Boutique Office Spaces as Contrarian Investments
CONTRARIAN INVESTMENTS Contrarian Investing is an investment strategy that is characterised by purchasing and selling in contrast to the prevailing sentiment of the time. Also known as Value Investing.
1987, WARREN BUFFET AND COCA COLA
"Be fearful when others are greedy, and greedy when others
To understand contrarian investing or value investing, let's go back in time. The year was 1987, mid-October. The US stock market saw an intensifying decline for 5 consecutive days. As with any financial crisis, the speculations around this crash were multi-pronged (trade agreements, volatility in the Persian Gulf, introduction of computerised trading et al). As with time and tide, the crash waited for no man. Good stocks plummeted to the ground. And among them was Coca Cola, a brand that was expanding into emerging markets and one that enjoyed an expanding market share.
What did Warren Buffet do? He applied the principles of value investing, identified Coca Cola as a company whose value exceeded its market price and bought 23.35 million shares worth $1.8 billion. Coke stock has climbed 1,750% since then. Today, 30 years later Buffet still holds stock in Coca-Cola. This is contrarian investing. He purchased in contrast to the prevailing sentiment.
2020, CORONA AND REAL ESTATE
While financial crises can be seen as a course correction for the future of progress, pandemics are a course correction for mankind as a civilisation. Both phenomena create widespread pessimism leading to uncertainty and fear in the short-term, but they also take mankind back to the fundamentals of personal finance. Start saving, benefit from compound interest, avoid credit card debt, create passive income and make wise investments. In 198889, Warren Buffet determined Coca Cola would recover, that it stood ahead of competition and showed positive intrinsic value.
Case in point, the positive intrinsic value of real estate - it helps you generate passive income through rental inflow and it is not vulnerable to short-term fluctuations. Also, over time, real estate outperforms other forms of investments. Contrarian investing in real estate, especially in the investment of office-spaces is more relevant now than ever.
THE FUTURE OF WORKPLACES
Five months into the pandemic now, organisations both big and small have started recalibrating as a business - in terms of products or services, embracing new technologies and adapting for a changing market. Over the next few years they will look to stay lean, increase productivity and operate with no frills. Taking a cue from companies like Google (that have extended work-from-home for employees until July 2021, medium and small businesses will further look to save on operating expenditure by relocating to smaller office spaces.
Office spaces that are space-efficient, centrally located, offer seamless network connectivity and built by a reliable developer. Enter Boutique Office Spaces
BOUTIQUE OFFICE SPACES AS CONTRARIAN INVESTMENTS
Boutique offices offer space-efficient design, great location, state-of-the-art connectivity and hassle-free maintenance - the four cornerstones of wise commercial real estate investments.
As the economy is jumpstarted, in the years to come, this decade will revive entrepreneurship, giving rise to a new wave of small and medium businesses, with a renewed rigour on innovation, and a focus on India as a competitive market for digital products. New age online tools will flourish in education, healthcare, entertainment, accounting, fitness and marketing to name a few.
An investment in a boutique office space will therefore bode well in the coming years both as a wise financial investment and a step towards supporting ingenious ideas.
THE INNOVATION REVOLUTION - A CLOSING THOUGHT
A month ago, my ninth-grade daughter took to baking cookies watching YouTube videos and now she has sales orders for the next seven weekends.
She had an idea, focused on the process and found a steady stream of buyers - the fundamentals of entrepreneurship in a cookie. Did I mention she is in her ninth grade?
She did not fear the process or the outcome. She dove nose first, kept calibrating her technique and found her own niche. Now she's building a viable source of income. Business lessons from a 14-year old!
I am in awe of India's Generation Z. They are individualistic, enterprising and hyper-connected - three traits I see in today's entrepreneurs. Perennially hooked to their mobile devices they may be, but being born into interactive technology they've quickly jumped from zero to one in tapping its potential. This generation will be at the forefront of our Innovation Revolution, driving
India into the next decade as a competitive market not just in the services sector but in products, technology and design. And the key ingredient to this revolution will be what I call Indian Ingeniousness - another contrarian investment in itself.
An eternal optimist, I also see exciting times ahead for the real estate market. More on that in my next blog.
Take care and stay safe.