regular tax - so why not get money's worth - right?); smog of sooty toxic fumes from old polluting vehicles that the RTO fails to seize and destroy; construction dust from work sites selling million dollar homes being project managed by best practise following agencies; street urchins, road dwellers and dogs defecating side by side (not because there are no public loos, but its inconvenient to wait in a line); and many such interesting acts of daily business that just kill the quality of life I am in pursit of. It tells me that India is a land of dumb people who take 3 baths in a day to stay clean, but have no regard for cleanliness or the environment around them nor for other people's rights or property.

I once flew an Air India B-787 Dreamliner only to discover that the dream like aircraft was over engineered for the passengers it carried, given the state of the 2 year old aircraft, that looked like it had flown for 20. Would the newly built smart cities be just as over engineered for the rural folks that the PM wants to halt from migrating to urban ghettos?  Going by the plans submitted, there is an obvious disconnect who these Cities are being developed for. Maybe, the idea is that that smart cities will make the dumb Indian smart too.


So, let's just think about how all the new and smart "Modi-Nagars" (trust me, they will all be called by that name) are going to make the people who choose to abandon the dumb urban dream, smart city compliant.

I am told quite a bit of funds collected under "Swachh Bharat" are being channeled to the research institutions for developing or improving the following smart technologies:


1. A wall that bounces back  the pee at the person urinating on it.

2. Create a wall material that is anti adhesive and paint resistant to prevent anyone from sticking posters or defacing it with slogans. God would not to protect the walls anymore.

3. A self cleaning road system because even the elite educated illiterate spit on the roads and throw waste on the roads  from their fancy cars. What to do - we are like this only.  Guys such a system  actually exists. Real  picture of it happening in Korea. All we need to do is  find ways to keep people from stealing the water for homes or cows using the system to cool themselves in summer. After all, with the beef ban, more of them on the streets.

  4. Drones that can publicly shame people who spit or litter on the roads or walls. That is entirely possible. Happening in Canada. Honest. But to scare of farm pests.

5.  A cost effective way to develop roads made out of plastic waste. India is actually experimenting this technology. Now we need to come up with self repairing roads as either Indian contractors have no idea how roads are built or are hand in glove with the corrupt administrators to siphon off money from public contracts.  Isn't the latter obvious? 

6. How about non polluting vehicles including a curb on noise pollution?. Can a vehicle be designed to decide when it is appropriate to honk? Or design a driverless public transport system so as to do away with drivers that violate lane and traffic  discipline. All entirely possible. Only need to work out how these vehicles will deal with cattle and the cattle brained people invading the roads. Then how about autoricks made out of plastic so that do not damage other people's vehicle and roads with sensors that can auto control vehicular speeds? No need of policemen to run traffic and they can focus more on their actual task of guarding the politicians and VIPs. I am sure this is food for thought.

7. How about paying people to come and poop at public latrines? If the collected matter can be converted to fuel then I guess the raw material provider should be paid in all fairness - right? material handling would be an issue as Indians are clever enough to learn how to shit real bricks if paid by the weight of produce. What are robots being built for?

Guess I have made my point. Building Smart Cities is the easiest task. Populating and maintaining them a totally different ball game. It took New Mumbai and Gurgaon some 25 years to reach a critical population base; and both of them were right next to the two largest cities of India that were and are desperate to reduce the population that has far exceeded the number their infrastructure can handle.

Clean green and smart tags are fine, but what is the business and commerce agenda of these cities being built? Without a clear and established economic motive, these cities will end up as the ghostly glass towers in China. Then again, how will they be governed? If the same lethargic and corrupt systems manned by equally self serving individuals will be in charge, then... guess I don't have to spell out the disaster. Who then will take on the civic duties like manning the public transport, utilities, sanitation services, upkeep of gardens, cultural venues, public spaces, and such things that define quality of life? Guess it will be much the same as now with indisciplined driving, neglect of hygiene, encroachment of valuable open lands; then these new cities will actually end up worse than the older ones for logical reasons - just like the "Dreamliner" I spoke about earlier. Bigger worry; will the residents themselves respect the City? Habits die hard and unfortunately plentiful new money is not necessarily with the ones who either appreciate or understand what good quality of life is other than buying fancy cars, houses, and employing multitude of servants. We don't even appreciate or look after what we already have. (See links below)

I don't want to sound derogatory but the reality is that this is how most of India is across it's geography, and I have travelled across its length and breadth. If SMART cities need to be built, they need to be built around the weakest link - dumb people. Else the several "Dream Cities" like those being advertised each day will be nothing more than just pipe dreams.



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