Thursday, 18 September 2014

Buy Property - Gangnam Style

Remember Psy and the megahit video Gangnam style ?  Yeah, I know, two years is the equivalent of a full Jurassic Age in pop music circles, but still ..... While you were trying to prance about like a horse, did you wonder what Gangnam style really meant ??

Gangnam is actually a suburb in Seoul, inhabited by the mighty and wealthy. The song was a parody of the lifestyles of those mighty men and women. Today Gangnam district came back into the news, with a property deal that raised my eyebrows so much that they vanished into my hairline (such as it is !). A 79,000 sq metre plot was up for sale. Thirteen bidders emerged, including two of Korea's biggest corporations , Hyundai and Samsung. Hyundai won it ; apparently they want to build their corporate headquarters there. The price tag ? A cool $ 10 bn. If you do the math , that is $126,000 per sq mtr. Or if you are an Indian, preferring ancient British metrics, Rs 7.6 lakhs per sq ft !!!

What sort of a crazy world do we live in where the price of a piece of land just enough to plant your two feet in and stand still, is more than the annual income of 99% of the population of the planet. Well, that is Gangnam style.

There is an ancillary question to be asked. What is Hyundai doing trying to build a corporate headquarters for $ 10 bn ? Investors are asking that question too. The shares of Hyundai were beaten down by 9% when news of this transaction broke out.  After all Hyundai didn't make a profit of $ 10bn last year. The pundits believe that Hyundai overpaid by about 3 times !  Hyundai defended it with typical corporatespeak - "Internally, we think we offered the appropriate price, considering various factors such as our global business plan and its future value ".

This blogger bought a Hyundai car a little while ago, for about the same price as would have fetched 1 sq ft of the land in Gangnam district. He is now unclear as to whether he should have opted to buy the land instead. You see, he is somewhat ( OK severely) dance challenged. However that has not deterred him from dreaming of some delectable dance moves that would make a dozen redheads swoon (Sriram please note !). So maybe, to get the right inspiration, he should have perhaps done the property deal and stood on his 1 sq ft plot of land in the middle of Gangnam district. And then practiced some intricate moves under the watchful tutelage of Psy. Trying to contort himself inside 1 sq ft may have perhaps cured his dance challenged status !

No use crying over spilt milk now. The car is there in the basement (for some hilarity on what this blogger is doing to it, read here). However he is intending to write to Chung Mong-koo, the patriarch of the Hyundai family offering to exchange his new car for the equivalent plot of real estate in Gangnam district. After all you see, its not very obvious which is overvalued more !!


Ravi Rajagopalan said...

The last time I said anything on your blog was April 2013 - shows that ever since I raised money I have had no time!

Ramesh said...

@Ravi - Honoured that you still find the time to visit this blog. I know how pressed for time you are. More power and success to you so that one day you can blog much more than I do :)

Kalpana said...

Lol.. You are still dreaming of making DOZEN redheads swoon ?? If you are trying a dozen, you should buy a Jag or RR :)

Ramesh said...

@Kalpana - Sound advice. May I borrow one from your fleet :):)

Sandhya Sriram said...

I am guessing they would spend another fortune for the building which they will actually use as their corporate office.

This is the problem when you have so much cash in your balance sheet, 50% of your share holders are "Foriegners" from whom you nicely took money but dont want to give some huge dividends or buy backs, and that you have to spend for sure to avoid being taxed for cash balances, might as well create a swanky building for yourself.

and Ramesh, please dont do the exchange. We want to keep spotting that handsome man behind the wheels on the streets on bangalore - though limited edition - still worth the wait :-)

Sriram Khé said...

Ah, it would be awesome to watch the dance-challenged you move your feet to this Now, that will be a way to attract a few redheads, unless Kalpana feels sorry for you and loans you a Jaguar convertible! ... btw the old Jaguar convertible, not the new ones ... I can't afford either one (the car, not the redheads), but I hate the new style

As for the real estate issue, I cannot understand money once it is past a hundred dollars, I can't understand anything ;)

Ramesh said...

@Sandhya - Yes, shareholders be damned. The concept of shaeholder interests is still to catch on in East Asia.

Ha Ha - you are great for the ego :)

@Sriram - Oh; I was not aware that you had an opinion on the design merits and demerits of Jaguars ; we are discovering new facets of you every day. Whatever next ? Do we spy you rooting madly for your college football team ??

The Million Miler said...

I hope, having spent a gazillion dollars on the land, they don't spend another gazillion on putting up a monstrosity like the one that the desi gazillioniare built in Mumbai for a couple of billion dollars!

The Million Miler said...

And here is a nice 1962 Cadillac for you to pick up a dozen redheads!

Ramesh said...

@Kiwi1 - Without a doubt that is exactly what they are going to do

@Kiwi2 - Thank you very much. I would truly appreciate the gift :)

Sriram Khé said...

Looks like a lovely "jaanavaasam--maappillai azhaippu" car ... ;)

Prats said...

I just read your post on Team BHP and was rolling on the floor. Here I was wondering where are you since past couple of days, and now I know where you have been.

Coming back to the prices of the land,I have a firm belief that the world has gone crazy. There is no sanity and even the semblance of it when it comes to real estate prices.

Ramesh said...

@Prats - Oh you went to BHP; I am mightily thrilled !

Yes, property prices have no logic at all.

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