Fractional real estate, Tesla vs VW, election freebies and other news
Business news and insights to jump start your day
“Success is the sum of small efforts, repeated day-in, and day-out.”
- Robert Collier
Good morning! 😀
Here are the main stories for today:
Emerging trend in India - Fractional real estate
Shot in the arm for Centre’s infra push
Volkswagen looks to overtake Tesla
Let’s get started…
📈 How did the markets fare
BSE Sensex - 50,363.96 | -0.06% ⬇
NSE Nifty - 14,910.45 | -0.13% ⬇
10-Yr Bond Yield - 6.180% |-0.020 ⬇
S&P 500 - 3,962.71 | -0.16% ⬇
USD/INR - ₹ 72.55 | +0.11% ⬆
Shares of Tata Communication (erstwhile VSNL) fell 7% as the offer for sale (OFS) to divest the government’s holding in the company opened yesterday. The Centre is looking to offload its 26.12% stake.
📰 What's happening around us
Real Estate
Want to buy a vacation home to take a break from your hectic city life? Or a retail property or even a warehouse to take advantage of the retail and e-commerce boom? It may not be out of reach anymore with the concept of fractional real estate gaining momentum in India.
Fractional real estate is basically where multiple investors form a special purpose vehicle (SPV) to buy a property and they get shares proportional to their investment in the SPV. Each investor then receives a fraction of the rental income periodically and can also benefit from appreciation in property value when they sell their share.
While fractional real estate is similar to a real estate investment trust (REIT) in many ways, the former offers much more flexibility. They can offer annual rental yields of around 8-9% and when you include property appreciation, yields can go up to 15-18% annually.
To simplify fractional real estate ownership, a number of tech-enabled platforms have popped up in recent years. AllSpace, Frxnl, RealX, FRACSN, Strata, and hBits all seek to take the hassle out of the whole process for a fee. Tempted?
Infrastructure
The government’s ambitious National Infrastructure Pipeline (NIP) got a shot in the arm after the Union Cabinet approved the setting up of a development finance institution (DFI), to finance long-term infrastructure projects. The government will pump in Rs 20,000 crore into the DFI in FY22 as proposed in the Budget and hopes to raise Rs 3 lakh crore from markets and other sources in the next few years.
The DFI will have certain tax benefits for a 10-year long period and a number of initiatives such as tax-free bonds will be introduced to lower the cost of funds. It will start with 100% government ownership and will be brought down to 26% over the coming years.
DFI is not new in India as ICICI, IDBI and IDFC were all development financiers before they turned into universal banks as raising long-term funds for infrastructure financing proved challenging.
While the Rs 3 lakh crore fundraising target for the DFI accounts for less than 3% of the Rs 111 lakh crore to be spent on over 7,000 infrastructure projects under the NIP during 2020-25, the success of this will be crucial for similar future endeavours.
Auto
Electric carmaker Tesla better keep an eye on the rear-view mirror. The world’s second-biggest carmaker, Volkswagen is making moves to overtake Tesla and end its reign as the undisputed leader in electric vehicles (EV).
VW Group's EV sales have more than tripled last year to over 2,30,000, closing the gap with Tesla, which delivered just short of 500,000 vehicles. VW Group has already overtaken Tesla as the biggest electric vehicle maker in Europe, selling one in four cars delivered last year.
Over the past few years, VW has been pumping in billions of euros as part of a radical strategic shift towards EVs, a move that was prompted not only by market dynamics but by the 2015 "dieselgate" scandal that severely dented the German carmaker's reputation. To further its ambitions of dominating the EV market, the company said it would sell more than two million electric vehicles by 2025, build its own network of battery factories and launch its own operating system for EVs.
At present, the market value of VW is $133 billion, significantly lesser than Tesla’s $680 billion, which experts attribute to Tesla’s superiority in battery technology and software tech (autonomous driving tech). However, the path to dominating the EV market will depend on whether VW and Tesla can learn from each other. Volkswagen needs to quickly upgrade its software capabilities, while Tesla would need to improve its ability to churn out a large number of high-quality vehicles each year.
🎯 News Bites
The two-day nationwide strike that crippled banking services ended yesterday. The strike called by public sector bank unions was to protest against the government’s decision to privatise public sector lenders. The unions have warned of intensifying the stir if the government goes ahead with privatisation.
It’s raining freebies in Tamil Nadu! In the run-up to the assembly elections, all the main parties in the state are making promises to lure voters. Offers include washing machines, free cable connections, free LPG cylinders and even one government job per family.
Looking to buy an air-conditioner to stay cool ahead of the sweltering summer? You might want to get it quickly as AC makers are set to hike prices due to rising input costs.
Trump is back! Donald Trump is partnering with Tribeca to foray into ultra-luxury residential projects and premium office spaces in India. Of the four Trump properties in India, two in Pune and Mumbai are complete. The ones in Kolkata and Delhi-NCR are under construction.
Online brokerage Upstox has signed a multi-year deal to be the official partner for the Indian Premier League (IPL) starting April 9. This is the first time a brand in the stock market segment is coming on board as a sponsor for IPL.
According to World Air Quality Report 2020, a report by Swiss organisation IQAir, 22 of the world’s 30 most polluted cities are in India, with Delhi being ranked the most polluted capital city globally. The topmost polluted city is Xinjiang in China followed by nine Indian cities.
That's it for today. Have a good day!
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