Real estate current scenario

8/7/2019 Real estate current scenario

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Executive Summary

Several global and local factors have converged over the last two years to

culminate in the unprecedented interest in Indian real estate by global and

domestic investment funds. While India has been the flavour of investment

globally for some time now, it has taken almost ten years, for Indian property to

evolve, after a full cycle and consolidation, before it has come squarely under the

international spotlight.

While the influx of global money has been the crowning event in the real estate

markets, almost simultaneously there has been a huge upsurge of domestic

institutional and classic private equity investment activity in the country.

The real estate market has been on a growth and expansion phase ever since

2002, after it emerged from a phase of consolidation since the correction of the

late 1990s. In the years of resurgence, the transformation of the Indian real estate

sector has been more or less organically driven by consistent growth of the

economy and business, growing incomes and aspirations as well as enthusiastic

supply response. The scale of transformation achieved till now has not been

insignificant considering that a few years back, the sector was relatively insulated

from foreign investment.

The hallmark of this transformation is not only typified in the increase in depth

and size of the markets, but also in the maturity, quality and process

improvements that have been achieved.



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Contents

Index Page no

1. Real Estate in India 7

2. The Global Real Estate Market 13

3. Foreign Direct Investment in Real Estate 16

4. Latest development in FDI 22

5. Changing Face of Real Estate Sector 26

6. Indian Real Estate-99Acres 32

7. Case-study on DLF 35

8. Conclusion 43



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Real Estate Sector in India

The real estate sector in India is of great importance. According to thereport 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 PricewaterhouseCoopers (PwC) and Urban Land Institute(ULI), India is the most viable investment destination in real estate. Thereport, which provides an outlook on Asia-Pacific real estate investmentand development trends, points out that India, in particular Mumbai andDelhi, are good real estate investment options for 2011. Residential

properties maintain their growth momentum and hence are viewed as morepromising than other sectors. ULI is a global non-profit education andresearch institute.

Further, real estate companies are coming up with various residential andcommercial projects to fulfill the demand for residential and officeproperties in Tier-II and Tier-III cities. For instance, Ansal Properties hasseveral residential projects in cities such as Jodhpur, Ajmer, Jaipur,Panipat, Kundli and Agra. Omaxe has also planned around 40 residentialand integrated township projects in Tier-II and Tier-III cities, majority of

them being in Uttar Pradesh, Punjab, Madhya Pradesh, Rajasthan andHaryana. The growth in real estate in Tier-II and Tier-III cities is mainly dueto increase in demand for organized realty and availability of land ataffordable prices in these cities.

According to the data released by the Department of Industrial Policy andPromotion (DIPP), housing and real estate sector including cineplex,multiplex, integrated townships and commercial complexes etc, attracted acumulative foreign direct investment (FDI) worth US$ 9,072 million fromApril 2000 to October 2010 wherein the sector witnessed FDI amountingUS$ 716 million during April-October 2010

With property boom spreading in all directions, real estate inIndia is touching new heights. However, the growth also depends on thepolicies adopted by the government to facilitate investments mainly in the



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economic and industrial sector. The new stand adopted by Indiangovernment regarding foreign direct investment (FDI) policies hasencouraged an increasing number of countries to invest in IndianProperties.

India has displaced US as the second-most favored destination for FDI inthe world. As the investment scenario in India changes, India which hasattracted more than three times foreign investment at US$ 7.96 billionduring the first half of 2005-06 fiscal, as against US$ 2.38 billion during thecorresponding period of 2004-05, making India amongst the "dominant hostcountries" for FDI in Asia and the Pacific (APAC).

The positive outlook of Indian government is the key factor behind thesudden rise of the Indian Real Estate sector - the second largest employer

after agriculture in India. This budding sector is today witnessingdevelopment in all area such as - residential, retail and commercial inmetros of India such as Mumbai, Delhi & NCR, Kolkata and Chennai.Easier access to bank loans and higher earnings are some of the pivotalreasons behind the sudden jump in Indian real estate.

Why Invest In Indian Real Estate? Flying high on the wings of booming real estate, property in India hasbecome a dream for every potential investor looking forward to dig profits.All are eyeing Indian property market for a wide variety of reasons:

y It¶s ever growing economy which is on a continuous rise with 8.1percent increase witnessed in the last financial year. The boom ineconomy increases purchasing power of its people and createsdemand for real estate sector.

y India is going to produce an estimated 2 million new graduates fromvarious Indian universities during this year, creating demand for 100million square feet of office and industrial space.

y Presence of a large number of Fortune 500 and other reputedcompanies will attract more companies to initiate their operationalbases in India thus creating more demand for corporate space.

y Real estate investments in India yield huge dividends. 70 percent of foreign investors in India are making profits and another 12 percentare breaking even.



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y Apart from IT, ITES and Business Process Outsourcing (BPO) Indiahas shown its expertise in sectors like auto-components, chemicals,apparels, pharmaceuticals and jewellery where it can match the bestin the world. These positive attributes of India is definitely going toattract more foreign investors in the near future.

The relaxed FDI rules implemented by India last year has invited moreforeign investors and real estate in India is seemingly the most lucrativeground at present. The revised investor friendly policies allowed foreignersto own property, and dropped the minimum size for housing estates builtwith foreign capital to 25 acres (10 hectares) from 100 acres (40 hectares).With this sudden change in investment policies, the overseas firms cannow put up commercial buildings as long as the projects surpass 50,000square meters (538,200 square feet) of floor space.

Indian real estate sector is on boom and this is the right time to invest inproperty in India to reap the highest rewards. With around 1.1 billionpeople, India is the second most populous country after China and it isexpected to overtake it by 2030. Its economic transformation over the pastdecade has pushed up real GDP growth to an average of 6 per cent per annum since 1992. India is emerging as an important business location,particularly in the services sector. Its favourable demographics and strongeconomic growth make the country an attractive place for propertyinvestors, given that demand for property is determined chiefly by business

development and demographic trends. Historically, the real estate sector inIndia was unorganised and characterized by various factors that impededorganised dealing, such as the absence of a centralized title registryproviding title guarantee, lack of uniformity in local laws and their application, nonavailability of bank financing, high interest rates andtransfer taxes, and the lack of transparency in transaction values.

In recent years however, the real estate sector in India has exhibited atrend towards greater organisation and transparency, accompanied by

various regulatory reforms. These reforms include:

� Government of India support to the repeal of the Urban Land Ceiling Act,with nine state governments having already repealed the Act;

� Modifications in the Rent Control Act to provide greater protection tohomeowners wishing to rent out their properties;



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� Rationalization of property taxes in a number of states; and

� The proposed computerization of land records

The trend towards greater organisation and transparency has contributed

to the development of reliable indicators of value and the organisedinvestment in the real estate sector by domestic and international financialinstitutions, and has also resulted in the greater availability of financing for real estate developers. Regulatory changes permitting foreign investmentare expected to further increase investment in the Indian real estate sector.The nature of demand is also changing, with heightened consumer expectations that are influenced by higher disposable incomes, increasedglobalization and the introduction of new real estate products and services.



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The Global Real Estate Market

For all the change in the global real estate market in the past twoyears, the landscape in emerging markets still looks much the same. China remainson top, Asia still dominates with six of the top 10 countries, and the Middle Eastcontinues to improve in the rankings.

The Index was designed to help property developers decide where to expand outsidefamiliar markets. Focusing on a short list of emerging markets, the Index weighs realestate development potential against the risks

The following are the major findings.



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Strength in Asia. Continued economic growth and effective stimulus plans are fuelingthe Asian real estate engine. Top-ranked China and third-place India are expected togenerate world-leading economic growth of 7 to 10 percent in the next several years,an outlook that should benefit their real estate markets. Although the Chinese marketsuffered during the final quarter of 2008, government steps kept the economy ontrack and real estate has improved throughout 2009. Growth in India's real estatemarket appears to be in the affordable housing sector, where there is demand for more than two million units in major urban areas.

In South Korea, which ranked second, government relief and infrastructure spendingwere supported by a strong economy that has reduced the impact of the crisis.

The Middle East's ascent. From Saudi Arabia's huge real estate market and "mega"projects to Abu Dhabi's continued emergence, the Middle East remains an attractivetarget for global investors.

In Saudi Arabia, prices are expected to rise, as demand for housing increases,business development projects expand, and a growing hospitality sector spurs $543billion worth of projects under construction. Real estate is second only to oil as thecountry's largest economic sector. In the United Arab Emirates, Abu Dhabi sparks thegrowth with a $200 billion real estate plan. Dubai, which was driving the developmentvision for the UAE, is now paying for overenthusiastic development with oversupplyin most segments. Its experience is a cautionary model for other countries in theregion. At the same time, its capacity to rebound quickly should not beunderestimated.

Smart diversification. While real estate development is a local business, globalsuccess is not out of reach. The best route begins in a developer's home region andproceeds gradually.

There are two potential routes to take when expanding into an emerging real estatemarket.

The first is to expand gradually by geography, which requires gaining access to localknowledge and the discipline to avoid rushing indiscriminately into the hot market of the day. The other route is specialization, in which a firm takes the lead in a particular

segment and carries that success across geographies.From development to asset management. Top developers are diversifying into assetmanagement. As major emerging markets mature, it offers stabilization and attractiverevenue growth opportunities. Developers in Asia and the United States already relyheavily on funds, real estate investment trusts and property management as sourcesof revenue and growth.



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Foreign Direct Investment in Real Estate

India has been ranked at the second place in global foreign directinvestments in 2010 and will continue to remain among the top fiveattractive destinations for international investors during 2010-12 period,according to United Nations Conference on Trade and Development



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(UNCTAD) in a report on world investment prospects titled, 'WorldInvestment Prospects Survey 2009-2012'. The 2010 survey of the JapanBank for International Cooperation released in December 2010, conductedamong Japanese investors, continues to rank India as the second mostpromising country for overseas business operations. A report released inFebruary 2010 by Leeds University Business School, commissioned by UKTrade & Investment (UKTI), ranks India among the top three countrieswhere British companies can do better business during 2012-14. A reportreleased in February 2010 by Leeds University Business School,commissioned by UK Trade & Investment (UKTI), ranks India among thetop three countries where British companies can do better business during2012-14.

According to Ernst and Young's 2010 European Attractiveness Survey,

India is ranked as the 4th most attractive foreign direct investment (FDI)destination in 2010. However, it is ranked the 2nd most attractivedestination following China in the next three years. Moreover, according tothe Asian Investment Intentions survey released by the Asia PacificFoundation in Canada, more and more Canadian firms are now focusing onIndia as an investment destination. From 8 per cent in 2005, thepercentage of Canadian companies showing interest in India has gone upto 13.4 per cent in 2010.

India attracted FDI equity inflows of US$ 2,014 million in December 2010.

The cumulative amount of FDI equity inflows from April 2000 to December 2010 stood at US$ 186.79 billion, according to the data released by theDepartment of Industrial Policy and Promotion (DIPP). The services sector comprising financial and non-financial services attracted 21 per cent of thetotal FDI equity inflow into India, with FDI worth US$ 2,853 million duringApril-December 2010, while telecommunications including radio paging,cellular mobile and basic telephone services attracted second largestamount of FDI worth US$ 1,327 million during the same period. Automobileindustry was the third highest sector attracting FDI worth US$ 1,066 million

followed by power sector which garnered US$ 1,028 million during thefinancial year April-December 2010. The Housing and Real Estate sector received FDI worth US$ 1,024 million. During April-December 2010,Mauritius has led investors into India with US$ 5,746 million worth of FDIcomprising 42 per cent of the total FDI equity inflows into the country. TheFDI equity inflows in Mauritius is followed by Singapore at US$ 1,449



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million and the US with US$ 1,055 million, according to data released byDIPP.

Investment Scenario

In the year 2010, India has assumed a notable position on the worldcanvas as a key international trading partner, majorly because of theimplementation of its consolidated FDI policy. The consolidation, firstundertaken in March 2010, pulls together in one document all previousacts, regulations, press notes, press releases and clarifications issuedeither by the DIPP or the Reserve Bank of India (RBI) where they relate toFDI into India.

According to the modified policy, foreign investors can inject their funds

though the automatic route in the Indian economy. Such investments donot mandate any prior government permission. However, the Indiancompany receiving such investment would be required to intimate the RBIof any such investment.

The FDI rules applicable to such sectors are, therefore, fairly clear andunambiguous. Inx May 2010, the government cleared 24 foreigninvestment proposals, worth US$ 304.7 million. These include:

y Asianet's proposal worth US$ 91.7 million to undertake the business

of broadcasting non-news and current affairs television channels.y Global media magnate Rupert Murdoch-controlled Star India

holdings' investment of US$ 70 million to acquire shares of direct-to-home (DTH) provider Tata Sky.

y AIP Power will set up power plants either directly or indirectly bypromotion of joint ventures at an investment of US$ 24.4 million.

According to the 6th Annual Edition 2010 data released by Grant ThorntonIndia, an accounting and consulting firm, total of 971 deals valued at US$62.2 billion were registered. The increasing confidence in the Indian

economy, buoyancy in the capital markets, significant improvements inglobal perception of India and improved performance of the earlier cross-border transactions, resulted in India Inc¶s total merger and acquisitions(M&A) and private equity (PE) activity to reach US$ 6.24 billion, registeringa growth of 159 per cent over 2009.



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The total M&A deals in 2010 were valued at US$ 49.8 billion (622 deals)and PE were valued at US$ 6.2 billion (253 deals), while the qualifiedinstitutional placement (QIP) deals in 2010 were valued at US$ 6.2 billion(56 Deals). Moreover, cross border activity also surged in 2010 andsignificant outbound investments totalled US$ 22.50 billion, while theinbound activity also increased significantly to touch US$ 9 billion (91deals).

y Sembcorp Utilities, a company based in Singapore, has picked up 49per cent stake in the 1,320 mega watt (MW) coal-fired plant of Thermal Powertech Corporation India Ltd, a special purpose vehicleand subsidiary of Gayatri Projects Ltd, for US$ 235.1 million.

y Renewable energy project developer, Juwi Group, launched its firstfacility in India in Bengaluru resulting in Juwi India Renewable

Energies Pvt Ltd, being headquartered in Bangalore.y In the biggest foreign direct investment (FDI) into India, BP, the

world¶s fourth-largest energy company, will pay $7.2 billion for a 30per cent stake in 23 oil and gas blocks of Reliance Industries Ltd(RIL).

y Investments by French companies in India are expected to touch US$12.72 billion by 2012, and would focus on automobile, energy andenvironment sectors among others, according to Jean Leviol, Minister Counsellor for Economic, Trade and Financial Affairs, FrenchEmbassy in India.

y Japanese pharmaceutical major, Eisai plans to invest US$ 21.25million in India to expand its manufacturing capacity and researchcapabilities. The investment will be used for increasing themanufacturing capacity of Active Pharmaceutical Ingredients (APIs)and product research at the Eisai Knowledge Centre inVisakhapatnam.

y India's largest automobile company Maruti Suzuki will supply its latestcompact car A-Star to Volkswagen AG . The car, which will undergo

some modifications and design changes, will be sold in India andAsian markets under a new brand, according to senior officials in theautomobile industry.

y Franco-American telecom equipment maker, Alcatel-Lucent plans toshift its global services headquarters to India. The headquarterswould need about US$ 500 million in investments over three years,according to Ben Verwaayen, Chief Executive Officer, Alcatel-Lucent.



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y Robert Bosch Engineering and Business Solutions Ltd (RBEI), a 100per cent owned IT subsidiary of Robert Bosch GmbH of Germany, asupplier of technology and services to automobile OEMs, hasannounced an additional investment of US$ 66.36 million over nexttwo years to expand its global powertrain electronics centre in India.RBEI develops software for in-house applications of Bosch group for its global operations.

The HSBC Markit Business Activity Index, which measures businessactivity among Indian services companies, based on a survey of 400 firms,rose to 58.1 in January 2011 from 57.7 in December 2010.

Policy Initiatives

The Government of India has released a comprehensive FDI policydocument effective from April 1, 2010. The Circular 1 of 2010 consolidatesinto one document all the prior policies/regulations on FDI which arecontained in FEMA, 1999; RBI Regulations under FEMA, 1999 and PressNotes/Press Releases/Clarifications issued by DIPP and reflect the current'policy framework' on FDI.

The consolidation initiative is highly meritorious on part of DIPP. Theregulator also endorsed the practice of making bi-annual amendments tothe policy (as against the previous practice of implementing ongoing

notifications) and hence, the most recent policy came into effect on October 1, 2010.

Furthermore, the government has allowed the Foreign InvestmentPromotion Board (FIPB), under the Ministry of Commerce and Industry, toclear FDI proposals of up to US$ 258.3 million. Earlier all project proposalsthat involved investment of above US$ 129.2 million were put up before theCabinet Committee of Economic Affairs (CCEA) for approval. Therelaxation would expedite FDI inflow, according to Mr P Chidambaram,Union Home Minister.



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With the release of the simplified compendium on foreign direct

investment (FDI), several processes on FDI and associatedroutes of investment too are being ratified with a view to expedite

the process of inflows into India.

The overseas Indian investors too would find it simpler to accessnodal bodies and invest in India. However, a note of caution - theReserve Bank of India too is attempting to regularize certainsections in Foreign Exchange Management Act (FEMA) which alsoallow NRIs, routes to invest in India. Its contention is that NRIstend to invest much more than the cap allowed in the sectorsthrough these other routes, thereby exceeding allowed limits for

FDI. The government may also remove the liberties provided toNRIs in sectors such as aviation, real estate etc.

Also, more reforms²to make investing in India a simplerprocess²such as FDI in multi-brand retail, defense production,agriculture etc are. In the discussion stage and the government



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intends to bring out concrete policies in this direction. Proposalscan also be sent to DIPP online. This facility will enable alloverseas investors to speed up their investment proposals.

Significantly, as per the latest FDI estimates released byDepartment of Industrial Policy and Promotion (DIPP), thegovernment nodal agency, the non-resident Indians (NRIs) havecontributed FDI inflows worth about US$ 41.78 million inDecember 2009 through the automatic route, almost 2.71 percent of the total FDI inflows in the same month. Total NRI FDIinflows through the period April-December 2009-10 stood at US$320.05 million.

According to DIPP, Mastek Ltd., Wire Wireless (i) Ltd, OrbitCorporation Ltd and Bang Overseas Ltd were some of the Indiancompanies that received NRI contributions through the automaticroute in December 2009. Meanwhile, Jones Lang LaSalle Meghraj,a property advisory firm, remarked in its March global marketperspective report, that the previous two months saw highnetworth individuals (HNIs) as new investors in Indian realestate. Many wealth managers such as Barclays recommend thatbanking, infrastructure and real estate would be major avenues

for foreign investment in 2010. Continued flow of foreign capitalin the form of FDI, FII investments, NRI remittances and exportearnings are hence expected to continue strengthening of therupee in 2010.

The states of Karnataka and Gujarat are now preparing for majorevents to be held for attracting investments into the State fordifferent investment sectors. These states are extending allcooperation to investors through their Global Investor Meet in

June 2010 and Golden Jubilee celebrations starting May,respectively. These events are expected to garner major inflows

from investors, both domestic as well as overseas.



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Latest developments in FDI

FDI contributing to an organized Indian real estateForeign Direct Investments (FDI) in the real estate sector in India would

contribute towards making the sector more organized. Besides increasingprofessionalism in the sector, it would bring in advanced technology andhelp in the creation of healthy and competitive market environment for bothdomestic and foreign investors.

India¶s claim to be one of the fastest growing economies in the world is bestproved by the increasing number of countries showing interest to invest inthe country as India is considered a stable country for investments by theoverseas corporate market. This encouraging trend is further acceleratedby the government¶s decision to liberalize policies on the foreign directinvestments (FDI) in India in the real estate sector.

With the amendment of the Indian government in March 2005, FDI wasrelaxed upto 100 per cent in the construction business. This amendmenthas cleared the path for foreign investment to meet the demand intodevelopment of the commercial and residential real estate in India. It hasalso encouraged several large financial firms and private equity funds tolaunch exclusive funds targeting the real estate sector. F

DI in real estate on the high growth pathForeign Direct Investments (FDI) in Indian real estate is currently on thehigh growth path. Study on Future of Real Estate Investment inIndia brought out by The Associated Chambers of Commerce and Industryof India (ASSOCHAM) says real estate market in India is growing at therate of 30% p.a.

Industry experts are of the view that, FDI¶s share in domestic real estatemarket will shoot up by at least 10% by March 2007 and touch about 26%level from 16% of fiscal 2005-06. This growth comes in view of growing

interest of global real estate players into Indian real estate market andincreasing demand of office space particularly in IT & BPO sectors.

A fierce and healthy competition is also expected to emerge betweendomestic and overseas investors. ASSOCHAM¶s Study on Future of RealEstate Investment in India forecasts that of estimated US$ 60 billion futuremarket size of real estate business in India, the share of foreign



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investments will be within the range of US$ 25-28 billion by 2010. Theoverseas investments will also be finding larger space in Indian SEZs andincreasing number of shopping malls that will naturally fatten their share inreal estate market.

In 2003-04, India received totalFDI inflow of US$ 2.70 billion,of which only 4.5% wascommitted to real estate sector.In 2004-05 this increased toUS$ 3.75 billion of which, thereal estate shares was 10.6%.

However, in 2005-06, while

total FDIs in India wereestimated at US$ 5.46 billion,

the real estate share in them was around 16%. The Study, neverthelessprojects that in 2006-07, total FDIs will touch about US$ 8 billion in whichthe real estate share is estimated to be about 26.5%.

Indian Economy makes headway with recordFDI

India is poised as the most favorite FDI destination in South East Asia,outpacing China. With the opening up of different sectors to add to its

economic growth, India¶s FDI inflow in the first half of this fiscal is anupwards of Rs.11, 460 crore. This includes investments by top-notchcompanies including DSP Merrill Lynch, Barclays Bank and Mauritius-based TH Holdings.

Though most FDI investments were in the services sector amounting to8955.88 crore; manufacturing sector had investments FDI worth Rs. 1,133crore. Mahindra & Mahindra was at the helm of things as foreign financialinvestors made investments worth Rs. 260.6 crore. Mauritius-based TH

Holdings was not far behind, with an investment of Rs.1697.35 crore.

But Indian real estate sector was capable of attracting satisfactoryinvestments, by attracting sizeable FDI. The collective investment for realestate and construction sector was to the tune of Rs. 1,252.79 crore.Prominent among them is the Rs. 321.70 crore investments by Mauritius-based IREO Investment Holding which can be considered the highest FDI



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in the sector. All these gives us a promising picture of large scale growthand development for the economy of India.

Foreign Investments flood Indian real estateAs opportunities in India grow, major asset management firms from abroadare investing in the local Indian market. The real estate market in India isflooded with overseas funds. Industry sources say over 90 foreign investorsare already in the country tapping investment avenues.

Real estate Management Company, Cushman and Wakefield confirms thatfigures are expected to touch $10 billion in the first half of 2007. Thiscomes with Ayala of the Philippines, Signature from Dubai, Och-Ziff Capital, EurIndia and Old Lane entering Indian real estate market shortly.FDI from Malaysia is expected to be sizeable, and UK, US, Israel and

Singapore are likely to start their India operations soon.

Foreign institutional investment (FII) is expected to have over 75 first timeinvestors. Signature from Dubai has a $650 million investment plan for theUAE and India, Duetsche Asset Management and Actis are actively settingup teams to start investing in real estate in India. Carlyle, Blackstone,Morgan Stanley, Trikona and Warbus Pincus are vigorously exploringinvestment options too.

The latest news in Indian real estate is that 150 overseas private equity

funds have teamed up with real estate developers in India. Moreover, atotal of $10 billion has already been raised through the same route and isexpected to put into the development process within the next two years.Real estate experts predict that the realty sector will witness $90 billionworth investment by 2015.

FDI inflows rise 92% in just four monthsIndia as the best bet for real estate investment has been confirmed by thereports on the recent trends in investment inflow during the last few

months. Recent, liberalization of FDI in the real estate and retail sectorshas also opened up the prospects of more and more investments into thecountry.

On one hand where FDI in construction in real estate has opened up thedoor for developers from around the globe to invest in real estatedevelopment in India, it has also brought about a competitive environment



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in the Indian real estate market, procuring the investors with qualityconstructions.

Also, FDI in retail has provided new business opportunities in India for global brands to acquire a market share of their products. Rationalizationand liberalization measures in the FDI policy has resulted in a surge in theinflows into such sectors creating opportunities for foreign investors andNRIs to invest in India.



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The Change in the Face of Real Estate Sector

For decades the real estate world turned in a very predictablemanner. The roles of the buyers, sellers and real estate

professionals were well defined and the real estate transactionfollowed a distinctive pattern. It would be an understatement tosay that the real estate market has gone through some changesin the last two years. Along with these changes - the dynamics of real estate have been redefined thanks in large part to theinternet. With the help of the World Wide Web, buyers and sellershave become more empowered thus enabling them to buy and

sell with more ease.

As technology advances, the real estate industry is transformingitself from agent centric transactions to consumer centricpractices. With the help of the online industry, consumers nowhave more real estate knowledge, tools and resources at theirfingertips than ever before. According to the National Associationof Realtors (NAR), more than 72 percent of homebuyers nowbegin their home search online. Thanks to the Internet and othertechnological innovations, more real estate information is nowfreely available. As a result, consumers are demanding more

choices, improved services, faster transactions and lower prices.

Buyers are not the only ones that are benefiting from theinternet. With the downturn of the housing market the last thingsellers want to do is pay a hefty commission. More and moresellers are taking a stand by not wanting to pay the salescommission that an agent would command. This isunderstandable, as it will save you roughly 6% incommissions...which can easily be more than ten thousand

dollars.

For example, if you sell a home for $250,000 you wouldtraditionally pay your agent $15,000...the buyer's agent gets 3%($7500) and the seller's agent (your agent) gets the other 3%.The buyer never pays any commission; that burden fallscompletely on the home seller. It's no wonder that sellers are



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opting to sell their properties independently, without the help of an agent. This explains the increase in the number of For Sale byOwners. Sellers who are not affiliated with an agent make up a

large part of our market today.

So what makes a seller think they can sell their home on theirown? The answer is the internet. The internet allows sellers tomarket their homes to millions of people with just a few clicks of their keyboard. Pricing information, Comparative Market Analysisand Recently Solds can all be available on the web for the sellerswho choose to list their own homes. Years ago - agents were themust haves for this kind of information, but this is no longer the

case; simply put - the face of real estate has changed.

The Internet, technology and competition are causing changewithin all industries. Within the last few years, this is very evidentin the real estate industry, which traditionally has been slow toadopt technology and embrace new ideas. The Internet has vastlyimproved the consumer¶s ability to get information thatpreviously was not accessible to consumers. Technology and itssimplification have improved the efficiency of systems as well asthe ability to effectively and efficiently use the information.Competition has created new or improved ideas and challengedmany businesses¶ traditional way of doing business.

As the real estate evolution continues, I believe and I am seeingthe role of real estate agents change. Consumers of traditionalreal estate services are now able to access many of the homeselling/marketing services from sources other than traditional realestate agents. Lock boxes and for sale signs can be purchased.Internet marketing for those who know how to µeffectively¶ market services on the Internet can now do so quite easily. Even

the µsacred¶ real estate Multiple Listing Service (MLS) is availablefor home sellers to list their home for sale for a very reasonable

fee. The MLS was, and remains, the most effective way to allow realestate agents to match their home buyer¶s to homes that are for



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sale. For years, the MLS was only accessible by licensed realestate agents, which allowed them to become the ³gatekeeper´ of real estate information and homes for sale. Therefore the realestate agent was the center of the real estate transaction.

Technology and the Internet have made all that information,which used to be inaccessible, available to home buyers with aclick of a mouse. For the past 5-years, the MLS data has beenpublished online on popular real estate web sites real estateportals such as Realtor.com, atlmls.com and hundreds of other

real estate web sites and portals. For those empowered home sellers and home buyers who wish touse the technology available to them and µgo it alone,¶ there are

tools and services available to help them accomplish their goals.For those home sellers and home buyers who are willing to investthe time, energy, resources, and money and are willing acquirethe expertise and experience to take the real estate transaction

from marketing to closing, opportunities for success exist. In fact, I foresee the day when motivated and educated homesellers will be able to successfully market their homes for sale,and home buyers will be able to locate homes that meet theirneeds with little or no involvement of a real estate agent. Thereal estate agent may or may not provide some or all of theservices a home buyer or home seller wants or needs tosuccessfully accomplish their goal of locating a home or finding a

buyer for a home. AlphaFSBO is a pioneer in this area, offering home sellers andhome buyers the ability to market their home or locate a homethat matches their search criteria as part of our Seller Select

Marketing and Contract to Closing Services. Seller Select Marketing and Contract to Closing Services isdesigned to give home sellers the ability to purchase only theservices they want to use to market their home, and take thetransaction from marketing to closing at a fixed cost. Our 1½%VIP Home Buyer Cash-Back program is designed to allow home



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buyers the ability to search and find a home that matches theirneeds, without having to use a real estate agent to control the

process and be the ³gatekeeper´ of information. Any experienced real estate professional knows that marketing orlocating a home is only the first step to successfully completingthe real estate transaction. Once you have a potential buyer foryour home, or you have found a home you want to purchase,how do you proceed? Make an offer ««« right? Right, but herecomes the dilemma. Where the Internet and technology canprovide home sellers and home buyers with information and toolsto successfully market or locate a home, they cannot interruptthe data and show you how to use it to maximize your

opportunity.

A home is, to most people, their greatest financial asset. Buyingor selling a home is not the same as selling clothes at a yard sale.Without expert assistance, consumers µgoing it alone¶ more oftenthan not, fail in their attempts to buy or sell for the greatest

value. To maximize your home buying and home selling opportunity you

must have: 1. Experience, current real estate knowledge, and know the

local real estate market conditions 2. Marketing skills or marketing services (a marketing plan) 3. Strong knowledge of contracts, legal and real estate terms 4. Exceptional negotiation skills 5. The ability to objectively review and interrupt the

information 6. The ability to keep what is a very emotional process

objective and factual



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I see a future of real estate professionals providing an "elevated

role." They will become an objective advisor, using their years of local real estate knowledge, and making sense of what themounds of data actually means -- something the Internet can

NEVER do! Instead of real estate agents installing signs, runningaround putting lock boxes on doors, waiting at the seller's houseto meet the appraiser and playing tour guide, real estateprofessionals will be using their professional expertise andexperience advising, negotiating, and trouble shooting? Ratherthan simply "doing the paperwork," real estate professionals needto provide the vital "contract to close" service. This is notsemantics -- it's a true reflection of where a real estateprofessional¶s value is TODAY. Selling a home or locating a home

is only the first step and often the easiest part of the real estatetransaction -- getting the transaction to a successful andprofitable close is where the rubber meets the road. Changes are indeed afoot and the continued emergence of newmodels only point out what is becoming clear as day to anyonewho will pull their head out of the sand: that in as little as fiveyears from now, the people earning a living in real estate willoverwhelmingly be consultants who are paid for their expertise

and counsel, not salespeople who are paid to move product.Change is not something that should be feared -- it is in factinevitable and necessary. After all, there was a time when thehorse and buggy was our major means of transportation butsomeone came up with the automobile and thought that it just

might work better! The growth of technology offers doom and gloom for those in thereal estate industry that sit back and let their role bedisintermediated. Real estate professionals will be paid for theirtime, knowledge, and the expertise that can only come fromyears of experience. An attorney or trusted advisor can do thelegal paperwork. Only a ³seasoned´ real estate professional canuse their years of knowledge and their local real estate expertisefor the advantage of their client to help maximize their client¶s

best interests.



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Indian Real Estate-

99acres.com is an online realestate website that provides useful and easy-to-find information

about real estate in India and other allied services.

The Internet has become an extremely good source of hunting for

information pertaining to real estate and related activities.

Previously, one would visit libraries, refer to books or

advertisements, and rely on word-of-mouth recommendations to

gather information about real estate. Now, however, all theinformation one may need before investing in real estate is just a

mouse-click away at 99acres.com. The website has a wide array

of options and information about real estate and real estate

related services in India.

99acres.com provides information

seekers with a variety of information on real estate grades and

prices across India. With the boom in the real estate industry,

consumers are constantly on the lookout for reasonable homes

equipped with modern day amenities. Prospective investors are

also highly interested in the real estate in India because the

Indian real estate sector has been doing exceptionally well in the

last 5 years or so. The services offered by the 99acres.com web

site:

y Information about buying, selling, and leasing various types

of real estates in India y Information about paying-guests facilityy Provide suggestions on buying, selling, and leasing

propertiesy Provide advertisements for buying, selling, and leasing of

properties



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y Provide information about the latest projects coming up

99acres.com provide information on real estates like: y Residential complexes y Commercial complexesy Office spacey Shopping complexes

y Special constructions

The Board of Directors of the 99acres.com

y Mr. Sanjeev Bikhchandani, Managing Director and Chief Executive Officer

y Mr. Kapil Kapoor, Non Executive Chairmany Mr. Hitesh Oberoi, Chief Operating Officery Mr. Ambarish Raghuvanshi, Chief Financial Officer and Head-

Legal and Administrationy Mrs. Bala Deshpande, Directory Mr. Arun Duggal, Directory Mr. Ashish Gupta, Directory Mr. Saurabh Srivastava, Directory Mr. Sandeep Murthy, Director

Management Team of the 99acres.com website

comprises of:

Deepali Singh, Business Head, 99acres.com Vibhore Sharma, Vice President, Technology and

IT Infrastructure

Sharmeen Khalid, Vice President, Human Resource Anil Lall, Advisor Sharad Malik, Advisor Sushil Bikhchandani, US operations



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99acres.com has tie-ups with real estates companies like:

o

Bengal Shrachi Groupo Supertecho Ansal Housingo Amrapali groupo Mahaveero Gopalan Enterpriseso OSB Groupo Kalpataruo Ozone Group

o

Hiranandani



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Case-Study on



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Contents:

In Real Trouble?

Overview of Indian Real Estate Sector

About DLF

Growth in Real Estate Canvas of DLF

Changed Economic Scenario

Problems Faced by DLF

Credit Crunch & Increasing Debts

The Struggle Continues

Exhibits



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IN REAL TROUBLE ?

As on June 12, 2010, DLF Limited (DLF), India's

largest real estate company, had accumulated an

outstanding debt of more than US$3100 million,

marginally below the record high of US$3635 million

in the month of March 2009. The net profit of the

company also plunged by more than 60%, falling

from US$993.25 million in financial year 2008-2009to US$384.44 million in financial year 2009-2010. In

addition to decreasing profits, DLF was struggling

with an enormous outstanding debt and a high debt

to equity ratio which stood at around 0.70 in the

month of June 2010.To reduce its debt burden, DLF

was considering selling 97% of its stake in Aman

Resorts, a hotel chain it had acquired in November

2007 for about US$400 million, to Khazanah.



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OVERVIEW OF INDIAN REAL ESTATE SECTOR

The Indian Real Estate Sector witnessed a massivetransformation in the period 2003 to 2008, with a

cumulative average growth rate (CAGR) of around

30%. The growth rate was more than 38% in 2007

alone..

ABOUT DLF

DLF, Indian's largest real estate company in terms of

earnings, revenues, market capitalization, and total

developed area, was headed by KP Singh asChairman, as on March 31, 2010. The company had

a presence in more than thirty cities across India

including Super Metro, Metro, Tier-1, and Tier-2

cities (Refer to Exhibit II for footprints of DLF)...



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GROWTH IN REAL ESTATE CANVAS OF DLF

DLF witnessed significant growth as a private

company, utilizing internal and external funding. It

went public in June 2007. The company's growth

was supported by the growing Indian economy and

DLF's access to strategic land holdings, particularly

around the Indian Nation Capital Region (NCR),

Delhi..

CHANGED ECONOMIC SCENARIO

India witnessed an increasing demand for both the

residential and commercial real estate properties till

late 2008. However, the global financial crisis, an

outcome of the sub-prime crisis in the US , and the

subsequent collapse of many big corporations,

worsened the economic environment across the

globe and in India as well...



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PROBLEMS FACED BY DLF

Though DLF was able to book significant sales in the

months before November 2009, the sales started

falling across segments from November 2009. In the

housing segment, DLF had launched some projects

in the middle of the year in Kochi, Bangalore, and

Gurgaon which were witnessing marginal sales...

CREDIT CRUNCH

Analysts felt that under the duress of the prevailingmarket conditions, DLF was unable to secure the

required loans for implementing many of its

projects. The overseas credit markets had been shut

since January 2008 giving DLF no access to FIIs...



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THE STRUGGLE CONTINUES

By the beginning of 2010, there was a slow revival

in demand for both housing and commercial

properties within the country. This enabled DLF to

increase the prices of some of its residential

properties by around 15%, which helped it to realize

higher margins...

EXHIBITS

Exhibit I: Demand for Residential Sector in India

Exhibit II: Foot Prints of DLF

Exhibit III: DLF Land Bank as on March 31, 2010

Exhibit IV: DLF's Balance Sheet

Exhibit V: DLF's Profit & Loss Account Exhibit VI: Vertical Wise Sales, Lease, Inventory,

Sale Price, Least Rentals and Project Cost - April,

2007 to December, 2008

Exhibit VII: Vertical Wise Sales, Lease, Inventory,

Sale Price, Least Rentals and Project Cost - January,

2009 to March, 2010

Exhibit VIII: Vacancy Levels across Major Cities in

Financial Year 2008-2009

Exhibit IX: Expected Correction in Prices of



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Commercial Properties across Major Cities

Exhibit X: DLF Closing Stock Price in US$ from July

5, 2007 (Listing) till July 30, 2010

Exhibit XI: DLF Gross Debt, Revenue and Net Profit

from April 2007 to June 2010 (Figures in Million

US$)



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Conclusion

Indian economy is going thorough a very good time

and is posting new highs on a regular basis. The per capita income growth rate during 2006-2007 was

13%. As the real estate sector has a high correlation

with the overall economic growth of the economy, so

the expansion of this sector is also phenomenal.

Two main reasons behind the boom in real estate sector in

India are:

y High rate of growth of the industrial sector amounting to 10.8 % during 2006-2007. In addition,the manufacturing sector grew at the rate of 11.8 %which is itself a commendable performance.

y Inception of L-P-G policy has helped the contractors

and the builders in bypassing the red-tapism as wellas the ³license-raj´. Allowing the foreign investors toinvest in the mega real estate projects in the year 2002 has broadened the scope for growth in thesame.



Documents

Real estate current scenario