King Johnson Koyyada: In the United States, inflation rose to 9.1 percent, the highest level in four decades. Though the onset of recession was not officially announced, the stock market collapsed due to the increased inflation. For the first time in the last two decades, the US Dollar is almost equal to the Euro. Foreign institutional investors are withdrawing their money. So, in the wake of economic recession in the US and the Europe, what extent will it affect our IT sector? Will property buyers in Hyderabad decrease?
It took nearly a year for Hyderabad to feel the impact of the previous economic recession abroad. Because, till then, a large percentage of the techies did not buy houses. Moreover, the current strict regulations against cash payments did not exist then and a few developers readily accepted cash. But, the current situation is different. Be it IT professionals or NRIs, they are buying houses entirely by making payments through cheques and demand drafts (DD). They are even getting the properties registered by paying stamp duty to the full amount and getting the registration done. So, in the current situation, the flow of black money is not much in the form of purchases made by NRIs and IT professionals. So, if an economic recession hits America, it is certain that it will affect property sales back home in India.
Google announcement
It is known that the Bank of America has already announced that the economic recession will begin by the end of this year. Google CEO Sundar Pichai has announced that Google was being cautious in fresh recruitment due to the recession. Experts say that almost all IT companies are likely to follow this rule. New York-based NFT firm Open Sea recently tweeted that it is laying off 20 percent of its employees. Tesla has laid off 10 percent of its workforce. California-based Loan Depot has announced plans to cut 2,000 jobs by the end of this year.
Electric automaker Rivian has officially announced that it will remove 5 percent of its workforce. Real estate firm Remax also announced layoffs of 17 percent of its staff. JP Morgan Chase also bid adieu to about 1,000 employees. Realty companies like Compass and Redfin have officially announced that they are dismissing 10 and 8 percent of their employees respectively. Crypto firm Coinbase has sacked 1,100 employees. Carvana, which sells second-hand cars, has sent home 2,500 people. All in all, companies of all kinds are sakcing their employees workers as the economic recession looms large over the US. All these companies are likely to re-recruit some of these employes, once the market recovers. However, experts say that the adverse impact of recession will stay alive for at least 18-24 months.
US recession could be good for us!
Will there be a recession in the US or not? There are different reports on the subject. The Federal Reserve has decided to withdraw the cash reserves. As a result, there could be a temporary break in the development due to decrease of the liquidity in the market, but the entire market will not collapse. However, we all have to wait for the official announcement regarding the economic downturn. If there is a recession, it can be said that it will be a kind of advantage for countries like India as the multi-national companies will focus on hiring cheaper manpower to cut down expenses. As a result, India will have an advantage among all the South Asian countries.
* Despite the recession, the US-based IT giants are unlikely to lay off their Indian IT force. Moreover, the property rates in the US have increased significantly and interest rates on home loans also are high. On the other hand, with the increase in value of the US Dollar compared to the Rupee, a large percentage of NRIs will be able to invest in Indian cities like Hyderabad.
– Nandakishore, MD, Ramky Estates
Recession is an advantage for us
If there is a recession in America, we will have an advantage. NRIs will not invest in the US and are likely to make their investments in India especially as the US Dollar is now valued at Rs 80. This has happened in 2008 when all the NRIs sent home their savings to invest in India. Since, NRIs are everywhere in the US, Europe, Australia and Africa, they will try to convert their dollars into rupees and invest the amount in properties in India. In case of the US recession, the IT firms might not expand their new operations, but it wouldn’t affect the current operations.
Though the property sales might slow down on part of the IT sector, professionals from sectors like pharma, film, industrial, education, medical and infrastructure will continue to buy houses. Even if the construction sector loses its momentum due to the recession, it will not collapse entirely. Most of the properties in our SMR Iconia are bought by senior IT executives and top officials. So, a recession will not have a big impact on companies like us. Presently the market in Hyderabad continues to be stable.
– S Ram Reddy, CMD, SMR Holdings
People will buy houses here!
Reports of recession are pouring out in the USA. All the major IT companies are likely to lay off at least 10 per cent of their employees during 2023. The US stock market has already fell by 20 to 30 percent. Demand for real estate has also decreased. On July 13, 2022, a home costing $609,950 in Virginia was being sold for $549,950. The rate has decreased by about twelve percent in four months. There is a risk of another 20 percent price drop in the next six months. In Washington DC and Virginia, the price of a gallon of petrol rose from $2.99 to $5.55. We are all aware that there are mostly Indians in Ashburn, a suburb of Washington DC.
– Srinivas Arla, Application Development Manager
