Chapter1. Introduction The Indian economy has transformed substantively over the last two decades, growing consistently at an average of 8 per cent and is poised to take its place among the leading economies in the years to come. Strong performance of the economy can be particularly attributed to healthy growth in manufacturing and services sectors. The economic performance of India has provided strong impetus to the real estate sector, which has been witnessing heightened activity in the recent years. Substantial end- user and investor interest, large scale investment in infrastructure and rapid urbanization have contributed to the growth trajectory of Indian real estate. The real estate growth story is clearly visible in urban centers such as Delhi, Mumbai and Bangalore which have acquired global character and recognition Real Estate is one of the most productive incomes in India. The growth and damping in this sector directly affects the economy of India. Having a property is primarily a matter of pride for Indians. So people in India select land for their investment. In addition to that, there are the most profitable investments in India. Investing in properties is considered the most appropriate if the risk of loss is negligible. Graph of growth of this sector is seen to escalating day by day Growth was seen not only the metropolitan cities like Delhi, Chennai, Mumbai, Hyderabad, etc., but also the surrounding areas. Suburban areas are growing fast and opened the doors of investments. Those who are looking for an investment can select this market. Foreign investments: With the steady growth of the sector, foreign investment is also setting the bar raised and process improvement has added to the growth of this market. NRI are growing and looking to foreign investors and lucrative Indian property. World-renowned banks such as Morgan Stanley, etc are investing large sum of money in the Indian market. Due to its contribution to real estate prices have increased significantly and safety benefits are great.
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Chapter2. Company Information:INVESTORS CLINIC is a real estate consulting company serving all over the globe. It´s our efficient and effective solution that has given us domestic and global giants as satisfied clients. Investors Clinic has earned a strong reputation in the real estate industry as we strongly work for the satisfaction of our customers. We have catered to numerous national and international clients belonging to various business domains. As a real estate company we have been redefining the standards of real estate and with our years of experience, we offer a wide range of services to fulfil our client´s need. We make it our business to understand your financial requirements. We have already served the premier corporate houses in both domestic and international arena. We have more than 6 years of collective experience in this industry. i ndustry. Our expertise is to make your money work for you and manage your investment portfolio .Our motto mo tto is customer satisfaction at any cost. We deal in everything related to your property needs whether it is industrial, commercial, and residential or farm land. We W e assure to give you the best of our services and at best competitive value to suit your budget.
Year of Establishment Legal Status of Firm Nature of Business Number of Employees Turnover Table1
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2004
Limited Liability/Corporation Liability/Corporation (Privately Held) Retailer, Trader 501 to 1000 People US$ 1-10 Million (or Rs. 4-40 Crore Approx.)
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sector 121, Noida Sector 118, Noida Sector 94, Noida Sector118, Noida Sector76, Noida Sector78, Noida Sector113, Noida Sector78, Noida Sector 107, Noida Sector 128, Noida Sector 168, Noida Sector 100, Noida Sector 137, Noida
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Chapater3. Methodology 3.1 RESEARCH DESIGN:1. Exploratory research 2. Conclusive research
Exploratory Research: •In exploratory design first collect the information about research. •Understand Real Estate •About Real Estate in India •About Indian economy •Impact of Real Estate market in Indian economy •Collection of primary data from past research. •Then collection secondary data from Books, Magazines, Internet etc. •Then start qualitative research in this the interview of Manager of Investors Clinic.
Conclusive Research: •In conclusive research main part is survey. •In this research design we get perfect conclusion. •It is structure. In conclusive research design two types a.
Causal Research
b.
Descriptive Research
In this research use Descriptive research Descriptive research two types a.
Cross
b.
Longitudinal
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In cross sectional In cross sectional use Single cross sectional design because in our research the information collects only one‟s a time.
In longitudinal design use panel.
3.2. Define the target population 1. Target population: The collection of elements or objects that process the information sought by the researcher and about which inferences are to be made.
2. Elements: An object that possesses the information sought by the researcher 3. Sampling unit: The basic unit containing the elements of the population to be sampled . 4. Sampling frame: A representation of the elements of the target population. It consists of a list or set of direction for identifying the target population. 5. Extent: Extent refers to the geographical boundaries. 6. Time: Time is time period under consideration.
I.
Personal Interview with questions
II.
Expert opinion
An exploratory survey, by way of extensive literature review of books, journals and other published data related to the focus of the study, as also concerned websites, was carried out to gather background information about the general nature of the research problem.
1. Sources of Data The main part of the Study deals with Indian Real Estate‟s awareness of and attitudes to Investments in Real Estate. The required data was collected through the pre-tested questionnaire administered on a judgement sample of some Estates, located in different parts of the country. The administration of the questionnaire was done through multiple channels, which included surface mail, e-mail and personal involvement. Information relating to contemporary practices abroad was obtained from published sources such as journals, reports, and from related websites.
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2. Sample for the Study The survey was accomplished with the pre-tested questionnaire administered on some Real Estate Company in India, having Infrastructure exposure. A combination of simple random and judgement sampling was used for selecting the corporate enterprises for the exploratory Study. As against the questionnaires circulated, few responses were received. Of these, 37 had to be eliminated, as they were incomplete in many respects. The respondents are spread over 18 different major industry classifications. The sample covers both old economy corporate like Manufacturing, and new economy corporate including Information Technology (IT), Information Technology Enabled Services (ITES), Business Process Outsourcing (BPO) etc., and they vary notably in size. The respondents to the questionnaire are financial executives with responsibility for FERM and for risk exposure by use of derivatives. The Study is exploratory in nature and aims at an understanding of the risk appetite and FERM practices of Indian corporate enterprises. It also embraces an understanding of the policy or other constraints or impediments faced by the enterprises in managing exposure. The Study has its focus on the activity of end users of derivatives and, hence, is confined to corporate enterprises. Since banks both use and sell derivatives, they have not been included in the scope of the Study. Risk management practices of Indian subsidiaries of MNCs are determined by their parent companies and, hence, they do not form part of this Study. In analysing the responses, the Microsoft Excel Spreadsheet and the Statistical Package for Social Sciences (SPSS) have been used. Factor Analysis, using Principal Component Method, was done wherever there was need to reduce variables into factors. Correlation analysis was also done, as needed.
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Chapter4. Result Analysis : I.
Profiles of Respondents
The Study covers responses from Real Estate. The sizes of the enterprises, in terms of turnover as well as international involvement (expressed as the sum of values of investment in infrastructure in commercial and non commercial) varied considerably. Maximum number of responses came from the IT category, reflecting the dominance of international transactions in that sector. II.
Why do household/company invest in real estate?
Responding to the question as to why companies‟ invest, the most important reason adduced is „to reduce the volatility of the cash flows’. Next in importance comes, „maximising share holder value’ and then, „reducing volatility of reported accounting earnings ‟. III.
Types of Derivatives Used
The First generation derivatives instruments are the most popular, the greatest preference being for simple Forward contracts. This is followed by Second-generation instruments, namely Swaps and Futures. Some corporate also used structured derivatives, which come in the Third Generation category. The Rupee-Dollar Options would have been largely preferred, but they were not available at the time of response to the questionnaire. IV.
Investments for Indian Firms
The recent period has witnessed amplified volatility in the Real Estate market in the backdrop in the Indian Market and increased infrastructure into the Indian markets. In this context, the paper has attempted to study the choice of instruments adopted by prominent firms to stem their Real Estate investment exposure.
1.
According to the real estate experts, the prospect of getting superior returns in the U.S combined with less asset price distort the risk-reward balance in opposition to up coming realty markets of India. Thus, there is a high probability of foreign investors avoiding the Indian real estate market.
2.
Real Estate has contributed in a long way in attracting funds from small investors who emphasize on certain return. Another impediment that can be eased on the discretion of government is the existing tax laws and other complex regulations relating to multidimensional real estate‟s such as industrial parks and SEZs.
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3.
According to another expert in real estate, there is no developmental liability in other markets as these are existing properties. Further, the absence of political or currency risk and the prospect of approximately 18-20% returns in the US make it very attractive for investment and, they are not particularly eyeing for additional 5% they may gain comingto India.
According to the real estate experts, the prospect of getting superior returns in the Indian market. Combined with less asset price distort the risk-reward balance in opposition to upcoming realty markets of India. Thus, there is a high probability of foreign investors avoiding the Indian real estate market. 4.
5.
The real estate market in India is yet in a nascent stage and the scope is simply unlimited. It does not resemble a bubble that will burst. An unhindered growth for the next twenty years is almost sure. This is because the outsourcing business in India is going in great guns and this entails a huge demand for commercial buildings and urban housing besides improvement in infrastructure.
6.
A price index for the housing market to track price movement must be incorporated. The government must ensure that there is no shortage of funds. Sebi's(Securities Exchange Board of India) recent harbinger of permitting real estate mutual funds in both private and public sector will go a long way in attracting funds from small investors who emphasize on certain return.
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Chpater5. Overview of Indian Infrastructure, Real Estate & Construction Industry: The construction sector is the second largest employer in India after agriculture. Currently, the construction industry in India, directly or indirectly, employs approximately 32.0 million workers and also accounts for 40.0% of gross investment and 60.0% of infrastructure costs. The construction sector accounts for a gross annual business volume of Rs.2,300 billion and accounts for 5.0% of India‟s GDP (India‟s total GDP is approximately $1 trillion).Investment in the construction sector may be broadly classified into the following categories:‡ Infrastructure construction investments (i.e. roads, urban infrastructure, power, irrigation and railways)‡ Industrial construction investments (i.e. steel plants, textiles plants, oil pipelines and refineries)‡ Real estate construction investments (i.e. residential and commercial construction)Growth in the construction industry is expected to be led by growth in infrastructure and industrial construction investments, which are expected to grow at a faster rate than real estate construction investments. Consequently, the share of real estate construction investments in total construction investments is expected to fall. Nevertheless, real estate construction investments will continue to be the biggest.
5.1 Real Estate Developments in India India is emerging as one of the places to live in with tranquility and a better social life. India now is not only a place to find greenery and an enriched culture but also it is the place to find various opportunities in terms of jobs and money. Metropolitan cities like Delhi, Bangalore, Mumbai, Gurgaon etc are the centre of attraction to all those who are looking forward to live in the milieu of all the possible amenities and a good environment. These cities are well equipped with high tech opportunities and a well maintained social atmosphere. Days are gone when India was considered to be the country of farmers and agriculture now it is well known because of its high tech companies and software professionals. Delhi being the capital of India offers all the advantages to the people from India or abroad to find themselves at home. This is the basic reason why real estate India along with real estate investors and developers in Delhi has been on a wild ride recently. The main reason behind a sudden increase in real estate rates is the development of NCR and growing population in Delhi. Due to a higher standard of living and higher economy rate of people in Delhi and NCR the property rates are also increasing exponentially. For those who want to buy rent or sell property in Delhi or other metro cities in India some real estate communities have been made whereby people can openly discuss about their needs and demands. These real estate communities are accessible through both ways: physical contact addresses and through web sites. Real Estate Agents are good option as well, for those service class people who hardly have enough time to search for place to put up in. One can easily visit the different real estate communities in order to get a wider knowledge about the current scenario of the location and the availability of place. At the same time these real estate communities offer a wider range of location depending on the budget and requirements of an individual which eventually helps a person to locate the best place according to his/her own choice. He real estate developer is stands by three words real estate developer which means-Real=actual, Estate positions, and Developer builder, means actual positions of builder, by builder. So the real estate developer in India means the activity of India builder by which the value of property in India reach so high and builder also make their existence in the history of India. But in real sense µThe person who develop the property of India and make it usable for men with the main sense of gaining more profit. The process of property development by 10 | P a g e
developer is dealing, buying, constructions, building selling and so on. In India there are many estates which are constructed by famous builder and in every famous estate there are so many builders which are known for their art. So real estate of India is the name of a building whose strong pillar is estates and foundation or base is developer or builder.
5.2 Advantage of Real Estate Market After taking a turn for the worse during the recession, it appears that L.A.is commercial real estate market is finally poised for a rebound. Banks are cautiously considering new loans, life insurance companies and institutional investors are wading back into the market and the FDIC plans to close its Irvine office in early 2012, which points to the improving health of the regions banking industry. But high unemployment, rent concessions and shifting consumer preferences could sabotage uninformed investors who inadvertently venture into unstable submarkets. It seems that while investors were napping, the rules changed, and big returns in commercial real estate are no longer guaranteed.³Overall, commercial real estate is heading in the right direction, but it is not the heyday of 2005to 2006 when virtually every investment paid off,´ says Rocco Parrott, senior vice president and manager of the Commercial Real Estate Group for Wilshire State Bank. ³Investors need to do their homework and partner with a creative banker because, this time, your mistakes will definitely come back to haunt you.´ Smart Business Spoke with Parrott about the opportunities and pitfalls awaiting local investor‟s into days commercial real estate market.
Which submarkets offer the best deals? After falling precipitously during the recession, several submarkets are starting to gain traction. First, the recession virtually halted the construction of new apartment buildings and condos, so apartment vacancies are starting to decline and rents are inching up, which will ultimately increase owner cash flow and may even boost property values. Second, retail sales were up in the fourth quarter and landlords are granting fewer rent concessions, but consumers now prefer the convenience of one-stop retail centers and success hinges on local demographics as well as tenant mix and longevity. Industrial properties have been steady performers and container volume continues to rise at our local ports, but investors should be cautious about purchasing office buildings, as companies are still reluctant to hire, vacancy rates are high and experts say it will take two to three years to absorb the existing excess space. Finally, avoid the hospitality sector, car washes and gas stations, because many of these businesses are still struggling.
What is the key to evaluating prospective deals? Investors cannot rely on superficial analysis; they must review data and confirm anecdotal market intelligence supplied by owners and brokers to accurately estimate their ROI.
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Rent rolls Review a six-month collection history to see if tenants are making their scheduled payments and to expose disparities between scheduled and collected rents, which may indicate concessions. On the one hand, investors may be able to boost cash flow as rent concessions expire, but on the other hand, financially strapped tenants may be unable to pay the higher rents and they might request additional concessions if economic conditions
don‟t improve. Tenants Are apartment dwellers working? Are suitable jobs available in the local area? Do retail centers have financially sound anchor tenants like banks and grocery stores that draw traffic and provide critical services? Centers could be in trouble if tenants rely on discretionary consumer spending, especially in economically depressed areas. Consider the local demographics along with each tenant‟s business model and customer base as these underlying factors influence a property‟s return.
Lease terms Banks have historically preferred long-term leases when evaluating commercial deals, because tenant longevity favors the buyer. Now most commercial leases average one to two years, which could be advantageous if tenants renew at higher rates, but short-term leases also allow viable tenants to negotiate a better deal or shop the competition and defect to other properties.
What else should investors consider before making a commitment? Investors should ignore the national trends and focus on local economic conditions that directly impact commercial real estate submarkets, since our recovery is lagging behind other parts of the country. They should also spend an entire day at the property to assess the neighborhood, traffic flow, vacancies and competing projects to see if the property attracts an ample number of customers and prospective tenants. Finally, examine the owner‟s recent marketing expenditures, because abundant giveaways and free rent could be a sign of a troubled property.
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How can investors partner with bankers to secure a loan? In this age of cautious underwriting, investors need a creative financial partner who understands the need for liquidity and is willing to consider options that satisfy the needs of both parties. For example, bankers used to consider future cash flow when determining funding limits, because they assumed the owner could raise rents to cover the increased debt. Now, bankers may need to offer a smaller loan, such as an earn-out loan, where future time-sensitive benchmarks allow them to increase the loan as occupancy rates or rents rise. The lender usually agrees to fund future loan increases at today‟s rates, which protects investors in a rising rate environment. Collaborative evaluations and creative financing protect both investors and lenders in this new world of commercial real estate, where not every deal is a guaranteed winner. The real estate market is one of the most complex markets in the entire world due to the fact that it is in a continuous change, thus making it a very dynamic market. The internet has a lot to offer consumers regarding real estate and as a result it is a great place to start shopping. Some of these advantages are:
1- It is inexpensive, if not free to list your home in an online property listing service. 2- It is a quick and easy method to advertise your property that is for sale/lease or if you would like to buy a property. 3- The buyer and seller have direct access to information about the property in question. This makes other forms of communication between the buyer and the seller obsolete. The internet iseasy in comparison to the old-fashioned method of answering dozens phones calls or setting up numerous meetings. 4- Many websites that deal with real estate allow you to include up to 5 photos of your property. This is a lot more in comparison to a regular newspaper and you have complete control over the photos¶ quality. In addition you can highlight specific features about your property with the potential buyers. This can be very helpful if you are working to attract buyers from outside your local geographic area whom potentially need more explanation of certain elements. 5- Once listed, your home is available until you will sell the property. This is a big advantage if you consider that for a newspaper ad you will systematically have to pay a fee week after week. 6- These online real estate listing services have a nation-wide audience which will make your advisable to the entire country. 7- Searching for the right house is very easy as these websites have filters which will allow you to only see the houses that meet your specific requirements. Therefore you can spend time looking only out houses that meet your needs without having to waste time looking at houses you aren’t interested in.
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Using the Internet for real estate will make you your own real estate agent without having to pay a great sum of money to an agent and also you will have full-control of the entire activity. Whether you are a home buyer or seller, it is very easy to search for the perfect house as the online offers are endless. Or, if you would like to sell a piece of real estate, there is no safer and quicker way to do it. Online real estate has become popular and is consuming are looking to the internet more each day as an easy place to get good information. As a matter of fact, more than 5 million people use the internet for real estate issues every month. With numbers like this it is easy to see how the internet can improve your chances for selling or buying a home. Another major advantage of real estate moving to the internet is that you won‟t need a real estate agent to start your search. This is very important because we all know that real estate agents are of value but sometimes you just want to look. All in all, there is no better, safer and easier way to search for a home or to sell one than online as the internet has a lot to offer in the real estate market and it is rapidly developing, gaining more and more consumers everyday and thus improving your chances for a profitable buy/sell. Like most people, you work hard during most of the time and enjoy the chance to take a week or two to recuperate and rejuvenate your body and spirit. So ask yourself, where and how do you want to spend your vacation? More individuals are looking into taking part in a time-sharing arrangement. Here are a few reasons to consider time-shares for your vacation as well. As a concept, a time-share property is fairly simple. It begins when you purchase the timeshare, which gives you the right to use the vacation property for a certain amount of time each year. Basically instead of renting a beach house for a week during August, you actually own a part of the beach house. The cost may be high at first, sometimes thousands of dollars. There are some good points that could make it a excellent option for you. One advantage is that these time-share vacation properties are usually very comfortable properties or apartments. Depending on what you buy, there could be two to four bedrooms, a full kitchen, bathroom, and possibly even a deck for your enjoyment. Why is this a exceptional thing? As any family will tell you, living out of a hotel room during your vacation isn‟t very much fun. Even the closest of families will need some space away from each other from time to time, as well as privacy. A time-share property gives you the space you need, unlike a hotel room. Besides having the creature comforts of home, time shares are also a excellent financial investment. The thing to keep in mind is that buying a deeded time-share property is still a real estate transaction. This indicates that you will own that portion of the vacation home, and may sell, give it away, or keep it as you wish. However it is best to make certain that your time share is a deeded one. Make sure you read the contract to ensure that there is a deed involved. Another advantage of investing in a time share is their flexible options. When a person buys a time-share, they obtain the right to exchange it for another resort within the collection 14 | P a g e
provided. Generally speaking, time share memberships allow you to choose from a few different homes. By purchasing one share, you have the versatility to choose from many options. Indian real estate sector continued to remain on the radar of several global realtors. International developers originating primarily from Middle East, South East Asia, and Europe have been hunting for business opportunities in India and several strategic tie-ups were announced in the year 2006-07. Prominent Middle East based developers such as Nakeel Group (Dubai); Signature Group (Dubai) announced their plans or projects in India. Technology and Media Free Zone Authority (TECOM) of Dubai has also entered into a MOU with the State Government of Kerala to develop the ³Smart City´ project near Kochi city in Southern India.
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Chapter6. Real Estate Facilitating Indian Economy Growth Speaking at the ³National Convention µNATCON 2008, Kamal Nath, Union minister for commerce and Industry said that developments in the Indian real estate sector symbolizes the changing face of nation and is a reflection of the growth in the Indian economy brought about by high rates of GDP and also by India‟s integration with the global economy. The minister further added that in recent years real estate sector has been the main driving force of the Indian economy. Describing the present upswing in the economy Kamal Nath emphasized the requirement of creating international standard infrastructure and residential real estate to sustain the growth rate projected in the 11th Five Year Plan. The Minister further stated that we have already opened construction development sector for FDI and the policy permits wholly owned subsidiary in this sector in India by a foreign company. ³Of course, there are conditions regarding minimum area for real estate development and minimum capitalization to be brought in by the foreign investor. A number of global players have entered the Indian market and many more have shown interest. Growth and investment have also created opportunities for investment in real estate sector, his said.³ While the role of the Government is expected to be primarily as a facilitator to the development process, the private sector participation is aimed at bringing technical and managerial expertise in delivering good quality mass housing projects. It is a good sign that many State governments are joining hands with private entrepreneurs in resolving the acute scarcity of residential real estate in urban areas. The private sector and Government has to work in tandem towards a common goal. It is equally important to address the institutional and regulatory aspects as well as strengthen and expand the capacity of financing institutions for further growth of the sector,´ Nath said.
6.1
Role of Major Industries in India GDP
The Gross Domestic Product popularly known as GDP of an economy requires contribution from major industries to be healthy. India is largely an agrarian economy; so agriculture makes the major contribution to the GDP. Role of major industries in India GDP is important as based on this only the total GDP is calculated. In terms of US Dollar exchange rate India's economy is the twelfth largest. Despite witnessing a slowdown, due to the global recession, India's economy has huge potential of expansion.
Major industries that contribute to India's GDP There are various sectors that contribute to India's GDP. Some of the major sectors are Automobile Industry, Steel Industry, Real Estate Industry, Tourism Industry, Energy Sector, Textile Industry, Airlines Industry, Medical Industry, Biotechnology Industry, Electronics and Hardware and the power industry. Besides these industries, there are several other sectors that are important contributors to the GDP of India.
GDP: $1.209 trillion (2008 Estimate) 16 | P a g e
GDP growth: 6.7% (2009) GDP per capita: $1016 Inflation (CPI): 7.8% (CPI) (2008) Unemployment: 6.8% (2008 Estimate) Main Industries: Textiles, Chemicals, Food Processing, Steel, Transportation Equipment, Cement, Mining, Petroleum, Machinery, Software The fertilizer industry of India makes more than a 20% contribution to the GDP. Another sector that seems very promising for the future is biotechnology. This sector is very young, but it is growing at a very fast pace and will undoubtedly become one of the leading sectors contributing to the GDP in the near future. Currently this sector generates $ 2 billion revenue for the Indian economy. The real estate sector has witnessed a huge boom of late and has made significantcontributions to the GDP of India. The real estate sector is one industry that has made significant contribution to the country's GDP.Due to the enormous demand in the retail and other sectors of the economy, more demands are being created for real estate. The automobile industry is another sector that makes goodcontribution to the Indian economy. Due to the changed lifestyle of the consumer the demand for vehicles is increasing at a huge pace.
6.2 Trend of Growth Rate of India's GDP 1960-1980: 3.5% 1980-1990: 5.4% 1990-2000: 4.4% 2000-2009: 6.4% The trend of growth rate of India's economy demonstrates an upward trend. During the period of 1960 ± 1980 the economy saw a growth rate of 3.5% due to the roles of major industries in India GDP. In the years from 1980 to 1990 the growth rate showed a marked improvement of 5.4%, while it was slightly lower in the period from 1990 to 2000 which was at 4.4%. The phase 2000to 2009 saw a huge improvement and the growth rate of GDP were marked at 6.4%
6.3 Real Estate Planning in India Real estate planning in India has been introduced as a separate chapter by the Planning Commission of India in the tenth five year plan (2002-2007). The chapter on India Real Estate planning covers shopping malls, residential townships, multiplexes, entertainment centers, hotels, factories, and industrial building as activity related to real estate. The real estate sector is one of the fastest growing sectors of India and provides many employment opportunities as well. More than 250 industries indirectly or directly depend on the Indian real estate industry. The Indian real estate sector contributes 6.5% to the country's GDP. This shows the importance of the real estate sector in the Indian economy. This is the reason that the government of India is making more efforts in order to organize this industry which is at present largely unorganized. In order to increase planning of real
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estate in India, the National Building Organization has been setup. This is an agency which is under the Housing and Poverty Alleviation Ministry of India. According to the Indian Planning Commission, around 61.8 million people lived in urban slums in 2001. This means that there is need millions of houses with basic civic facilities. In the Indian real estate planning, a National Housing and Habitat Policy- 2006 had been formulated, which aimed at providing shelter for all slum-dwellers by 2010. Under this policy, the government plans to provide 2 million dwelling houses per year. All these plans have given a major boost to real estate planning in India. The planning of real estate in India has increased in recent years for it have been found that the majority of people are evading taxes related to real estate. The government of India plans to make the tax regime more rationalized in this sector, so that the evasion of taxes becomes less. Real estate planning in India has begun only recently. The government needs to make diligent efforts to ensure that this sector grows and realizes it full potential in the near future. Embassy Property Development is understood to be raising private equity even as it is awaiting Securities & Exchange Board of India (SEBI) clearance for a planned public offer of Rs 2,400core which is expected during this calendar. The issue is expected to be managed by investment banks UBS, Citigroup,
Nomura and Edelweiss. While Blackstone could not be reached for comments, Embassy denied any such plans of raising funds from Blackstone. According to recent reports, Embassy was also in talks with Tease and HDFC Property Ventures for a $100million private equity infusion, the status of which is not yet clear. Estate planning refers to the process by which an individual or his/her family arranges the transfer of assets to the legal heirs in the event of death or disability of the individual. It includes the distribution of the
real and personal property of an individual to his/her heirs. An estate is the total of all personal and real property owned by an individual. Real property is real estate and personal property is everything else such as cars, household items, shares, units, and bank accounts. Estate planning refers to the process by which an individual or his/her family arranges the transfer of assets to the legal heirs in the event of death or disability of the individual. It includes the distribution of the real and personal property of an individual to his/her heirs. .
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Chapter7. Objectives of estate planning: 1. Asset transfer to beneficiaries: Every individual wishes that his/her accumulated wealth should reach the hands of the beneficiary of his/her choice. Beneficiary can be his/her children, parents, friends or any other person. 2. Tax-effective transfer: To ensure least tax deduction on such transfer of wealth 3. Planning incase of disabilities: It ensures smooth functioning of asset management within the family incase an individual gets disabled. 4. Time of distribution can be pre-decided: Individuals having minor children may wish to transfer the assets only after the children attain a certain age, to avoid misuse that may happen due to lack of maturity and discretion. 5. Business succession: Organized succession or winding up can be defined in case of an individual handling business 6. Selection of trustee or guardian or the executor: An individual needs to be appointed to carry out the functions like
Distribution of assets to the beneficiaries as per the individual's wish
To pay testamentary and funeral expenses
Applying for a probate
Paying all the expenses and outstanding debts
Ensuring all the benefits due to the deceased, such as life insurance, pension, and other benefits are received Arranging for filing of tax returns
7.1 Steps in the estate planning process: A financial planner performs the following steps in estate planning Relationship establishment Information gathering Determining the client's financial status Draw out a plan of transfer Implementing the plan Regular reviewing of the plan 19 | P a g e
Chapter8. Real Estate Offers Attractive Investment Opportunities Undoubtedly, real estate India offers very attractive property investment opportunities for anyone interested in making real good money. This is due to the consistent appreciation of real estate properties in India for several years now, barring the recent slump in the wake of the global economic meltdown. But the recession has had only a temporary effect in the Indian economy. The real estate industry was in fact affected by the resultant slump, however. And, reportedly the doldrums in the market is tapering off and the industry is again becoming vibrant with talks and deals. As such, individual and institutional investors have begun to evince keen interest in real estate properties in India. As the slump has caused stagnation in the market, many prime properties are available at much less price than they would be available after a year. From another angle also investment-wise real estate offers attractive opportunities in India. Among other investment options, stock and shares do not seem promising in the context of fluctuating sensex and volatile market conditions. Bank deposits and related investment options will not yield any lucrative returns in the context of inflation and declining currency value. There is yet another aspect which can inspire confidence in the mind of the property investors in India. Currently, the real estate scenario in India is undergoing a metamorphosis. In the new scenario new market equations are emerging due to influence of sector-specific and macro-economic factors. Also, industry experts after that the Indian property sector is going to be in an upswing in the coming years. The renowned property investment analyst, Jones Lang LaSalle opines: “economic recovery during CY 2011-12 is likely to reinvigorate the interest of foreign investors in India‟s Real estate market. We expect enhanced capital inflow in the real estate sector in the medium-to-long term”. There is yet another dimension to the fact that real estate Property in India offers very attractive investment opportunities. In resonance with the foregone forecast as to the prospects of real estate investments in India, it would be logical to anticipate a quantum leap in the property sector in India in the coming future. The projected growth in the national income in the coming years will be directly linked to a resultant up-thrust in the property market. Further, owing to the increase in the pay-scale of Government employees, better paying corporate sector, foreign exchange through NRI manpower, an estimated 10 million residential units in the middle income level will be in the need in India in the coming years. This aspect is very relevant when we analyze the scope of property investment in India.
8.1 Government Plans Real Estate in its FDI Policy The government plans to widen the definition of real estate in its foreign direct investment (FDI) policy to include consultants, advisers , values and brokers, a move experts say could restrict entry of foreign players in these specialized services. The department of industrial policy and promotion, or DIPP, has circulated a draft note for comments of various ministries on the proposal.³The idea are to explicitly state what all services does the definition (of real estate) cover, ´ a government official privy to the discussions said. The wider definition is likely to be included in the half-yearly update of FDI policy due to be released by the end of this month. The current FDI policy lacks clarity on several issues, including what constitutes 20 | P a g e
real estate. The policy prohibits FDI in real estate business but allows 100% foreign investment in construction and housing development. In construction and housing, the FDI is subject to several riders including a three-year lock-in period, minimum capitalization of $10 million for wholly-owned subsidiaries and $5million in case of joint ventures. The government hopes to clear the air by defining the scope of the real estate business. According to the proposal, consultancy or advisory services related to location space and property issues of any kind will be included in the real estate business. Agents, advisers, brokers and consultants dealing with any facet of residential, commercial and industrial property will also be included if they offer certain services. To preclude any chances of misinterpretation, the policy will mention a comprehensive list of services. The move follows queries received by the Foreign Investment Promotion Board and DIPP from foreign investors asking if FDI was permitted in broking services in the realty sector. Experts, however, say the changes, if accepted, could make the FDI policy more restrictive. ³This would be a retrograde measure particularly at a time when the country needs foreign direct investment,´ said Akash Gupt, executive director at PwC. The proposal could affect even the existing players who largely offer advisory services.³It will have a dampening impact on the services sector as the lot of players who are waiting to tap the booming sector will have problems entering the country´ said Anuj Puri, chairman and country head at real estate consultancy firm Jones Lang LaSalle India. Some of the players said the restrictions made no sense for service providers. ³We do not control liquidity in any way, nor do we make investments in the sector,´ said Anurag Mathur, managing director at Cushman & Wakefield. ³We just offer our advisory services to the sector. ´Opening several opportunities for foreign developers. Further various public sector enterprises are unlocking land value in prime assets held by them. With their openness and interest in collaborating with foreign developers this is an added opportunity for an overseas developer. In are cent development, DLF has entered into an agreement with Kolkata Metropolitan Development Authority to develop an integrated township in Hooghly District, West Bengal at an estimated investment of US$ 7.7 billion. As per industry sources and the recent announcements, the total committed FDI inflow in the Indian real estate market stands at over US$ 16.3 billion. Major investors include developers/ investors from West Asia (especially Dubai), Indonesia, Singapore and Malaysia. The investments from other countries are further witnessing a sharp growth. At present real estate developers from West Asia especially Dubai have really shown confidence in the Indian real estate market, with financial commitments almost touching US$ 9.5 billion, accounting for almost 58 per cent of the total FDI inflow in the sector. Some of the leading investors include Nakheel Group, EMAAR, ETA Star and Dubai World. Salim Group of Indonesia has further committed to invest over US$ 4 billion in West Bengal for various projects such as SEZs, Health and Knowledge cities. Singapore developers are betting big on the Indian real estate market with investments of over US$ 1.7 billion that are currently underway. Major players from Singapore include GIC, Ascends and Jurong International. Some of the foreign property developers are now launching their own real estate funds, which would allow the investors to gain from the expertise of these developers. This would further help developers indirectly to transfer their constructed assets into the fund enabling them to capture their profits earlier. Singapore based Ascend as has launched a US$ 325 million fund for investing in integrated real estate projects in India. Several other foreign developers are further looking at scaling up their real estate funds for India.
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As within other sectors in the Indian economy, one of the key drivers has been the changes in policy of the Indian Government to a more liberal model. There has been a drastic curtailment in restrictive policies such as the Urban Land Ceiling and Regulation Act, accompanied by majored forms in the Integrated Township Policy. These changes have allowed the real estate development industry to take a significant step forward, whilst international investors have brought both capital and expertise. With the liberalization of FDI rules and the emergence of real estate funds, the options available to both domestic and international investors will continue to grow. Continuing the reforms agenda for the sector, the Securities and Exchange Board of India(SEBI), vide its press release dated June 26, 2006 has approved the guidelines for Real Estate Mutual Funds (REMFs) wanting to set up shop in India and may possibly introduce Real Estate Investment Trusts (REIT) thereby continuing to widen the source of capital for the sector. The Government has moved towards modernizing and rationalizing other areas of regulation impacting real estate, which are perceived to being barriers to further investment and growth. To date this has included simplification of urban development design guidelines and a trend towards reducing and rationalizing stamp duties across the states. Steps are being taken to address the record keeping of land ownership and transaction records, thus improving transparency and possibly reducing transaction costs. Taxation And Legal ±Capital Gains Tax For Real Estate
Sections 2, 45 to 55 under Capital Gains: Section 2 defines that land or house property held for not more than 36months is Short Term Capital Gain (STCG). Otherwise, it is Long Term Capital Gain (LTCG).
Section 48 defines Computation of Capital Gains (STCG) = Consideration -expenses on transfer - cost of acquisition - cost of improvement LTCG = Consideration expenses on transfer - INDEXED cost of acquisition - INDEXED cost of improvement Section 50C defines special provisions regarding consideration where consideration received is less than the value adopted by the stamp duty valuation authority, the value adopted by the stamp duty valuation authority shall be taken as the consideration (wef 01/04/2002) The tax on capital gain on transfer of house property are as follows:1.
1. LTCG on transfer of house property is taxed at 20%2. 2. STCG is added to income from other sources, and a taxpayer pays tax at therate applicable to him/her.
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Section 54 concerns the sale of residential house and subsequent purchase of another property. The conditions are:1.
1. the taxpayer must be an individual or HUF2. 2. the residential house sold must be a long term asset3. 3. the new residential house must be
purchased within a period (T-1) to (T+2) years, or Constructed within a period (T) to (T+3) years.
4. It does not matter whether or not
The house sold was not self-occupied
The taxpayer owned any other house property when the sale and purchase is done.
5. Concession in taxes if the capital gains (on sale of old house) is greater than the cost of the new house, then only such excess capital gain is taxed. But if the capital gain (on sale of old house) is less than or equal to the cost of the new house, then the entire capital gain is not tax. 6. If the taxpayer sells the new house within three years of its purchase or construction, then for the purpose of computation of capital gain on the sale of the new house (remember, this becomes a STCG when the CG on the sale on the old house is greater than the cost of the new house), its cost will be taken as nil. If capital gain on sale of old house is less than or equal to the cost of the new house, its cost will be reduced by the amount of capital gain made (and was exempted) on sale of the first house. 7. Capital Gains Account Scheme: The amount of capital gain not utilized for purchase or construction of new house within the same accounting year, but which is earmarked for such purchase of construction, must be deposited in specified bank account opened under µCapital Gains Account Scheme, and payments in subsequent years must be made from such account.
Section 54B applies to capital gain on transfer of agricultural land, if proceeds are invested in agricultural land. Its provisions are similar to thoseof Section 54 above. Section 54F concerns the sale of any asset other than residential house and subsequent purchase of another property. The conditions are:-
8. The taxpayer must be an individual or HUF. 9. The asset sold must not be a residential house (if it is, S54 applies) j. 23 | P a g e
10. the asset sold must be a long term asset. 11. the new residential house must be
purchased within a period (T-1) to (T+2) years, or
Constructed within a period (T) to (T+3) years.
12. It does not matter if the taxpayer owned any other house property when thesale and purchase is done. 13. Concession in taxes if the cost of the new house is NOT less than the net consideration in respect of the old asset, then the entire capital gain is not taxed. But if the cost of the new house is less than the net consideration in respect of the old asset, the proportionate capital gain is not taxed.
If the taxpayer sells the new house within three years of its purchase or construction, then the amount of capital gain on old asset, which was not taxed, will now (in year of sale of new house) be charged to tax as µLTCG. If the taxpayer purchases within two years from the sale of the old asset, or constructs within three years from the sale of the old asset, any residential house other than ³the new house´, then the amount of capital gain on old asset which was not taxed will now (in years when such additional house property is purchased) be charged to tax as µLTCG. Capital Gains Account Scheme: The amount of capital gain not utilized for purchase or construction of new house within the same accounting year, but which is earmarked for such purchase of construction, must be deposited in a specified bank account opened under µCapital Gains Account Scheme, and payments in subsequent years must be made from such account.
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Chapter9. Future of Real Estate Market in India The real estate market in India is yet in a nascent stage and the scope is simply unlimited. It does not resemble a bubble that will burst. An unhindered growth for the next twenty years is almost sure. This is because the outsourcing business in India is going in great guns and this entails a huge demand for commercial buildings and urban housing besides improvement in infrastructure. The organized retail market in India is also accelerating with players like WalMart, Bharti, Reliance etc. looking forward to make a foray thus stepping up the demand for real estate. According to former Planning Commission Advisor Tarun Das, a price index for the housing market to track price movement must be incorporated. The government must ensure that there is no shortage of funds. Sebi's(Securities Exchange Board of India) recent harbinger of permitting real estate mutual funds in both private and public sector will go a long way in attracting funds from small investors who emphasize on certain return. Another impediment that can be eased on the discretion of government is the existing tax laws and other complex regulations relating to multidimensional real estate‟s such as industrial parks and SEZs(Special Economic Zone).RITES(Real Estate Investment Trusts) of the type introduced in U.S.,U.K. and Germany should be imitated and explored. According to the real estate experts, the prospect of getting superior returns in the U.S combined with less asset price distort the risk-reward balance in opposition to upcoming realty markets of India. Thus, there is a high probability of foreign investors avoiding the Indian real estate market. According to another expert retardation of general growth and low interest rates have served as a double blow to the real estate developers even as the alleged risk-reward ratio for India is going downhill. For instance, the pension funds in US have the opportunity to invest in India or other markets. They opt for other option because of better level of available information. According to another expert in real estate, there is no developmental liability in other markets as these are existing properties. Further, the absence of political or currency risk and the prospect of approximately 18-20% returns in the US make it very attractive for investment and, they are not particularly eyeing for additional 5% they may gain coming to India. Considering the elevated risk that the investors have to take in India, this minor extra return seems to be rather inadequate. This might be an early phase but, for investments, it may result in investments decisions against Indian market. Investors have plenty of doubts and asking many questions and deals are getting cancelled. Term-sheets are deferred. City Venture and AIG backed out of a proposed investment of Rs 1500 core to be made in Mumbai-based real estate developer Akruti City in April. There isa hold-up or delay because of slow decision-making by the PE majors. According to the experts, this is happening because PE majors are not sure. However, developers are commencing to recognize the actuality and coming with better terms and condition. This is clear from the financing terms that they are accommodating nowadays with the growing demand of economy.
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If a developer and a PE major invested in a ratio of 75:25, the profit-sharing was partial to promoters by the ratio of 60:40 beyond a specific interest rate of 15-16%. This has now become almost 20-22%. The coming year could lead to more confusion, as inflation would elevate the rates of interest rates. Deficit financing for oil subsidy would also place the economy in much strain. And thus real estate in India is all set for a hard time. This indicates an end of the days of extraordinary profits, and real estate developers would be forced to price their products affordably. Further, the passion to purchase lands would slow down and consequently India property prices would be corrected. The aggressive land purchasers, having a tendency to acquire lands in large scale will definitely be in a restrained mode for inadequacy of fund. A rectification in this regard will be good option.
Real Estate Industry, Indian Real Estate Market and Boom Indian Real Estate Report "If the human race wishes to have a prolonged and indefinite period of material prosperity, they have only got to be have in a peaceful and helpful way toward one another." –Winston Churchill. The heresy of typical Indians has changed the orthodox mindset of building and designing a house to live in it. A ramification of this is that houses are nowadays counted as a transitory asset. The idea of buying a house that will last a lifetime has gradually vanished. The buzzword nowadays is 'investment'. Both the policymakers and the stock-brokers share an united view in this aspect (although moved by different intentions). 'The growth in the real sector is not unreal' said S.K. Jain, President Global Infocom. In this study we make an attempt to vivisect the real and unreal components in this eye-catching sector. 9.1 The Real Estate Boom: A genuine Euphoria Indian real sector has seen an unprecedented boom in the last few years. This was ignited and fueled by two main forces. First, the expanding industrial sector has created a surge in demand for office-buildings and dwellings. The industrial sector grew at the rate of 10.8 percent in 2006-07 out of which a growth of 11.8 percent was seen by the manufacturing sector. Second, a the liberalisation policy of government has decreased the need for permissions and licenses before taking up mega construction projects. Opening the doors to foreign investments is a further step in this direction. The government has allowed FDI in the real estate sector since 2002. FDI was deemed necessary in the view of making the sector more organized and increasing professionalism. Farmers. The villages adjacent to the metro cities have experienced sky-rocketing land prices. This has induced farmers to sell their land for good money.
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9.2 Future Prospects on Real Estate Industry The real estate market in India is yet in a nascent stage and the scope is simply unlimited. It does not resemble a bubble that will burst. An unhindered growth for the next twenty years is almost sure. This is because the outsourcing business in India is going in great guns and this entails a huge demand for commercial buildings and urban housing besides improvement in infrastructure. The organized retail market in India is also accelerating with player‟s like WalMart, Bharti, Reliance etc. looking forward to make a foray thus stepping up the demand for real estate. According to former Planning Commission Advisor Tarun Das, a price index for the housing market to track price movement must be incorporated. The government must ensure that there is no shortage of funds. Sebi's(Securities Exchange Board of India) recent harbinger of permitting real estate mutual funds in both private and public sector will go a long way in attracting funds from small investors who emphasize on certain return. Another impediment that can be eased on the discretion of government is the existing tax laws and other complex regulations relating to multidimensional real estate‟s such as industrial parks and SEZs(Special Economic Zone).RITES(Real Estate Investment Trusts) of the type introduced in U.S.,U.K. and Germany should be imitated and explored. The real estate sector in India is of great importance. According to the report of the Technical Group on Estimation of Housing Shortage, an estimated shortage of 26.53 million houses during the Eleventh Five Year Plan (2007-12) provides a big investment opportunity. According to a report µEmerging trends in Real Estate in Asia Pacific 2011', released by Price water house Coopers (PwC) and Urban Land Institute (ULI), India is the most viable investment destination in real estate. The report, which provides an outlook on Asia-Pacific real estate investment and development trends, points out that India, in particular Mumbai and Delhi, are good real estate investment options for 2011. Residential properties maintain their growth momentum and hence are viewed as more promising than other sectors. ULI is a global non- profit education and research institute. Further, real estate companies are coming up with various residential and commercial projects to fulfill the demand for residential and office properties in Tier-II and Tier-III cities. For instance, Ansal Properties has several residential projects in cities such as Jodhpur, Ajmer, Jaipur, Panipat,Kundli and Agra. Omaxe has also planned around 40 residential and integrated township projects in Tier-II and Tier-III cities, majority of them being in Uttar Pradesh, Punjab, Madhya Pradesh, Rajasthan and Haryana. The growth in real estate in Tier-II and Tier-III cities is mainly due to increase in demand for organized realty and availability of land at affordable prices in these cities. According to the data released by the Department of Industrial Policy and Promotion (DIPP), housing and real estate sector including Cineplex, multiplex, integrated townships and commercial complexes etc, attracted a cumulative foreign direct investment (FDI) worth US$9,072 million from April 2000 to October 2010 wherein the sector witnessed FDI amounting US$ 716 million during April-October 2010.
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Chapter10. New Projects Private equity fund IL&FS Investment Managers (IIML) is estimated to have invested US$ 300million in real estate and urban infrastructure projects in 2010.Godrej Group's real estate company, Godrej Properties and Frontier Home Developers, has launched a residential project in Gurgaon with joint venture partner M/s. Frontier Home Developers Pvt. Ltd. This is a debut residential project in the national capital region (NCR) for Godrej Properties. Shristi Infrastructure Development Corporation will invest US$ 444.7 million over the next three years in seven small cities in West Bengal, Tripura and Rajasthan. The money would be used to build integrated townships, healthcare facilities, hospitality and sports facilities, retail malls, logistics hubs and commercial and residential complexes. Realty major Ansal Properties & Infrastructure Ltd plans to invest about US$ 330.8 million over the next three years on expansion of its existing integrated townships and to develop a group housing project in Haryana. Tata Housing is planning to launch about 10 new residential projects in both affordable and luxury segments in 2010-11, with an investment of about US$ 268.9 million along with its partners. Vision India Real Estate, a closely-held business group in the US, is investing US$ 5 million in Gem Group's upcoming residential project in Chennai. This will be the first joint development project for the US Company that is proposing to invest US$ 100 to US$ 200 million over the next three years on projects, especially in the logistics arena. Ramky Estates and Farms Limited, the real estate arm of the Ramky Group, is contemplating to enter Indian market by July 2011. The company is evaluating on land acquisitions in Kolkata and Bhubaneswar. Chennai-based VGN Developers Pvt Ltd has entered into a joint venture with private equity firm Pragnya Fund to initiate a new residential project with an investment of US$ 20.06 million in thecity. Realty major Embassy Property Developments has entered into a joint venture with MK Land Holding, a Malaysian company that specializes in pre-fabricated affordable housing, to build projects in the affordable housing segment. The proposed project entails an investment of over US$ 1.2 billion. Thai real estate developer Pruksa Global plans to invest US$ 218 million in projects in India and launched its first residential project in the country at Bangalore in October 2010. The International Finance Corporation is in talks with several real estate developers to create large affordable housing projects in India. For FY-09 and FY-10 (fiscal year ending June 30),IFC's highest exposure has been in India. Out of the US$ 3.5 billion that IFC has committed in India, US$ 2.5-2.6 billion have been disbursed. IFC will continue to invest roughly US$ 1 billion in India every year for the next two or three years.
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10.1 List of Top Real Estate Companies in India India Bulls Real Estate: One of India‟s largest listed developers developing residential and commercial real estate. Being a focused regional player, more than 90% of IBREL¶s portfolio by value is in the three major markets of Mumbai, NCR and Chennai. Established in 2000, the company has grown into one of the leading Indian business houses with its companies being listed on Indian and overseas financial markets having combined net worth in excess of Rs. 18,000 crores. The current market cap beingRs.6,545.17 crore.
HDIL: Ranked as India‟s fastest growing real estate company by Construction World-NICMAR in October 2007 & with a current market cap of Rs.8,567.76 crore, Housing Development & Infrastructure Limited has established itself as one of India‟s premier real estate development companies, with significant operations in the Mumbai Metropolitan Region. HDIL is a public listed real estate company in India with shares traded on the BSE & NSE Stock Exchanges. With operations spanning every aspect of the real estate business, from residential apartment complexes to towers & townships, commercial premium office spaces and retail projects like world-class shopping malls. It is India‟s largest slum rehabilitation company, & was given the Mumbai International Airport Slum Rehabilitation project in October 2007,one of the largest urban rehabilitation projects in India..
Emaarr-MGF: One of the world‟s leading real estate developers company in India and Development of properties in the residential flats, Commercial Properties, premium apartments etc. The µCommonwealth Games Village builder is still trying to get listed on NSE. Currently not listed.
Note this is hardly a complete list of all the realty companies in India but a sample of the big listed companies. A couple of realty players like Oberoi Realty and Prestige Estates recently listed on the India markets
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Chapter11. Interpretation of Questionnaire Question1Gender :
Gender Male Female
Male
Female
No of Respondents 72 28
Respondents
28% Male Female 72%
Interpretation From the above chart, we can understand that Males are more interested than Females. The percentage of males is 72% but females are only 28% . Female contribution shows positive sign as they are also taking part in Real Estate market. It also shows the Education level of Female and awareness regarding this real estate sector.
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Question220-30
Age (Years):
Age 20-30 30-40 40-50 50-Above
30-40
40-50
50-Above
No of Respondents 11 35 20 34
Respondents 11% 20-30
34%
30-40 35%
40-50 50-Above
20%
Interpretation The above chart reflects respondent according to their Age. We can see that number of people between 30-40 is more interested to invest in this sector. The willingness and awareness of this market is more in this age group & therefore, any firm can target this age group and can get benefits.
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Question3Qualification:
HSC
Graduate
Post Graduate
Other
No of Qualification Respondents HSC 6 Graduate 25 Post Graduate 40 Others 29
Respondents 6% 29% 25%
HSC Graduate Post Graduate Others
40%
Interpretation The above chart depicts the Qualification or Education Level. According to the survey, 40% are the Post Graduates who are willing to invest in this sector lead by 25% Graduates. Majority of the Post Graduates is higher in market.
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Question4Occupation:
Business
Self-Employed
Services
Other
No of Occupation Respondents Business 40 Self Employed 10 Services 25 Others 25
Respondents
25% 40%
Business Self Employed Services Others
25% 10%
Interpretation Above mentioned is the Occupation of respondents. 40% are Businessman who are looking for Investment in real estate market. Service sector and some other forms contributed 25% each. Majority of the people are from Business class and they will preferably go either for investment or for their own stay purposes.
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Question-5 Annual Income:
Annual Income <10,00,000 10,00,00020,00,000 20,00,00030,00,000 >30,00,000
< 10, 00,000 20, 00,000-30, 00,000
10, 00,000-20, 00,000 30, 00,000 >
No of Respondents 15 20 30 35
Respondents
15% <10,00,000
35%
10,00,000-20,00,000 20%
20,00,000-30,00,000 >30,00,000
30%
Interpretation The above chart shows the Income level of the respondents. 35% people lies within the category of more than 30 lakhs whereas on second position 30% were having income between 20 lakhs to 30 lakhs. As we have targeted the Middle Income Sector only, their contribution is more prospective towards real estate investments.
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Question6Types of Investment:
Types of Investment Residential Plot Residential Villas Commercial office Farm Land Residential Apartment Retail Space Commercial Food Court
Residential Plot Residential Villas Commercial Office Form Land
Residential Apartment Retail Space Commercial Food Court
No of Respondents 10 5 25 6 35 15 4
Respondents 4% 10% 15%
Residential Plot 5%
Residential Villas Commercial office Farm Land 25% Residential Apartment Retail Space
35% 6%
Commercial Food Court
.
Interpretation The above graph depicts the types of investment in real estate sector. As per the survey, 35% would like to buy residential apartment and 25% will go for Commercial office space. As we have targeted Middle Income segment, majority goes for residential apartment for their self stay purpose. Therefore, Builders need to invest in Residential and commercial projects which will provide them fruitful returns in the near future.
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Question7Purpose:
Self Stay Investment
Self Use
No of Respondents
Purpose Self Stay Self Use Investment
20 45 35
Respondents
20% 35%
Self Stay Self Use Investment 45%
Interpretation The above chart shows the purpose of real estate projects. 45% of the people have chosen self use and 35% would like to go for investment purpose. This clearly shows that people still need more residential projects in this growing current scenario of our economy.
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Question8Duration of Investment:-: Duration of Investment 1 Year 2-3year 3-4year 4-5year
1year 3-4 year
2-3 year 4-5 year
No of Respondents 20 35 26 19
Respondents
19%
20% 1 Year 2-3year 3-4year
26%
4-5year 35%
Interpretation The above graph shows the duration or time period of investment. 35% people would like to invest atleast 2-3 years, followed by 26% would like to keep it for 3-4 years. Generally, An investor keeps investment for 2-3 years only for better returns in this industry.
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Question9Delivery Time: -
Now 2-3 years
Within 1 Year 3-5 Years
No of Respondents
Delivery of Time Now Within 1 Year 2-3year 3-5year
16 30 35 19
Respondents
19%
16% Now Within 1 Year 2-3year 30%
3-5year
35%
Interpretation The above chart shows the Delivery time or Possession time of the project. Delivery or Possession time means that the project will be completed within certain period of time or ready to move in if completed by builder. As per the survey, 35% will go for 2 -3 year delivery time as Ready to Move In projects has high costs in comparison with 2-3 years. Second majority lies within 1 year with 30% contribution.
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Question10Location:-
Location Noida Noida Extn. Greater Noida Yamuna Express Way Faridabad Gurgaon Others
Noida Greater Noida Yamuna Express Way Other
Noida Extn. Gurgaon Faridabad
No of Respondents 10 15 22 26 12 10 5
Respondents 5%
Noida
10%
10%
Noida Extn. 15%
12%
Greater Noida Yamuna Express Way Faridabad
22%
Gurgaon
26% Others
Interpretation The above graph shows the Location of the projects preferred by respondents. Maximum people have marked on Yamuna Express way because of its prime location. Their contribution is 26%. Second most preferred location is Greater Noida with 22%. As Noida is second planned city in our country, maximum woiuld like to invest in Noida, Greater Noida and Yamuna Expressway. 39 | P a g e
Question11Bank Funding:-
Yes
No
Bank No of Funding Respondents Yes 85 No 15
Respondents
15%
Yes No
85%
Interpretation The above graph shows the Bank Funding option. As our main focus is towards Middle Income Segement, 85% will go for Bank Loan and funding in comparison with 15% who will invest with their own funds.
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Question12Preferred Plan :
Preferred Plan Down Payment Plan Construction Linked Plan Flexi Plan
Down payment Flexi Plan
Construction Linked Plan
No of Respondents 15 65 20
Respondents
20%
15%
Down Payment Plan Contruction Linked Plan Flexi Plan
65%
Interpretation The above chart shows the Preferred Payment plan by the respondents. There are 3 types of plan mentioned : Down Payment Plan, wherein, 20-30% in advance and rest on possession. Second is Construction Linked Plan, wherein, Installment needs to pay as per the construction of the building. Third is flexi Plan, wherein, Flexi Emi‟s need to pay as prescribed by builder. So, as per the survey, 65% will go for Construction Linked Plan which depends upon the construction of the project.
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Chapter12. FINDINGS & CONCLUSION NCR's property market, which is currently witnessing a setback, is all set to regain its lost momentum with the revival in economy. Government is leaving no stone unturned to capitalize on the inherent capabilities of the real estate and infrastructure sector to drive growth and to deliver to its citizens. The impact of the subdued economic sentiment and the rising inflation rate on the realty market and the attractiveness of a city's business environment can largely be gauged by evaluating the health of commercial realty in that city. The popularity of NCR as an investment destination can be determined by emergence of Connaught Place as the fourth costliest commercial office market inthe world. Rental values in central business district (CBD) rose by over 20 per cent in one year primarily due to lack of availability of quality space, no new supply while prevailing high demand. Commercial activity apart from Delhi CBD is mainly concentrated in the prominent locations of Gurgaon and Noida. Gurgaon enjoys precedence as a choice of business destination above cheaper market of Noida. The total supply of Grade A commercial spaces in NCR last year was approximately 5.5 million square feet (msf) while supply was recorded at 1.28 msf in the first quarter of 2013. Though the vacancy levels have increased to 24.3 per cent, there is an increase in the average rental values by 8-10 per cent. Rental values are expected to remain stable this year due to increased vacancy. The new and upcoming growth corridors along Gurgaon and Noida like Yamuna Expressway, Noida Expressway, Dwarka Expressway have recorded tremendous increase in the residential activity in the past few months and will continue to drive the residential market activity. Faridabad - Noida - Gurgaon (FNG) Expressway, Southern Peripheral Road and Kundli- ManesarPalwal Expressway are other major corridors that are witnessing prominent residential developments and their popularity is likely to accelerate with time.
India has provided strong impetus to the real estate sector, which has been witnessing heightened activity in the recent years. Substantial end- user and investor interest, large scale investment in infrastructure and rapid urbanization have contributed to the growth trajectory Indian real estate. The real estate growth story is clearly visible in urban centers such as Delhi, Mumbai and Bangalore which have acquired global character and recognition. Though high interest rates coupled with soaring property prices have temporarily impacted affordability of home buyers the demand-supply mismatch and low home loans to GDP ratio in. The growth of the sector has been complemented by favorable policy changes like liberalization of Foreign Direct Investment guidelines and significant increase in investment on physical infrastructure. Days are gone when India was considered to be the country of farmers and agriculture now it is well known because of its high tech companies and software professionals. Delhi being the capital of India offers all the advantages to the people from India or abroad to find themselves at home. But high unemployment, rent concessions and shifting consumer preferences could sabotage uninformed investors who inadvertently venture into unstable submarkets. It seems that while investors were napping, the rules changed, and big returns in commercial real estate are no longer guaranteed. 42 | P a g e
The growing popularity of nuclear families in India has decreased the average household (HH) size in the country, leading to an increase in the number of households in the country. Government of India policy envisages that the housing shortage should be removed and everybody should have a house of his own. Implementation of such a policy will translate large scale development in this segment. Due to non availability of land and proximity to upcoming knowledge industries, peripheral regions of major areas like are expected to attract maximum development.
Chapter13. Recommendations As we know that Investors Clinic is India’s Largest Real Estate Services Company. This consulting firm got tied up with more than 200 builders across India. I will further mention some NRI services and unique proposition offered by Investors Clinic.
NRI Services In our bid to cater to the demands coming from the NRI {Non Resident Indian} community, Investors Clinic is bringing NRI property management services to its set of customers. And as part of these NRI services, Investors Clinic works very closely with its customers through every step of the process of buying a home in India and managing the customer's real estate as NRIs. Investors Clinic provides global NRIs hassle-free property investments, management and related services in India, from the comfort of their home. Our experienced management professionals are ideally poised to help our customers identify and build a unique property portfolio in emerging cities like Lucknow, Indore, Bangaluru, Chennai, Mumbai, Pune, Delhi NCR, Gurgaon, Noida, Goa, Ahmedabad, Chandigarh and many more.
Unique Proposition After years of gradual consolidation, real estate in India has fathomed its own comfortable ground, and is poised at the right threshold to take a giant leap in years to come. And keeping in mind the burgeoning real estate opportunity, Investors Clinic, the leader in end-toend real estate consultancy has devised a unique strategy to assist its customers on all the major areas of property management. So right from starting the search for a property to visiting a property or getting the right kind of customer care, Investors Clinic is positioning itself as a one stop real estate solution provider for its end customers. Whether the customer is looking at searching a property or making a visit, booking a property or looking for customer care, Investors Clinic has completely entrenched itself within this unique space of providing complete property related consultancy. Over the past many years, IC has gained a lot of experience in terms of successfully engaging itself in the real estate consultancy, hence IC is utilizing on that experience to serve its customers 43 | P a g e
in a better and efficient manner and provide specific real estate focused assistance on every step of the way for its customers. And in today's real estate scenario, the stakeholders can't afford to sway on the riding waves of healthy demand, and lose the ground advantage that they have so painf ully regained by adapting to the rapidly changing business environment. Hence, the emerging opportunities should be targeted with an unmatched fervor of potential and pragmatism. The year 2013 is set to usher a new wave of opportunities for Indian real estate segment, which will be a test of sorts for its stakeholders between these two fringes of the fulcrum. And the winners would be the ones who balance caution with diligence evaluating all the potential opportunities with pragmatism. India will be a dominant economic force and have the youngest population in the world by 2030, yet the country still has 70% of the population in rural area. Providing quality living f or these people cannot be done by using traditional real estate development model given the land and environment issues.
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Chapter14. Career in Real Estate Real estate industry is one of the flourishing and dynamic sectors in India. This sector has witnessed several new developments in India. Activities in real estate business cover various categories such as development, appraising and selling of buildings. Real estate brokers‟ and agents have prominent employment growth in India because of increasing housing needs. Career in real estate development Covers various areas such as residential brokerage, commercial brokerage, industrial and office brokerage, property management, land development, real estate appraising, urban planning, real estate counseling and real estate research. Land development is one of the most significant specialties in real estate industry. The developers use the empty land to build government buildings, industrial buildings, commercial offices, residential townships, multiplexes, factories, hotels and restaurants, entertainment centers and shopping malls. The residential and commercial brokers help the people to sell and buy homes and income-producing properties. The property managers maintain the property so that to produce the highest possible financial return over the lone period of time. The real estate industry is a powerful force in determining where we live, work, shop, and play, in shaping the fabric of our cities and suburbs, and in influencing the quality of our lives. So it inessential that the industry attract smart, talented people who will make decisions that not only serve the interests of their companies, but also the larger public interest. Real estate needs good people, and good people can find interesting, challenging, and rewarding careers in real estate, if only they knew of all the opportunities it has to offer. But they may not know. The end product of real estate -- our built environment -- makes the industry one of the most visible on the planet, yet as a career choice, it is less visible than business, law, medicine, education, or other professions. Through personal experience and pop culture, most people have a basic familiarity with the careers of doctors, teachers, or lawyers, yet the world of real estate remains largely a mystery to many. Real estate careers are here to stay. The number of employment opportunities created by the real estate sector makes it the second highest employment generator in India, only after agriculture. Hundreds of subsidiary industries are, directly or indirectly, dependent on the real estate operations. Graduates can opt for careers as: Entrepreneurs, Asset Managers, Project Managers, etc. Number of jobs is increasing in related services of Landscaping, Plumbing and Electrical installations. Earlier there was a notion that real estate can, at the most, generate jobs in construction and civil engineering. But with the change of time and the tastes of people, organized housing industry and urban development has opened the floodgate for the constant flow of real estate job openings. 45 | P a g e
Chapter15. Appendix Questionnaire Dear Sir/Madam I am student of PGDM at JIMS Kalka Ji, undergoing Summer Internship Program at Investor Clinic. Undergoing a project report on “Analyzing Consumer Behavior of Middle Income Groups for Real Estate in Delhi and NCR”. So give your opinion for the same, the information will not be disclosed. [Note- please tick () to your option] NAME-
Gender:
Male
Female
Age (Years):
20-30
30-40
40-50
50-Above
Qualification:
HSC
Graduate
Post Graduate
Other
Occupation:
Business
Self-Employed
Annual Income:
< 10, 00,000 20, 00,000-30, 00,000
Services 10, 00,000-20, 00,000 30, 00,000 >
Types of Investment:
Residential Plot Residential Villas Commercial Office Form Land
Residential Apartment Retail Space Commercial Food Court
Purpose:
Self Stay Investment
Self Use
1year 3-4 year
2-3 year 4-5 year
Duration of Investment:-:
Other
Delivery Time: -
Now 2-3 years
Within 1 Year 3-5 Years
Location:-
Noida Greater Noida Yamuna Express Way Other
Noida Extn. Gurgaon Faridabad
Bank Funding:-
Yes
No
Preferred Plan :
Down payment Flexi Plan
Construction Linked Plan
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