Why (not) to buy a house

Last month I got a phone call. Finally I had found a buyer for my house. In a few weeks time - the sale was finally done. I was thinking what my reaction would be once the house was (really) sold with money in my bank- would I be sad that I would be selling a 'fixed asset'? Should I be thinking of buying 'another fixed asset'? Well, actually I just felt free, a big relief. Finally - I was able to free up some under-performing capital that was not generating sustainable, inflation beating economic returns.

I decided to pen down my thoughts on why it is such a bad idea to look at real estate as an investment class - especially first time buyers (like I was) looking at cheap (that's a relative term) investment which will magically grow once you purchase that house/apartment. Especially in the current situation. Also, especially if you are looking at buying something for 'investment' and not to 'live' in it.

I want to use my use-case for ease of explaining.

I bought a house in 2007 and sold just a few months shy of holding 7 years in 2014. Also, since I took a loan to buy the house - I did end up paying more through all these years for the interest component. Some rough calculations later - I have a number of Rs 49L for the overall ownership cost (based on loan closure). For the sake of maintaining simplicity I have not considered time value of individual loan payments which will make my overall returns worse still (not better). Considering a discount rate of 7% (inflation), here's what I see (all values in Rs.)-

Annualized return of 5% is not what you would have hoped when buying a house - would you? That quickly turns negative if you take inflation into account which hovered in range of 7 - 8% through the period. Investing in a index fund would have returned 10% annually (Jan 1: Sensex at 14,090).

Well - you may ask, what am I getting at? I'm jotting down a few mistakes I did as a real estate investor which one can easily avoid (lest I forget and make another mistake in future). Here are my top 5. I hope you can benefit from my mistake!

- I have only talked about the purchase price and sale price and not about the most important aspect - where and what did I invest in. As they say - the three most important things in real estate investment are location, location and location. Its better to invest in a property in a very good location (when you find something within means so to say).

- Avoid buying when something looks costly and indicators suggest that you are not able to afford prices being asked. Is the EMI equal to the rent you are paying currently? Are you just buying the house as an 'investment'. Buying a house which costs >3 times your annual income with a costly loan (as a thumb rule anything over 2% points over 'Fixed Deposit' rate would look high to me).

- I learnt it the hard way. The first investment should be a property to live in, not to look on. As Francis Bacon told in 1500's - "Houses are built to live-in and not to look on". Especially since any real estate investment needs 'taking care off' - it does no usually generate effort-free rental returns i.e., its better to think in terms of return on unit effort put-in; rental yields you calculate and actually end up with after expenses are quite different - its usually a modest 2 - 3%. And if you think you can increase rents 10% y-o-y think again :-)

- Investing to get tax benefits  as your primary reason (especially on the first property) is not such a good idea! Its good to pay your taxes.. someone needs to pay for the roads, lighting, government running (I know.. who likes it?), etc.. But if you find a nice property to live-in and save on rent plus create a nice environment where your children grow - that is an added benefit.

- Think before you jump. Its much easier to invest in a cheap index fund or an actively managed fund or better still invest in stocks yourself which would be highly enjoyable especially if you like do some thinking behind your investments (I ended up making 21% yearly returns from 2007 until 2013; taking away 2014 which would skew the returns further since this year returned close to 78% ytd). Its a good question to ask if you are ready to make an illiquid, not-so-easy-to-dispose real estate investment!

A normal question to ask oneself: Are there metrics worldwide which rationalize price paid for housing. Well, I read an interesting forbes article a few years back. 'Income to Home price ratio' is an interesting historical indicator.. read on, here's something I picked up -

The price-to-income ratio looks at the total cost/price of a home relative to median annual incomes. Historically, the typical, median home in the US cost 2.6 times as much as the median annual income (so if the median income in an area was $100,000, the median price of a home would typically be about $260,000: $100,000 * 2.6).

A similar scenario exists in UK. A January 2014 article on www.economicshelp.org points out that "First time buyers in London are seeing house prices at a record 7.5 times average earnings. For the UK as a whole, the ratio of 4.3 is still above long term trends." Most people in Germany prefer not to own homes. Here's why: article.

In comparison, if it takes 20 - 30 years of annual income to buy a home in any tier 1 city of India, what it clearly means is that the real estate companies have priced themselves out of the market. Looking at the huge inventories built up by companies like DLF, Unitech, Purva, Shobha, Prestige, others (on top - the enormous amount of debt these companies carry).. its prudent to think again.. is it not better to wait than rush in to buy?

Finally - Is the juice really worth the squeeze?

Ciao till next time...Harsha

Ownership..ownership..ownership.

I read this statement of an American-Indian chief and found it greatly amusing.. something in this made me re-think about 'ownership'-

How can you buy or sell the sky, the warmth of the land?
The idea is strange to us. If we do not own the freshness
of the air and the sparkle of the water, how can you buy them?

- Chief Seattle, Nineteenth Century American Indian (Tribe: Suquamish)

This is the great paradox of our times. That is the essence of investing. You see - stocks are but pieces of business ownership material. I am interested in holding and increasing  pieces of business that I like and admire. What I like and is available at a bargain price - I intend to buy and what is selling at a higher price than what it really is worth - I am willing to part with (maybe lets say I am  learning this aspect of selling still; for you see I would like to hold onto something for as long.. I mean forever.. unless it screams in the eye that its a sell..)

No animal but man can lay claim to own things, places, and stuff like that.. Animals are known to defend themselves, their mates, children, pack, food and area where they inhabit. Animal territory is defended by scent and once the animals are gone.. come new ones (not exactly offspring's) to take their place..

Human beings are different. We purport to believe that individuals can 'own' the most astonishing things.. we can own land, whole islands, mines, mountains, forests and anything else we can name and lay our hands on.

We do believe we own ways to execute a mere 'idea' - the basis for patents and intellectual ownership. Even more astonishingly we pretend that names can own such things, what else to do we call a partnership, company of even a country but a name?

I get this concept, its mind blowing... Something inside struck a deep chord.. Thank God we have this 'ownership thingy', however cynical it really is.

Ciao till next time...Harsha

What an inspiration!

Learning of the day!

Ciao till next time...Harsha

Getting on the right train..

I was reading the Q&A's that Buffett took when he visited the Tuck's school of business. Here's a interesting answer. What a gem!

Q:I worked in the paper and packaging business this past summer and really enjoyed my experience. None of my classmates are interested in the paper business and the company I worked for has not had MBA interns in years. Clearly the paper business has its challenges, but do you see this as an opportunity or a roadblock?


A: Well, you've got it right that the paper business is challenged. High capital intensity, low margins, cyclical. It is a brutal business; no one cares who made the box their Dell computer came shipped in. In general, commodity businesses, even you're the low-cost producer, are difficult. There are generally two recommendations I offer to college and business school graduates. The most important thing about where you work is that you admire/love it. So it sounds like you liked your experience, and that's great. But we come to my second recommendation, which is to get on the right train; that is, moving in the right direction. There's no course in business school called "Getting on the Right Train", but it's really important. You can be an average passenger but if you get on the right train it will carry you a long way. You want to learn from experience, but you want to learn from other people's experience when you can. Managing your career is like investing - the degree of difficulty does not count. So you can save yourself money and pain by getting on the right train.

Ciao till next time...Harsha

Buffett on Retained Earnings

Found this old article of Buffett interesting. Low P/E and high earnings.. not always mouth watering. What the company does with the earnings retained - reinvest to maintain the current position (constant capex need as, i.e., cyclicals), give out dividends (FMCGs, Oil and Gas companies), issue ESOPs to exec's and drain money buying back shares or reinvest for growth (organic or inorganic) is quite important.

BUFFETT: FOLLOW RETAINED EARNINGS
In the 1934 edition of Security Analysis, Ben Graham introduces his readers to Edgar Lawrence Smith, who in 1924 wrote a book on investing entitled Common Stocks As Long-Term Investments (Macmillan, 1924). Smith put forth the idea that common stocks should in theory grow in value as long as they earn more than they pay out in dividends, with the retained earnings adding to the company's net worth. In a representative case, a business would earn a 12% return on equity, pay out 8% in dividends, and retain 4% to surplus. If it did this every year, the stock value should increase with its book value, at a rate of 4% compounded annually.
With this in mind, Smith explains the growth of asset values through the reinvestment of a corporation's surplus earnings in the expansion of its operations. Graham, however, warns us that not all companies can reinvest their surplus earnings in expansion of their business enterprise. Most, in fact, must spend their retained earnings on simply maintaining the status quo through the replenishment of expiring plants and equipment. Predicting future earnings of any enterprise can be very difficult and given to great variance. This means that making a future prediction of earnings can be fraught with potential disaster.
Warren Buffett concluded that Graham's assessment of Smith's analysis was correct for a great majority of businesses. However, he found that under close analysis some companies were an exception to the rule. Buffett found that these exceptions over a long period of time were able to profitably employ retained earnings at rates of return considerably above the average. In short, Buffett found a few businesses that didn't need to spend their retained earnings upgrading plant and equipment or on new-product development, but could spend their earnings on acquiring new businesses or expanding the operations of their already profitable core enterprises.
We want to invest in businesses that can retain their earnings and haven't committed themselves to paying out a high percentage of their profits as dividends. This way the shareholders can benefit from the full effects of compounding, which is the secret to getting really rich.
Capital Spending for Maintenance vs Growth
One of our key stock screens for our WS8 Portfolio, as our Intelli-Vest members are well aware, is to think carefully about how management allocates capital. How much is paid as cash dividends? How much is required to be invested in maintaining or replacing plants and equipment just to maintain current levels of sales and profits? How much is spent on expanding production to create new business, new sales and new profits? To understand the investment merit of any business, we must be able to answer these capital allocation questions.
Making money is one thing, retaining it is another, and not having to spend it on maintaining current operations is still another. Buffett found that in order for Smith's theory to work he had to invest in companies that (1) made money, (2) could retain it, and (3) didn't have to spend those retained earnings on maintaining current operations.
Buffett discovered that the capital requirements of a business may be so demanding that the company ends up having little or no money left to increase the fortunes of its shareholders.
Let me give you an example. If a business makes $1 million a year, and retains every cent, but every other year it has to spend $2 million replacing plant and equipment that were expended in production, the company really isn't making any money at all; the business is only breaking even. The perfect business to Buffett would be one that earns $2 million and spends zero on replacing plant and equipment.
Buffett used to teach this lesson when he conducted a night class on investing at the University of Nebraska at Omaha Business School (image enrollment demand if he still taught such a class today!). He would lecture on the capital requirements of a company and the effect that it had on shareholder fortunes. He would do this by showing his students the past operating records of AT&T and of Thomson Publishing.
Buffett would demonstrate that AT&T, before it was broken up, was a poor investment for shareholders, because though it made lots of money, it had to plow even more money than it made into capital requirements -- research and development and infrastructure. The way that AT&T financed the expansion was to issue more shares and to sell lots of debt.
But a company like Thomson Publishing, which owned a bunch of newspapers in one-newspaper towns, made lots of money for its shareholders. This was because once a newspaper had built its printinig infrastructure it had little in the way of capital needs to such away the shareholders' money. This meant that there was lots of cash to spend on buying more newspapers to make its shareholders richer.
The lesson is that one business grew in value without requiring more infusions of capital and the other business grew only because of the additional capital that was invested in it.
Warren Buffett decided he wanted to search for a few businesses businesses that seldom required replacement of plant and equipment and didn't require ongoing expensive research and development. He wanted a few companies that produced a product that never became obsolete and was simple to produce and had little competition: the only newspaper in town, a candy bar manufacturer, a chewing gum company, a razor blade producer, a soda pop business, a brewery -- basic businesses with products that people never want to see essentially change. Predictable product, predictable profit. And he found a few, and he became the richest man on the planet!

Ciao till next time...Harsha

Some thoughts..learning's as I leave Europe and move to US

Decided to move out of Europe. Had a ball of a time in 3.5 yrs at Cypress in Europe. I will cherish the field experience; should give me enough perspective moving back into a BU role in US. Many top class sales guys in difficult environment...gave a good accelerated learning experience.

Summarizing some of my thoughts' from the time spent here; tried to make them as generic as possible.. here goes-

- The most popular software for writing fiction is not Word. It's Excel. Amen.
- Constant fight as it is.... Beware of lollipop of mediocrity... Lick it once and you suck forever....
- Not everything that counts can be counted, and not everything that can be counted, counts (this one is taken from something written on a purchasers' desk :-)
- It’s better to be approximately right than to be precisely wrong.. False precision is totally crazy... It only happens to people with high IQs.. (mostly)..
- If something looks irrational.. and has been so for a long time... odds are you have a wrong definition of rationality.
- Limitation of our Appraisal, CSFs System - People do extraordinary things at work only when they want to, not when they are forced to.

There are more, but these were some generic sounding themes I had noted in my diary.

Ciao till next time...Harsha

The Professional

I have been a ardent fan of Jesse Livermore ever since I read his wonderful book "Reminiscences of a Stock Operator" during my school days..

Came across a quote from the guy on one of the sites when researching a stock. Couldn't agree more..
Here goes:

Ciao till next time...Harsha

Modi wave - tsunami it was..

Hmmm.. Portfolio return: Sep 19, 2013 to May 22, 2014 - 74.7%.

That says it all. Somehow, I don't like this growth beyond estimation.

Ciao till next time...Harsha

First Locate, then Insulate :-)

Very interesting news.. Rahul Gandhi post elections

Ciao till next time...Harsha

Float and moat mixed with the election goat

State of affairs in India - 2013

Being locked out of your trading account can be good sometimes (lets hope so). Especially when it comes to the election time. Sitting on neat 30% profits on portfolio for past 6 months - I am having dual mind of either pulling out some money or buying more hoping that 'Ab ki baar Modi sarkaar' can give more impetus to the market. However - the decision for me to sit tight is made as I'm locked out of my trading account for the time being..

Last year was good for picking stocks as two factors came in handy for me - the currency devaluation (exchange rate EUR to INR dropped from 70 to 85ish i.e., 21%) and Sensex below 20K levels (add on top loads of stocks hovering at discounts to book value with 5%+ yields..).

As Charlie Munger would say - "Being rats in other person's granary" - investing is a crude way of wresting money from another in a capitalistic sense. Nepotism, monopoly and add some government backing (sprinkle some corruption) - you could be talking about India now. I think the trio can be good for investment though (corruption definitely not). I am not really proud of taking advantage of things as they stand - but; I'm not the PM right.. I'm just an average guy trying to earn a hard way to retirement..

Though - I do wish for the goodness of nation - there is a stable government; I really don't mind having any government in India at the moment. Being a net investor in the market for next 5 years, I would love that I can build my positions in few stocks favorably. Weak governments mixed with unstable policy matters don't seem to be a deterrent for me to invest (the long term consumption story remains intact - so I frankly dont really mind buying good businesses at cheap valuations). Actually who doesn't like to pick stocks with mouth watering margin of safety trading below BV and yielding 5%+ yields.. (on hindsight - being locked out, I definitely missed the golden chance to pick Corporation Bank and Syndicate Bank at 230ish and 70ish levels respectively which in turn would have yielded upwards of 9% yields..).

Shit happens.. but, I think we definitely live in interesting times.. ever checked the kind of returns Buffett made through the 1950's? I think its the kind of market India is in now. Amen.

Ciao till next time...Harsha

AAP - Why I am disappointed

I don't like Politics. I hate double-talk. More so, I feel that 'Honesty' cannot be subjected to twists and turns. Anyways... why this exception.. As I had blogged before (Link here) - I have been a huge fan of Anna Hazare:

"The man stood to make us whiter ourselves. None of us are white. None of us are black. We all fall in shades of grey. Some lighter. Some darker. It is our constant fight to be seen on the lighter shade of this color and confirm to the maxim - purer than thou.. this is what this guy is trying to stand up for. He is today talking about something small (Jan Lokpal).. but eventually he is trying to stand against the bad side of human nature.. he is standing to make the society a little bit more lighter.. he wants to say that all of us want to be good.. but cannot be for various reasons... maybe some day.. we will become good. Maybe our billion deities some day would provide us with divine powers to resist evil. Sooner than later. 'Hope' as they say, still burns bright in our hearts."

When Arvind Kejriwal created the Aam Aadmi Party (Mango People's Party - a nice jibe at that to Congress..), I was curiously feeling happy. Each mainstream party today has a plank to stand on. Congress has been the 'Secular' party (some would say - Pseudo-Secular.. and slowly this plank has been copied by SP, BSP, JD and many other regional parties which has eventually led to the slow decay of this once mighty party), BJP has been the 'Hindu' Party backed by RSS (some extreme form of regio-political planks were created by others like - Shiv Sena, MNS, others..). the nation needed a party to stand for the masses. We needed to take a stand against the 50%+ Black economy which has created huge imbalances in economy. On one side building up 5%+ Budget deficits (the deficit funding normally comes in 3 ways: long term loans which bring with it interest burden, FII/FDI investments - which sort of creates equity ownership in our nations jewels i.e., companies publicly traded and the big reparitions from NRI's) and on the other side drum up populist policies which take us on path of bankruptcy.. A fight against 'Corruption'- seemed refreshingly interesting. Especially for the 65%+ young Indians (in age group of 18 to 45 years) who normally tend to move away from religio-socio factors to elect leaders.

I thought - BINGO. AK has hit the bulls eye. In one shot - he has gained relevance that mainstream parties have lost out over years. A strange feeling of wanting to be politically involved came up. AK and AAP got a lot of respect from me. I am sure also from crores of people like ME. HENCE, metaphorically aam aadmi voted for him.

However, for the last month or so the AAP has been the center of attraction for wrong reasons in Delhi.. I must mention here that during the agitation led by Anna Hazare, I admired Kejriwal for his ability to connect with people and bring greater vigor to the movement. Shouldn't I then be rejoicing that the AAP has formed a Government in prestigious Delhi? Here are the reasons for my disappointment:

1. I expected new standards of political conduct from AAP when they said they would do things differently. It was shocking to see them form the Government in Delhi when they accepted the outside support from the party they abused the most as being corrupt, the Congress party. I don’t think their explanation that the people of Delhi asked them to  form a Government is a good one. On the contrary, it sets a dangerous precedent because in real life important decisions cannot be taken only because a large number of people support it by sending SMS. What was the alternative? If they were as principled as they claimed to be, and I expected them to be, they should have opted for a re-election. I believe they may actually have got more than 28 seats if they had adopted this course. Anyway, they didn’t and what followed disappointed me even more.

2. Political decision as regards water and electricity smack of short-term expediency. To say they exempted a section of people from paying bills because they had not done so at their behest is most dangerous as a trend.

3. I am disappointed that the whole anti-corruption plank stands exposed as till date AAP have not taken steps to initiate any action against those like former Chief Minister Shiela Dixit who was roundly abused by them day in and day out. At one time Kejriwal said he had 300 + pages of proof of her corruption, now they are asking the BJP to provide evidence. Their website Pol Khol also no longer has mention of Shiela Dixit’s corruption.

4. Lakhs of people are said to have joined the AAP. Here’s where it becomes essential for them to have made a framework of their national policies on a variety of important issues such as defence, economics, internal security , health, education etc. They have been in power for less than a month, but they became a party formally over a year ago. This gap had led to controversies with Prashant Bhushan’s stand on nuclear power and referendum in Jammu & Kashmir.

5. While more eminent people like Meera Sanyal, Capt. Gopinath and Mallika Sarabhai have joined the party, this raises the question of who is an aam aadmi? These are very well off, to put it mildly and hardly qualify for being the typical aam aadmi in a literal sense. If you go by the earlier understanding that the aam aadmi was someone who was not the big bad, corrupt morally weak politician, this no longer holds true as they have joined a political party and have become politicians themselves. It is now emerging to be a left of centre party.

6. Controversies regarding U turns in decision-making , be it about  Kejriwal’s accommodation or about Janata Durbars are not exactly adding to my confidence of the maturity of its leaders. I believe they tend to oversimplify things. Kejriwal said there was not much difference between the number of rooms in his current apartment and the new one he planned to take up. He forgot to take location into account, there being a world of difference between his current location in Ghaziabad and the apartment in question in a posh area of Delhi.

7. Policy paralysis - like opposing FDI and increasingly turning Left-Centric (in terms of ultra protectionist attitude).

8. CM or rabble-rouser? Prioritizing agitation v/s governance on side topics (which could well be taken care off by his folks in AAP - like agitating against certain policemen).

The next few months will be very crucial for the AAP. They have made it clear that the Congress is not a factor in the General Elections in 2014. How they will perform is anybody’s guess. They may shine, they may fall but as of today, I have started moving away from AAP band wagon.

Ciao till next time...Harsha

Guenter Anzer - A lesson in life learnt..

There are few people who can be missed at first sight. Guenter was certainly not to be missed. Standing at over 6' 4" - he certainly had a commanding presence; the friendly Ober Frankonian voice.. the at once friendly - 'hey I've known you for ages' kinda friendly salesmanship.. and off course - Guenter's gift of gab.. you've got to know to believe. I am very happy to have known the man from close quarters and its been a great pleasure and honor to have been his friend and mentee..

Guenter recently passed away. Just before Christmas 2013. As he would have liked it - the man worked until death. Sometimes.. Its better to leave with a feeling that the promise was yet to be complete than leave with a feeling of living beyond expiry date!

Flashback - It was the second day of Embedded in 2012 (for the uninitiated Embedded World is a conference held in Nuremberg - one of the biggest electronic design exhibitions worldwide). I vividly remember my former colleague Knut Kittel introduce the mountain of a man.. He seemed to have the knack to beat the hell out of us at Cypress being a one man sales army for our nearest competitor (for sake of brevity - I leave out business details). Had a coffee.. some friendly words.. exchange of business cards and I made a mental note to keep in touch. As fate would have it - more opportunities ensued and by twist of fate, details of which are not needed for the purpose of this article - Cypress soon hired him as our local rep.

One of the things which you normally would call ' EODB' (Ease Of Doing Business) - which after all the processes in place at a big organization... you still fail to achieve.. was something the man made it seem easy. If only there was a school to teach young sales professionals the way to grow business; Guenter would have been the Principal of that school. Some of the takeaways from knowing the man has been -

- Develop an attitude of 'Customer first', 'Internal shit next'. Hiding behind processes is easy - but that does not necessarily do good to the organization in the long run.

- Failure of our organizations... People do extraordinary things at work only when they want to, not when they are forced to.

- Something I find ironical. If at all there was someone who worked for the sake of work alone - I would put the guy right at the top of my list. Enjoying the journey - as long as it lasts... its not easy.

R.I.P Guenter. I would always remember the lessons I learnt and off-course the bier-garten  tips for life. Prost!

Ciao till next time...Harsha

The Money Game

The irony is that this is a money game and money is the way we keep score. But the real object of the Game is not money, it is the playing of the Game itself. For the true players, you could take all the trophies away and substitute plastic beads or whales teeth; as long as there is a way to keep score, they will play.

— ‘Adam Smith’, Quote from Money Game

Ciao till next time...Harsha

Dubai - Thoughts of a weary traveler...

Finally we went to Dubai for a vacation - wife, kid and and your truly.. This was on 'to see list' for the past 5 years... time and again something stopped us from going there...

Well, it turns out that we would not have missed much at all.. giving it a skip. As you enter Dubai - the first thing you do notice... is the concrete jungle filled with sky scrapers and malls... ('malls' may not give you a sense of size - a normal mall multiplied by 100 would come close to the size of Dubai mall... this is just one of the many). The Dubai mall had more shop attendants than customers... there was the famed Dubai Shopping festival ongoing...

Anyway.. the whole place looked very surreal to me... If you visit the city with eyes open –  the truth is hidden in plain view, behind the glitter and glamour of the place.. you see more servants.. more maids, workers and poor laborers on the building sites (all from the Indian subcontinent) than Arabs... None looking all that happy. We did see some rich Emiratis in their white dresses being driven by Indian drivers in Porsches, Mercs, BMWs and Rolls Royces... The undercurrent I felt was - South Asians were not looked upon as equals in Dubai. Some research later did confirm this after fact.

The place... seemed more like Albert Speer was reborn to build commercial castles for modern day Walt Disney... The multitude of sky scrapers had big screaming 'TO-LET', 'FOR SALE' or 'CALL FOR LEASE' signs.. written in BIG..BOLD letters (each letter looked like covering 3 - 4 floors to me..). Most roads have unfinished sky scrapers with workers teeming to complete them in that scorching heat... wonder why the hurry to add one more unoccupied sky scrapper...

The friendly taxi driver (South Asian again... a little research on Google later confirms that the population in Dubai is indeed 50%+ South Asian - Emiratis' make up less than 15% of the population).....was more than happy to talk about the desert revolution - how he has seen the desert bloom in past 15 years... On top of Burj Khalifa (at 160 floors - this dwarfs the other buildings around.... wonder if even 5% of this structure is occupied...) - you get to see the other sky scrapers like Gulliver would have seen the Liliputs....so many.. every where... you even see a 'Before' and 'Now' picture on walls at the observation deck showing how Dubai looked 15 years back and now... made me wonder how on earth could someone build this concrete jungle in the wide vast desert.... what was the need? Who are they building it for? 15% Emiratis living there? Are they trying to turn this place into a commercial nerve center in the middle east - is that needed at all? Deep inside - it struck me hard.. how money can make people try to fight nature... could money turn Dubai into Las Vegas / Singapore? For how long?

Dubai - 1990 v/s 2013

Where do they get so much water to pump up 160 floors on Burj Khalifa.... or 100 floors... or even 20 floors... every building around seemed like 20+ floors to me (turns out that there are over 200 sky scrapers in  Dubai)... Water, after-all is more costly than Petrol there... During its peak in mid 2000's- 1/5th of cranes worldwide were in Dubai - its afterall a small place: a little Googling tells me that the State of Dubai is smaller that our city of Mysore (or any level 2 City in India - in terms of land mass).. how on earth do they even get to build these structures... who builds them??... the posters all around in Dubai will make us believe that the Ruler Sheikh Mohammed has built this city.. Turns out that the vast majority of the concrete structure gets built by teeming underpaid workers from India, Pakistan / Bangladesh.... one gets to hear about the scamsters luring people to go to Dubai / Middle-East in smaller towns of India in exchange for large sums of upfront visa 'fees' / facilitation money - did not seem impossible to me that they get lured to work in these mammoth construction sites.... we did walk past some construction site filled with Indian laborers.... felt a slight tinge in my heart.

Dubai went on the verge of bankruptcy in 2009... big brother Abu Dhabi saved them from defaulting their Dubai World loan. Seems like a time bomb ticking... with all those empty buildings and the empty malls....  seems like Dubai is headed for a hard crash...

Wonder how long can the lights be lit on the sky scrapers and water be pumped in those artificial islands.. and in those landscaped golf courses and multitudes of parks when Oil Money runs out. After all.. Oil will not last forever.. not even for big brother Abu Dhabi..

How much waste. What for and for how long? This money could have been easily put to better use. With much less human suffering. Something reminds me of that beautiful poem from Percy B. Shelley -

Ozymandias

I met a traveler from an antique land
Who said: `Two vast and trunkless legs of stone
Stand in the desert. Near them, on the sand,
Half sunk, a shattered visage lies, whose frown,
And wrinkled lip, and sneer of cold command,
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them and the heart that fed.
And on the pedestal these words appear --
"My name is Ozymandias, king of kings:
Look on my works, ye Mighty, and despair!"
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare
The lone and level sands stretch far away.'

Ciao till next time...Harsha