Over the past month, my 6-year-old son and I have been learning how to solve the Rubik’s Cube – and here is something that got me thinking. It is incredibly difficult to solve the Rubik’s cube, much like navigating the complexities of investing. The cube has 43 quintillion combinations, and if you stare at it long enough, you will find it mind-boggling. Similarly, even investors with several years of experience and expertise find investing challenging.
A Rubik’s cube has multiple interconnected parts; one wrong move can take you back to square one. Investing is similar – myriad factors, such as inflation, currency, interest rates, company profits, company management, etc., hold sway over investment success, and one wrong investment decision may lead to significant losses. No wonder those who crack the code, i.e., solve the cube or become successful investors, are raised to a pedestal, and treated as geniuses.
Does this mean that if you are not a genius, all your attempts at solving the cube or investing are in vain? Fortunately, no.
Here are some parallels that I figured between investing and solving the Rubik’s cube:
Building muscle memory is essential to succeed: Practice. Practice. Practice. Solving the cube on your first try would be nearly impossible. You need to keep practising, learn tricks along the way and build muscle memory such that it eventually falls into place.
Investing world parallel: The same principle applies to investing. Investors and advisors who spend decades investing develop muscle memory that makes them better investors. Their expertise stems from having gone through similar trends multiple times over decades – and they can leverage this experience to distil noise while advising clients.
Rule-based approach: In the Rubik’s cube realm, there is a stark contrast between a structured approach—often termed ‘algos’—and haphazard, erratic steps. Unsurprisingly, the structured approach is a clear winner. These ‘algos’ offer a streamlined path, enabling swift progression through the cube’s complexities and eliminating tedious backtracking. Over time, these algorithms become ingrained, eventually becoming second nature in solving the cube.
Crafting strategic foundation: Investing success also involves a series of processes with multiple checklists, protocols, and sub-activities that can institutionalise the process of investing. Jumping between steps or being haphazard is a recipe for disaster. Steps such as creating a detailed plan or an IPS (Investment Policy Statement), focusing on asset allocation, strategy around security selection, a stringent review mechanism and being vigilant on cost, can form a foundation on which to build your investing success. For experienced advisors, these steps almost come naturally, almost like Rubik’s Algos.
Role of imagination, innovation, and honing the cutting edge
The record time to solve the cube has come down from one month (1974) to 23 seconds (1982) to today’s world record of 3.13 seconds. This staggering reduction in solve time is due to profound innovation in three areas:
a) Physical attributes of the cube, for example, drift, speed cubes, etc., b) Worldwide acceptance and availability of resources and training, and c) Intuition-driven speed-solving algos such as F2L, CFOP, ZZ.
Transformative Shifts: Pertaining to the investment landscape of India’s sophisticated investors, we are witnessing transformative changes driven by innovation, deepening of talent pools and implementation of global best practices and supportive regulations. Consider this:
Innovation: Innovation in products and platforms such as REITs, private equity, AIFs, large value funds (LVFs), are expanding the HNI and UHNI investment landscape. Investors can choose from a wide range of portfolio managers, advisors or distributors that are the ‘right fit’ for them. This rapid innovation is unlocking phenomenal opportunities for sophisticated investors.
Talent pool: Enabling regulations such as the IBC Code, RIA regulations and more lowers entry barriers for talented managers, creates a level playing field and protects the rights of investors. This opens a large segment of the talent pool which looks at investing as a viable career – leading to greater innovation and better investment frameworks – a virtuous cycle!
Global best practices: India is embracing global best practices across Mutual Funds, PMS, AIF and RIA regulations. Through the GIFT City initiative, we are becoming a jurisdiction of choice, both for Indian investors to access foreign markets or for foreigners to invest in India. Not surprisingly, we are seeing ever-increasing flows into financial investments from across the ecosystem, including mature investors such as family offices and institutions.
Although there is no hidden formula for mastering the game, adhering to a consistent and disciplined approach can be the key to attaining the ultimate prize in both conquering the cube and excelling in the art of investing.
Himadri Chatterjee, Head, Advisory & Key Clients Group, 360 ONE Wealth
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it’s all here, just a click away! Login Now!
Commercial real estate (CRE) has long been an attractive investment avenue for those seeking to diversify their portfolios and capitalise on the stability and income potential of real property. Real Estate Investment Trusts (REITs) have been a game-changer in the global investment landscape, providing investors with a unique proposition to participate in the commercial real estate market. In a bid to catalyse the growth of the real estate sector in India, the Securities and Exchange Board of India (SEBI) has plans to introduce an innovative concept – the MSM REITs.
These MSM REITs, with a reduced minimum asset size of ₹25 crores, aim to foster a broader range of real estate investments while ensuring transparency, control, and credibility for investors. The minimum ticket size of Rs10 lakhs provides accessibility to retail investors while maintaining a certain level of sophistication.
This article explores the key features and advantages of MSM REITs, comparing them to traditional models and drawing parallels with global small-cap REITs.
Transparency, control and niche targeting
MSM REITs adopt a niche-targeted approach that allows investors to choose specific asset-focused schemes, offering transparency and control that goes beyond traditional blind pool investments. This provides investors with a clear understanding of the modalities and fundamentals of their investments ensuring a level of customisation and transparency that aligns with their evolving preferences.
Mandatory sponsor commitment and credibility
MSM REITs maintain the core structure of traditional REITs, comprising a Trustee, Sponsor/sponsor group, investment manager, and investors as primary stakeholders. Notably, in these MSM REITs, the Investment Manager and Sponsor can be the same entity. The proposed regulations ensure mandatory Sponsor commitment, fostering a ‘skin in the game’ mindset, and set minimum net worth requirements for the investment manager and sponsor, enhancing overall credibility.
Enhanced liquidity, easy transferability and low volatility
Listing units on stock exchanges introduce fair pricing, robust risk management, guaranteed settlement, high liquidity and easy transferability. Unlike the traditional models in the CRE investing space with long investment horizons, MSM REITs allow investors to exit at a time and price of their own choosing. Despite being a listed product, volatility remains low due to the backing of fairly stable assets.
Standardised regulations, risk mitigation and investor protection
The transition from the earlier models to a more structured approach in MSM REITs is a paradigm shift towards investor protection. Standardised regulations, Know Your Customer (KYC) norms, grievance redressal mechanisms, and the oversight of regulatory bodies collectively fortify investor confidence. The non-permissibility of investing in under-construction assets mitigates the risk of non-completion and disruption in returns. This prudent measure safeguards investors from uncertainties associated with projects still in progress, aligning with the aim of providing secure, stable and predictable returns.
In conclusion, incorporating MSM REITs into an investment portfolio offers investors a unique combination of stability, income generation, and growth potential. Drawing inspiration from global practices, the introduction of MSM REITs in India has the potential to mirror the success of small-cap REITs, single-asset REITs in other markets, such as the United States and the UK. This represents a progressive stride in the Indian real estate investment landscape.
By incorporating transparency, control, credibility, and investor protection, these REITs aim to stimulate further growth in the real estate sector and related segments of the economy. As India embraces this innovative approach, the MSM REITs have the potential to become a catalyst for a more inclusive and vibrant real estate investment ecosystem.
Abhishek Katiyar, VP of Strategic Initiatives at Property Share
Here’s your comprehensive 3-minute summary of all the things Finance Minister Nirmala Sitharaman said in her Budget speech: Click to download!
Buying and selling stocks is one of the most common ways to get a significant return on your investments. One technology stock, in particular, has seen tremendous growth over the past 10 years.
Nvidia (NVDA) is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, or GPU. Nvidia’s focus has shifted from PC graphics to the new frontiers of artificial intelligence (AI), virtual reality (VR) platforms, and high-performance computing (HPC). As reported by Zacks Equity Research, the Santa Clara, CA-based company reported revenues of $26.97 billion in fiscal year 2023. This is a small increase from $26.91 billion in fiscal year 2022.
If you were wise enough to hang onto your initial investment, here’s how much you’d have today if you invested $1,000 in 2014.
Nvidia Investment 10 Years Later
In February 2014, Nvidia’s stock price was around $4.59 per share. A $1,000 investment made in February 2014 would be worth approximately $151,046.70, or a gain of 15,004.7%, as of February 5, 2024. This incredible return excludes dividends but includes price increases.
To put this into perspective, the S&P 500 gained 165.8% and the price of gold went up 54.5028% during the same period. A $1,000 investment in Nvidia in 2014 would have yielded you exponentially more than the same $1,000 investment in the S&P 500 or gold during the same period. As of February 5, 2024, Nvidia’s stock price is around $694 per share.
Nvidia’s Further Upside Potential
There’s even more upside forecasted for Nvidia as they explore artificial intelligence technologies, make headwinds into advanced computing, and even advance toward developing autonomous vehicles in collaboration with luxury automakers like Mercedes-Benz and Audi.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: Here’s How Much a $1,000 Investment in Nvidia Stock 10 Years Ago Would Be Worth Now
How can studying flows in mutual funds and ETFs improve my investment strategy? originally appeared on Quora: the place to gain and share knowledge, empowering people to learn from others and better understand the world.
This is an important question because mutual funds and ETFs currently hold around 40% of all U.S. stocks.
Before I provide a few approaches, let’s set up the context. When people invest money into these funds (inflows), the funds need to use this money to buy more stocks. Conversely, when people withdraw their money (outflows), the funds have to sell stocks to give the money back. This pattern of buying and selling is largely predictable; you can expect funds to buy more when they get more money from investors and sell more when investors are taking their money out. When a lot of funds are either buying or selling in the same way at the same time because they are experiencing similar inflows or outflows, it can push stock prices up or down significantly. However, these price changes tend to go back to where they were over time. This means that the price increase due to many funds buying will eventually decrease, and the price decrease due to many funds selling will eventually rise again.
Now, how can quantitative investors take advantage of these flows to improve investment performance? There are three approaches.
1) Trade on long-term reversion.
After large flows have happened, trade against those flows and bet on price reversion. This applies to slow-moving strategies as reversions can take years.
As an example, this study finds that fund flows often fluctuate wildly between different size and value/growth styles, creating large style-level price pressures that revert subsequently. I would recommend taking into account such flow-based signals in your asset allocation strategies. For instance, during the 2000s dotcom bubble, investors poured hundreds of billions into large-cap growth funds, and this made large-cap growth stocks more overvalued. On average, such overvaluation leads to substantially lower returns in the subsequent 1-2 years.
2) Front-run near-term flows. You can also predict fund flows and front-run them. This applies to shorter-horizon strategies, ranging from one week to one quarter.
This is slightly more complicated as it requires a deeper understanding of what drives fund flows. As an example, we find that fund flows are heavily determined by Morningstar ratings: funds with high (low) ratings receive large inflows (outflows). Further, Morningstar ratings are computed using mechanical formulas and are somewhat predictable. In follow-up research, we find that a Morningstar methodology change in rating calculation caused large, predictable style-level price fluctuations in June 2002 and also made momentum-type strategies less profitable afterward. Because the methodology change was announced ahead of time, if you understood fund flows and Morningstar ratings, you would have been able to take advantage of it back then.
3) Improve diversification.
If you conduct mean-variance portfolio optimization, you can use fund flows to better estimate return covariance and improve diversification.
Traditionally, quant funds use either factor-based approaches (e.g. BARRA) or Ledoit-Wolf type shrinkage to construct their covariance matrices. For reasons I cannot fathom, most of them do not use information beyond historical returns to estimate covariance matrices. However, fund flows can improve covariance matrix estimates, such as shown in this paper. The idea is very simple: if two stocks tend to be co-held by an overlapping set of funds, they tend to be traded together, and this leads to higher covariance between them.
In ongoing work, I find that incorporating flow- and trading-related data can improve covariance matrices estimation and lead to better diversification and higher Sharpe ratios. This work is still at an early stage and not ready for public consumption. If you are interested, and if you work in quantitative finance as a professional (this is not a topic for retail investors), feel free to email me.
Walter Schloss, an iconic American investor, garnered significant success through his adoption of the value investing methodology. A dedicated follower of Benjamin Graham, the pioneer of value investing, Schloss’s investment strategies continue to be scrutinized and implemented by contemporary investors.
Walter Schloss gained invaluable experience while working directly with Graham at Graham-Newman Corp. in the 1950s. During this time, he absorbed Graham’s principles of value investing, laying the groundwork for his successful approach.
In 1955, Schloss initiated his investment partnership, initially managing funds for family and friends. Remaining steadfast in his commitment to value investing, he consistently produced impressive returns over the ensuing years.
Over 45 years, Walter J. Schloss Associates achieved an average annual return of 15.3%, surpassing the S&P 500’s 10.5% return. This outstanding performance solidified Schloss’s status as a master of value investing. His inclination to invest in smaller, overlooked companies resulted in several hidden gems in his portfolio. Notable triumphs include the 50-fold return from Blue Chip Stamps and the tenfold growth of Emerson Radio.
Below are some fundamental tenets of Walter Schloss’s investment philosophy:
Concentrate on underpriced stocks
Schloss advocated for acquiring stocks that were trading well below their intrinsic value. He employed various metrics, including the price-to-book ratio, price-to-earnings ratio, and dividend yield, to pinpoint undervalued stocks.
Schloss transcended mere metrics to gain a profound comprehension of a company’s intrinsic value. He scrupulously delved into annual reports, industry publications, and personally visited companies to acquire firsthand insight into their operations and prospects. In his assessment of potential investments, Schloss took into account factors such as management quality, brand strength, competitive advantages, and the broader economic climate. Unafraid to swim against the current, he invested in stocks that were unpopular and overlooked by others. Schloss’s independent analysis enabled him to uncover hidden gems ahead of the crowd.
Exercise patience and maintain discipline
Schloss, as a long-term investor, advocated for the practice of holding onto stocks for extended periods. He displayed no hesitation in waiting for his investments to mature, even if it required enduring phases of market volatility.
Schloss became renowned for dismissing short-term market fluctuations, steadfastly refusing to let daily or quarterly swings sway his investment decisions. He comprehended the potential for emotional mistakes and straying from a solid, long-term strategy when fixating on the market’s daily gyrations.
Throughout his investing career, Schloss confronted multiple market crashes and periods of intense volatility. Yet, his unshakeable confidence in his research and the intrinsic value of his holdings enabled him to remain composed and weather the storms. Recognizing that short-term downturns often presented opportunities for patient investors, he maintained his calm approach.
Through the discipline of holding onto his investments for the long term, Schloss harnessed the power of compounding, where earnings were reinvested and grew exponentially over time. This approach resulted in significantly higher returns compared to frequent trading activities.
Implement portfolio diversification
Schloss adhered to the principle of distributing his investments across a diverse array of stocks to mitigate risk. Typically, he maintained a portfolio comprising 50 to 100 stocks.
Diversification played a crucial role in Walter Schloss’s investment strategy. By maintaining a variety of stocks spanning different sectors and industries, Schloss effectively mitigated the impact of any individual company’s underperformance on his overall portfolio. This method shielded him from scenarios where the weakness of a single investment could adversely affect the entire collection.
The practice of holding a diversified portfolio enabled Schloss to explore a broader range, enhancing the likelihood of discovering hidden gems in overlooked sectors or smaller companies. This diversified approach expanded his access to potential sources of alpha, representing excess returns beyond the market average.
Diversification played a role in helping Schloss navigate emotional biases that could impact investment decisions. With his investments spread across various holdings, he reduced the likelihood of becoming excessively attached to any particular stock, thus mitigating the potential for making irrational choices driven by emotions such as hope or fear.
Maintain emotional composure
Schloss exemplified a composed and rational approach to investing, steering clear of succumbing to his emotions. He steered away from impulsive decisions, remaining steadfast in adhering to his established investment plan.
Schloss acknowledged the significant influence of emotions on investment decisions. He proactively countered emotions such as greed during market highs and fear during downturns, adhering to his carefully crafted investment plan and avoiding impulsive reactions.
He disregarded the emotional manipulation often prevalent in financial news and market commentary. Instead, Schloss prioritized hard data, extensive research, and his analysis to make decisions grounded in information rather than emotional knee-jerk reactions.
Embracing a long-term investment horizon, Schloss distanced himself from daily market fluctuations and emotional rollercoasters. This perspective enabled him to make informed decisions based on fundamentals rather than succumbing to short-term anxieties.
Walter Schloss’s impact reaches well beyond his remarkable individual returns. His legacy is rooted in enduring success and a commitment to disciplined value investing. The principles he espoused, emphasizing long-term and disciplined approaches to value investing, retain their relevance and provide valuable lessons for investors at all levels of experience. Whether you’re a seasoned investor or a novice, delving into Schloss’s approach can furnish valuable guidance.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it’s all here, just a click away! Login Now!
By Jayshree P Upadhyay
(Reuters) – India’s central bank and market regulator are considering exemptions to recently tightened rules for bank investments in alternate investment funds (AIFs) due to their unintended consequences, three sources with direct knowledge of the matter said.
Last month, the Reserve Bank of India (RBI) ruled that banks and non-bank lenders cannot invest in AIFs with holdings in the banks’ current or recent borrowers, to avoid cases of “evergreening” bad loans, and asked lenders to sell existing investments within a month, or provision against them.
However, the industry says the new norms would stymie growth. These rules impact about $8-10 billion worth of investments, according to the Indian Venture and Alternate Capital Association (IVCA), a lobby body for AIFs.
“The inadvertent impact of the RBI circular is that banks and non-bank finance lenders will stay away from investing in AIFs fearing that they may run afoul of the regulations,” said Srini Srinivasan, managing director, Kotak Investment Advisors, one of India’s largest alternate asset managers.
Hence, the regulators are considering suitable exemptions to some of the valid concerns, said the sources, who declined to be identified as they are not authorised to speak to the media.
Reuters learnt of two such exemptions being sought by lenders and funds. The first is for AIFs set up specifically to invest in distressed assets, two of the sources said.
For example, two large funds run by State Bank of India — one that invests in stressed and stalled residential projects and one in small enterprises — are impacted as they have direct or indirect exposure to companies that are existing borrowers of SBI, said a source.
“It is under active consideration whether certain categories of funds such as the ones investing in distressed companies should be exempted,” one source said.
Emails sent to SBI, RBI and the market regulator Securities and Exchange Board of India (SEBI) were not answered.
Banks have also asked that they should be given more time to exit such investments or allowed to stagger provisions they need to make, two sources said.
“The 30-day deadline to either provide for or exit the investments is unrealistic as the haircuts are going as high as 80% of the net asset value due to the regulatory diktat,” said Siddarth Pai, co-chair of IVCA’s regulatory affairs committee.
A haircut in finance parlance is the difference between the fair value of an asset and how a lender can recover via a sale.
Pai said the industry is looking for at least one year to exit.
(This story has been refiled to correct the date)
(Reporting by Jayshree P Upadhyay; Editing by Sohini Goswami)
Terry Smith stands out as a notable personality in the realm of investments, earning the moniker “Britain’s Warren Buffett” due to his dedication to value investing and remarkable performance over time. As the founder and Chief Investment Officer of Fundsmith, a United Kingdom-based investment management firm, he has built a reputation for prioritizing high-quality, globally listed companies.
At the core of Smith’s investment philosophy is the strategy of acquiring and retaining robust businesses for extended periods, diverging from the short-term trading strategies commonly used by numerous fund managers. His focus lies on extensive research and comprehension of the companies in which he invests, aiming to pinpoint those possessing enduring competitive advantages and effective management teams. This methodical and discerning approach has yielded significant benefits for Fundsmith investors, exemplified by the company’s flagship Equity Fund, which has maintained an average annual return of over 478 per cent since its establishment in 2010.
Examining Smith’s success highlights the importance of understanding his investment philosophy and what distinguishes him from the crowd. His stock-picking strategy revolves around three key principles: Investing in sound companies, avoiding overpayment, and maintaining a long-term holding approach.
Consider investing in reputable companies
Search for companies that consistently achieve a return on invested capital (ROIC) well above their cost of capital, demonstrating efficient and profitable resource deployment. Smith places importance on robust competitive advantages, often referred to as moats, which safeguard a company’s profitability against competition. These moats may stem from diverse sources like brand recognition, intellectual property, network effects, or cost leadership. However, merely focusing on companies with high ROIC is insufficient. Although some high-quality companies may exhibit high ROICs, their growth potential might be constrained or depend on unsustainable methods.
Furthermore, allocating investments to reputable companies reduces the dependence on market timing or predicting short-term fluctuations. Prioritizing the inherent quality of the business empowers investors to navigate market cycles with the assurance that sustained long-term value creation will persist.
Emphasize simplicity and clarity
Terry Smith’s focus on simplicity in investment appeals to individuals who perceive the financial realm as overly intricate and daunting. He advocates for straightforward business models that not only are comprehensible to individuals of any financial background but also operate with transparency and clarity.
But then, it is not so easy to be simple. Simplicity starts by focusing on the fundamentals. Smith places a higher emphasis on comprehending a company’s fundamental business, its competitive strengths, and its financial well-being rather than delving into intricate financial models or engaging in technical analysis.
Steering clear of unnecessary complexity is crucial. This accomplished investor avoids businesses with intricate structures, opaque accounting practices, or excessive debt. He contends that such complexities often conceal underlying issues and elevate the risk for investors.
The advantage of adopting a long-term perspective should not be underestimated. Through investing in straightforward and comprehensible businesses, Smith promotes a commitment to a long-term investment horizon. This strategy diminishes the lure of impulsive decisions driven by short-term market fluctuations.
Steer clear of overpaying for stocks
Smith holds a nuanced perspective on valuation and the creation of long-term value. While undervalued stocks may present short-term gains, depending solely on a “bargain price” might cause you to overlook the compounding potential of high-quality businesses that consistently deliver robust returns over the long haul. Additionally, inexpensive stocks can be discounted for valid reasons, such as poor management, declining markets, or unsustainable business models. Misinterpreting a value trap as a bargain could incur significant costs.
Exercise caution regarding fees and investment expenses
Terry Smith strongly supports the reduction of investment fees and vocally criticizes the industry’s inclination to impose excessive fees that diminish long-term returns for investors. He contends that even seemingly modest percentage-based fees can accumulate significantly over time, diminishing profits and impeding capital growth.
Each percentage point in fees acts as an obstacle that investment returns must surpass to yield positive net gains. Smith underscores that elevated fees can substantially diminish the compounding potential of long-term investments.
He scrutinizes the value proposition of costly actively managed funds, often delivering subpar performance compared to the market while imposing substantial fees. Smith encourages a focus on low-cost index funds or passive strategies that mirror broader market indices, providing comparable or superior returns at a fraction of the cost.
Advocating for investment structures aligned with the interests of fund managers and investors, Smith suggests that performance-based fees or direct ownership in underlying assets can motivate managers to prioritize genuine value creation for investors.
Although Smith’s accomplishments are undeniable, it’s crucial to bear in mind that past performance does not guarantee future results. Blindly following Smith with the expectation of replicating his success would be imprudent. Investing in any financial instrument comes with inherent risks, and it’s essential to conduct comprehensive research and thoughtfully evaluate your investment objectives before making any decisions.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it’s all here, just a click away! Login Now!
The Scotia Lodge, formerly the Scotia Inn—a stately building with a portico and a white balcony—is the most ambitious renovation project in Scotia. The town’s sole hotel, it was built in 1925, not so much to house visitors as to provide temporary residence for new Pacific Lumber workers. During the pandemic, many Californians who might have ordinarily taken long-distance vacations travelled upstate instead, and a veteran hotel operator named Jon O’Connor saw an opportunity. He bought the lodge with his wife, Amy, and a number of staff members, and revamped the bar and the restaurant. He spruced up the front yard. The lodge now hosts weddings with some regularity. It was recently the site of a ketamine-assisted-therapy retreat.
I met O’Connor in the hotel’s lobby. He wore brown work boots and a utility jacket; he has dirty-blond hair and a faint beard. He told me that, after he and his wife bought the hotel, they heard a rumor that it was haunted. “We called a Realtor friend of ours who’s a Christian pastor,” he said. The pastor brought a few members of his congregation who’d had supernatural experiences. “They prayed and sang and all that stuff,” O’Connor said, describing the event as “a version of an exorcism.” In the end, the friend concluded that even if there were ghosts in the hotel, they did not pose a threat to visitors.
The lodge once offered a hundred small rooms. When I visited, only two of the three floors were renovated. O’Connor said that, during the previous month—March, 2023—the occupancy rate for the available rooms was a little under sixty per cent, but that it ticks up toward three-quarters full in summer. Most guests had little idea that they were staying in one of America’s last company-owned towns. “Half of the people just are coming for the redwoods,” O’Connor said. On dimly lit walls, black-and-white photos of lumber workers hung alongside a sign promoting “Proper Cannabis Delivered Daily.” At the front desk, guests could buy rolling papers for $2.75 each.
O’Connor led me downstairs, to a subterranean space that he had turned into a speakeasy-style bar, with beaded chandeliers and geometrically patterned floors. Another light fixture, behind the bar, gave the space a purple glow. I followed O’Connor to a closed-off corridor, where his team was installing a spa, featuring Himalayan-rock-salt bath crystals and a luminescent inlay. “That Bay Area tech population—we think they like these types of experiences,” he said. On my visit last spring, he told me of an ambitious plan to install a back-yard pool with a bar of the sort you might find at an Ace Hotel. But he has since scrapped his efforts to revitalize the lodge. California’s legal-cannabis market has struggled, he told me, and, because of high interest rates, he couldn’t get favorable loan terms from the bank. In Scotia, “our vision of a Napa Valley 2.0” that blended wine and cannabis experiences, he said, “didn’t really materialize.” In November, he listed the hotel for sale, for $3.3 million.
The morning after I met O’Connor, I woke up early and walked across the street to the Town of Scotia offices, as logging trucks trundled down Main Street. Most Fridays, Deike has a conference call with Joan Kramer, a former Marathon managing director who now works as an outside consultant for the fund and handles all Scotia matters. Other top Marathon executives used to make regular visits to check in on progress, but they don’t anymore. “Marathon doesn’t even ask for our financials,” Deike said. “Their auditors ask.” Kramer comes to town a few times a year, but what becomes of Scotia, in what remains of the twenty-first century, will depend on what Deike and his colleague Mary Bullwinkel can imagine for it.
The real estate market, a key driver of the country’s economy, has been undergoing rapid evolution and growth in recent years. Fueled by increasing urbanisation and rising incomes, the housing sector has become a significant contributor to India’s economic landscape. With a surge in demand for homes, major builders have made strategic adjustments to pricing, fostering expectations of a positive trajectory for house prices in the coming years.
Anticipated rebound and opportunities amidst evolving market dynamics
Looking ahead to 2024, optimism prevails as the sector is poised to rebound from the challenges encountered in 2023. Analysts anticipate a more favourable market environment, citing the presence of pent-up equity seeking housing opportunities. Whether you’re a first-time buyer or an investor eyeing property expansion, staying abreast of real estate trends is crucial for making well-informed decisions in this dynamic market.
What makes India’s real estate sector an attractive investment option?
The depth of capital in Asian markets, including India, is diversifying, with real estate emerging as a favored sector for increased allocations. India’s position as one of the fastest-growing economies globally, driven by private consumption and capital formation, makes the real estate sector an attractive investment option. Investors are exploring opportunities across various real estate segments, such as office spaces, logistics, private credit, residential properties, and data centres.
Considered a long-term and secure investment by financial experts, the future of the real estate sector appears promising. A report by Concorde outlines a robust Compound Annual Growth Rate (CAGR) of 9.2% for the real estate sector from 2023 to 2028. The year 2024 is expected to mark the next phase in the evolution of real estate, driven by factors such as continued urbanisation, growth in the rental market, and steady appreciation in property prices.
According to experts, the residential real estate market is set to remain within affordable limits, reaching a three-year high in 2024. The JLL Home Purchase Affordability Index indicates that metro cities like Mumbai, Delhi NCR, and Chennai will spearhead this surge in the real estate sector. Furthermore, the expected repo rate cut, ranging between 60-80 basis points, is anticipated to maintain home prices within an affordable range for buyers.
Expert views on sustainable growth in the residential market
For sustainable growth in the residential market, experts emphasise the importance of government prioritisation of affordable housing schemes and incentives for banks to offer lower interest rates, especially for first-time buyers. This approach could lead to organic and sustainable expansion in the residential market, ensuring a balanced and inclusive growth trajectory.
What are the home loan rate projections for 2024?
Looking specifically at the financing aspect, projections for 2024 suggest that home loan rates will likely remain stable, with no substantial impact on residential demand. Instead, the critical factors influencing residential sales in 2024 are expected to be affordability and the income outlook for potential purchasers.
In conclusion, the real estate market is poised for positive developments in 2024, driven by a combination of market dynamics, government initiatives, and investor confidence. With a focus on affordability, sustainable growth, and strategic financial measures, the sector is set to play a pivotal role in India’s economic landscape, offering opportunities for both homebuyers and investors alike.Rishabh Siroya, Founder of Siroya Corp