As India’s economy slows,
real estate markets in the cities
across India are crumbling. The rupee has dropped nearly 20% against the dollar since early May 2013, scaring away foreign investors. Real estate developments take a long time to build, as a result of a vast and often corrupt regulatory apparatus. The publicly traded real estate investment groups in India are heavily in debt. They are struggling to make interest payments, and are not in a position to bankroll further projects. Prices have been sustained by the willingness of developers to hold growing inventories of unsold apartments, shops and offices, without offering price discounts. The volume of real estate transactions has slumped as developers have refused to offer discounts, for fear of starting a market rout. With sellers refusing to cut prices, many potential buyers are losing interest. However, the longstanding shortage of space in many Indian cities, because of regulatory barriers to new construction translates into high occupancy rates and steady rental incomes for commercial and residential real estate at least in rupee terms.
Insurgency in Philippines
Several hundred rebels are in a stand-off with the Philippine military, in the southern Philippines. The Philippine government has been struggling for decades to contain attacks by Muslim groups, seeking independence for the region. Since September 2013, small violent groups joined forces to fight government troops in the southern island of Basilan. Soldiers are missing, wounded and killed. The rebel attacks involve combined forces of the Abu Sayyaf Group, which has undertaken kidnapping and beheadings in the area for more than a decade, and the recently formed Bangsamoro Islamic Freedom Fighters, an off-shoot of a larger rebel group. In nearby Zamboanga City, a faction of the Moro National Liberation Front has been holding dozens of hostages, virtually paralysing the important trading area. Plumes of black smoke can be seen pouring from the rebel held areas in Zamboanga City, but firefighters are unable to enter for fear of sniperfire. Commercial flights into the city have been cancelled for days. More than 15,000 residents have been evacuated or have fled the area because of fighting. Conflict in Zamboanga City was renewed when several hundred armed men tried to march to City Hall to raise a flag and declare independence from the national government. Street battles with rebels have left about 100 people dead. Most of the dead were rebels, holed up in several seaside neighbourhoods. In the embattled southern Philippines city of Zamboanga, government forces have been firing mortar rounds into the area, and battling house to house to take areas back from the militants.
Faster Growth in Poland
Poland is one of the European Union’s strongest performers. Despite the sharp economic slowdown, the Polish economy has grown steadily, since the start of the crisis five years ago. But business has been shrinking. Poland’s gross domestic product is growing at 0.8%. The threat of recession to Europe’s only economy to enjoy confidence for more than two decades without a contraction seems to have receded. Poland’s economy has been supported by exports, largely to a reviving eurozone. Banks are reluctant to lend and consumers who have spent savings are worried about high unemployment. At the last count, unemployment was 13%, although it appears to be falling. Mortgage lending is at a low level. Recent data points to an improvement in retail sales, alongwith industrial production. Average monthly salaries have risen from 2700 zlotys ($860) to 3800 zlotys. Business is counting on Poles to begin spending some of that extra money. The government has loosened fiscal policy; and the central bank has cut its benchmark rate to a low of 2.5%.
Vol. 46, No. 21, Dec 1 - 7, 2013
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