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A PROJECT REPORT
ON
Real Estate
SUBMITTED IN THE PARTIAL FULFILLMENT OF THE REQUIREMENT FORAWARD OF THE DEGREE BACHELOR OF BUSINESS ADMINSTRATION
SESSION:2007-2010
SUBMITTED TO: SUBMITTED BY:
MR.VED PRAKASH NIPUN CHAWLA
(1512051707)
BLS INSTITUTE OF TECHNOLOGY MANAGEMENT
JAKHODA, DELHI-ROHTAK ROAD, BAHADURGARH-124507 (HARYANA)
PH:01276-210106,011-53364500/4600/4700,09315605336
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E-MAIL:[email protected]
ACKNOWLEDGEMENT
The present work is an effort to throw some light on Real Estate
Industry. The work would not have been possible to come to the
present shape without the able guidance, supervision and help to me by
number of people.
With deep sense of gratitude I acknowledge the encouragement and
guidance received by my organizational guide MR.VED PRAKASH and
other staff members.
I convey my heartful affection to all those people who helped and
supported me during the course, for completion of my Project Report.
NIPUN CHAWLA
BBA (Sec-A)
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BLS INSTITUTE OF TECHNOLOGY MANAGEMENT
JAKHODA, DELHI-ROHTAK ROAD, BAHADURGARH-124507 (HARYANA)
PH:01276-210106,011-53364500/4600/4700,09315605336
E-MAIL:[email protected]
CERTIFICATE
This is to certify that the project report titled Real Estate Industry is
submitted in partial fulfilment of the degree of Bachelor of Business
Administration at BLS INSTITUTE OF TECHNOLOGY
MANAGEMENT , is a bonafide project carried out by NIPUN CHAWLA
(1512051707) under my supervision and guidance and no part of this report
had been submitted for the award or any other degree, diploma, fellowship or
other similar titles or prixes and the work has not been published in any
scientific or popular journal or magazine.
Mr. VED PRAKASH(PROJECT GUIDE)
COUNTER SIGNED
Prof. RAVINDER KUMAR(DIRECTOR)
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EXECUTIVE SUMMARY
Real estate has proved to be a real engine of growth. The real estate
sector in India is emerging as the next engine of economic
growth going by the fact that it is the second largest employer
next only to agriculture. It has significant linkages with several
other sectors and over 250 associated industries. According to
estimates, every rupee invested in this sector results in 78 paisa
being added to the GDP. Accordingly, a unit increase in
expenditure has a multiplier effect and the capacity to generate
income is as high as five times. For instance, if the economy
grows at the rate of 10%, the sector has the capacity to grow at
14% and generate 3.2 million new jobs over a decade. The
sector size is close to $12bn and grows at 30% per annum.
Presently, it is contributing 5% of the country's GDP and is
expected to rise up to 6% within three to four years.
The present project has been carried out with the objective of analyzing
the financial aspects related to the real estate.
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TABLE OF CONTENT
ACKNOWLEDGEME
NT I
CERTIFICATE II
EXECUTIVE SUMMARY III
CHAPTER NO. PAGE NO.
CHAPTER 1: INTRODUCTION1.1 : COMPANY PROFILE 6-91.2 : REAL ESTATE 101.3 : REAL ESTATE GROWTH 11-121.4 : PRESENT SCENARIO 14-151.5 : FUTURE SCENARIO 16-27
CHAPTER 2 : REAL ESTATE FINANCE 28-30
2.1 :REAL ESTATE INVESTMENT 31-34
2.2 :EXTERNAL ENVIRONMENT 35-382.3 :INTERNAL ENVIRONMENT 39-402.4 :ESCROW ACCOUNT MECHANISM 41-46
CHAPTER 3 : OBJECTIVES OF STUDY 47CHAPTER 4 : RESEARCH METHODOLOGY 48
4.1 :SECONDARY DATA
CHAPTER 5 : DISCUSSIONS 49-575.1 :REAL ESTATE MARKET
CHAPTER 6 :CONCLUSIONS 52-53
CHAPTER 7 :BIBLIOGRAPHY 54
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COMPANY PROFILE
We are a Group of Young, Enthusiastic, Focused and highly motivated
Professionals, having good hands of experience in construction group
housing. Narang Constructions & Financiers Pvt. Ltd. was incorporated
in year 1987, with a clear vision to be the top most housing and
construction company in the city.
As a result of it's initiative NCF transformed itself in to high performance
strategic business unit. The entire team of NCF is committed to deliver
quality at par with the best in the industry maintaining the most exacting
standards and offering a complete peace of mind & Luxurious Life style.
At NCF, We strongly believe in Quality and Customer delight. We also
understand that "TIME IS MONEY". We are particularly conscious of
meeting all our deadlines well in time. Excellence in our trademark,
superlative is not just an idea. We transform the creative ideas of our
customers into reality. At NCF, we maintain a perfect balance between
Imagination, Elevation, Layout & Construction.
By having a state-of-the-art facilities and equipments along with high
caliber skilled work force NCF has been able to live up to the
expectations of all our customers till date during and even after
completion of all our previous projects. We also aim high to maintain the
same level of comfort in future too.
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Now the entire team of NCF feel proud to announce and present you an
other exciting and most advance housing project at Kundli. Narang
Constructions & Financiers Pvt. Ltd. is an ISO 9001:2000 certified
by JAS-ANZ.
M/S. NARANG CONSTRUCTIONS & FINANCIERS PVT. LTD
Incorporated With the Registrar of Companies, NCT Delhi & Haryana
vide Registration No.55-29460 with the main object of real estate
developers, promoters, infrastructure developers financers. The company
is having its office at Pitam Pura. The company is having seven directors
namely Mr. S.C.Narang , Mr. Raj Pal Narang, Mrs. Sumitra Narang, Mrs.
Asha Narang, Mr. Arun Rathi, Mr. Jugal Kishore Gupta and Mr. Jawahar
Lal Goyal. The management of the company has decided to develop a
group housing project in the NCR area of Kundli. The company has
already acquired land measuring 11.437 acres in the Kundli and develop
and construct a group housing project at the proposed site. The land is
duly got registered in the name of company and payment for the purchase
has already been made. The LOI has already been received from Govt. of
Haryana Kundli is having all infrastructural facilities. The site is ideal as
Kundli is situated at NH-1 which is also nearest to Delhi. Kundli-Sonipat
is going to become a hub for education and the centre Govt. "recently
announced to establish a 11M at Sonipat. Govt. has establish a education
area of 2500 acres which will be available for national as well
international universities and other educational institutions. The area is
already attracted well known builders and developers which are
developing the area very fast.
The company is already in the business of construction and development
of Malls and developed and sold out two mall in Delhi.
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BRIEF PARTICULARS OF THE COMPANY
1. Name of the Concern M/S NARANG CONSTRUCTION' & FINANCERS PVT. LTD.
2. AddressI) Office SD-65, PITAM PURA, Delhi-110034II) Site at Kundli, Sonepat, (Haryana)
3. Status Private Limited Company
4. Name of the Directorsa.) SH. S.C. NARANGS/o Sh. Raja Ram Narang,R/o:- 291, Gujrawala Town-III, Delhi-110009
b.) SH. R.P.NARANGS/o Sh. Sal Ram Dass NarangR/o A-127, Gujrawala Town -I, Delhi-110009
c.) SMT. ASHA NARANGW/o Sh. Raj Pal Narang,R/o A-127, Gujrawala Town -I, Delhi-110009
d.) SMT. SUMITRA NARANGW/o Sh S.C.NarangR/o 291, Gujrawala Town-III, Delhi-110009
e.) SH. JAWAHAR LALS/o Sh Mauji Ram,R/o 437, Deepali, Pitam Pura, Delhi-110034
f.) SH. ARUN KUMAR RATHI ,S/o Lt. Sh Om Prakash Rathi,R/o B-53, Antriksh Appt.Sector-14, Rohini,Delhi-85
g.) SH. JUGAL KISHORE GUPTA,S/o Sh Shiv Narain Gupta,R/o A-1/4,
Sector- 8, Rohini, Delhi-110085
5. Main Objects/Activities Real Estate Promoter & Developers.
6. Projected 16111.00Lacs
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REAL ESTATE:
The term real estate is defined as land, including the air above it and the
group below it, and any building or structure on it is also referred to as
realty. It covers residential housing, commercial offices, and trading
spaces such as theater, hotels, and restaurant retail outlets, industrial
buildings such as factories and government buildings. Real estate
involves the purchase, sale and development of land, residential and non-
residential buildings. The main players in the real estate market are the
landlords, developers, builders, real estate agents, tenants, buyers etc. The
activities of the real estate sector encompass the housing and construction
sectors also. The real estate sector in India has assumed growing
importance with the liberalization of the economy. The consequent
increase in business opportunities and migration of the labor force has, in
turn, increased the demand for commercial and housing space, especially
rental housing. Developments in the real estate sector are beinginfluenced by the developments in the retail, hospitality and
entertainment (e.g.: Hotels, resorts, cinema theater) industries, economies
services and information technology (IT) enabled services etc. The real
estate sector is a major employment driver, being the second largest
employer next only to agriculture. This is because of the chain of
backward and forward linkage that the sector has with the other sectors ofeconomy, especially with the housing, construction and commercial
sector. About 250 ancillary industries such as cement, steel, brick, timber,
building material etc are dependent on the real estate industry.
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REAL ESTATE IS A GROWING SECTOR IN INDIA
Real estate in India will continue to rock. Profound economic suggest that
the realty sector would grow at 30% per annum to reach to $45 to 50
billion by 2010 from the existing $12 billion. To achieve this growth real
estate in India would require huge investments over the next five years.
By 2015 it is projected that the market size would grow to $ 90 billion.
Estimated suggest that the urban housing sector would requireinvestments to the tune of $25 billion (Rs 1.10 lakh crore) over the next
five years. Prices have remained buoyant as new construction lags.
According to surveys there is a shortage of 19.4 million units (12.7
million units in rural areas and 6.7 million units in urban areas) in the
country about three years ago, which will require real estate in India. Real
estate in India will trigger economic growth infrastructure developmentand enabling government policies would help trigger growth. Real estate
in India will help high economic growth has fuelled the demand for real
estate. Cities continue to attract interest from IT and ITES companies that
are either establishing a base or are looking to expand which will give
rise to real estate developer in India. It is the suburban locations that are
witnessing development activity due to easier availability of land
construction of large floor plate and offer of built to suit facilities thus
helping housing construction company in India. According to one
estimate the IT and ITES sector are creating 200,000 jobs per annum
which itself will create a demand in commercial space of 15 million
square feet. Besides it will generate a huge demand for residential flats.
So more need for luxury residential apartments in India.
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Real estate in India assumes that 25 % of the work force joining the
IT/ITES sector required independent housing there would be demand for
50 million sq ft of residential accommodation every year to meet the need
of the workforce joining the IT/ITES sector alone. The demand has been
aided by the ease in documentation and formality of property registration
in India. It leads to boost property developer in India. The Indian realty
sector would see unchanged interest from N R Is aided by the relaxation
in FDI norms in real estate. The government has also helped by
permitting banks to advance home loans to NRIs. The report
acknowledges that the government had also played a pivotal role in the
development of this sector .
It had aided the sector by giving income tax benefits to consumer and
benefits to developers. It initiated the rationalization of stamp duty and
repealed the Urban Land Ceiling Act in 9 states. A number of state
governments are moving towards computerization of land records.
Real estate in India has a bright future .The report also pointed out certain
issues, which need to be addressed by the government to ensure rapid
growth. Some of the issues are absence of large listed companies in these
sectors, which has affected fund flow. Foreign still cannot buy or sell
undeveloped land, and reassessment of the legal aspect to stamp duty and
rent control. At last, changing demographics, low interest rate regime,
rising disposable income, and fiscal incentives have provided huge
demand for housing. Further nuclearization of Indian families has
accelerate the demand for mortgages and for fresh housing thus give rise
to more real estate developer in India.
Political reforms in relation to real estate: The government is quite
rational when it comes to infrastructure and development in the country
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as it is required to achieve and maintain a growth rate for the economy.
The real estate sector being directly related to it, is being given due
importance. The government has made suitable amendments in the FDI
regulations, taxation structures and various land acts in order to attract
more foreign investment into the country.
Economic factors: The lower interest rates and ease of credit availability
is fueling the demand for real estate in the country. This scenario coupled
with the huge potential for consumer credit penetration in India is
favoring the real estate sector.
Demographic factors: Demographic factors like increasing literacy
rates, higher disposable incomes, and increasing urbanization in the
country are important factors propelling the demand for real estate in the
country. The above factors are going to generate huge demand for
residential space, which comprises 80% of the total real estate demand in
the country.
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PRESENT SCENARIO OF REAL ESTATE IN INDIA
The real sector in India today witnesses a wide spectrum of changes that
slowly but surely is expected to make India in to a preferred destination
for real estate activity. The real estate market in India is opening up.
There are still some barriers to real estate development like unclear titles,
tenancy reforms and low property taxes. Two major steps taken by the
Government will however be key catalyst in fueling growth in real estate
sector in INDIA. Now with reputed builders like DLF, ANSAL API etc
and international property consultants joining the fray, this image has
strengthened and evolves into a professional corporate image. Recent
moves to allow 100% Foreign Direct Investment in India. FDI would be
in integrated township which would include housing, commercial
premises, hotels and resorts, while the urban infrastructure would
comprise roads and bridges mass rapid transit system and manufacture of
building material. The minimum average that can be developed is 100
acres designed keeping into consideration the local byelaws and
regulations. FDI is not allowed in retail sector. Currently, real estate
prices have stabilizes to a great deal as a role played by speculation has
started declining. There a lot of change being introduce in the Indian real
estate sector especially with the cheap labour, pool of people. Othermajor event is the introduction of real Estate Investment Trust (REIT).
Currently mutual fund are not allowed to have direct exposure in real
estate but can make debt and equity investment in the company. The
Indian version of REIT-REIS (Real estate investment scheme) would
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enable investment by small investors in the real estate sector and thus
earn dividends on the rental income being paid. The fiscal incentives
introduce by government introduce 3 years ago have unleashed the
market forces. The credit of housing has gone up and interest rates have
come down to 8-9% average. With fiscal incentives and factoring
inflation the real interest rates on housing loans is very less. This has
brought in a sea change in the profile of the home purchaser across the
spectrum. The average age of the home buying customer has been
drastically reduced. It has been found that young working people in early
and mid 20 also buying residential flats. The other major changes
witnesses in the real estate industry currently are the reorganization of
country status itself. The Government of India has made it mandatory that
3% of the incremental deposits of the banks would be deployed to the
housing industry. Today real estate office market is booming IT AND
ITE s segment. With lower operating costs being the driver office
property have moved from Central Business Districts to suburbs to ClassI cities and this market is continue to expand in Tier II and tier III cities.
Real estate sector is still facing the main problem of high stamp duty in
Indian states. These range in most Indian cities between 10% to 15%
Some states even have double stamp incidence first on land and then on
its developments even National Housing and Habitat Policy 1998
recommend stamp duty of 2-3%. It needed to be reduced by taking therecommendation into consideration which is mentioned in the report
otherwise this increasing rates of stamp duty and land cost will give rise
to parallel economy which lead to huge loss of government revenue.
FUTURE SCENARIO OF REAL ESTATE IN INDIA
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In future the real estate sector will be in very good shape as the demand
for both residential and non-residential property is increasing and in
future more houses need to be developed in urban and rural areas as
census of 2001 indicates that urbanization rate of 27.78% is expected to
go up to 41%(550 million) in the next 20 years (population of 1350
million by 2021).However, Indian government Habitat Policy(NHHP)
envisages that by the year 2012 the housing shortage should be removed
and everybody should have a house of his own and to meet this target the
estimated investment involved is approximately Rs 400000 crore or say
US $800 billion by 2012.In future the demand for real estate will likely to
touch around1055 million sq ft by 2010 and by this date capital
requirement will have bloated to $68 billion and market will require $ 30-
40 billion more in future with most companies tying up their expansion
plan. The C&W says urban India alone require 12 million housing units
with scope of 400 townships in 5years across 30-35 cities each with 5
lakh population and Indian has potential to grow to those levels as FDIflows into more land intensive sector like retail and manufacturing as
there is a shortage of 20 million housing units till
2010.Cushman&Wakefield says smaller towns like Patna, Surat,
Lukhnow, Coimbatore, Vijayawada etc have immense potential in
commercial and residential sector and by 2015 there will be 45 such cities
from 25 odd cities. The US alone committed $ 2 billion for Indian realestate over next 18-30 months. In real estate sector 23 million sq ft of
new space came in to market with additional 50 million sq ft expected by
2009.
AMAZING BOOM IN COMMERCIAL SECTOR:
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Future of commercial sector is boom. There is a great demand for office
building in India. The demand for new office space alone has grown from
estimated 3.9 million sq ft in 1988 to over 16 million sq ft in
20045.Cumulative demand for office space in India between 2005-2008
is estimated to be in excess of 85 million sq ft. This represent annual
growth rate of 14.5% over the next 3 years or approx.20 million sq ft/year
and approx 80% of demand is created by IT AND BPO sector. ITES &
BPO segment register a growth of 54%. NASSCOM & Mckinsey study
has predicted that I T Es sector in India will provide additional job for
over 1.1 million people by 2008, which translate into space requirement
of approx.100 million sq ft. Retail is considered the world largest private
industry with total sales of over US $ 6.6 trillion with close to 12 million
outlets. India has the largest retail density in the world .It is estimated that
presently additional 46 million square feet for malls, multiplex is being
added in India out of which 32 million sq ft is spread over across 7 major
cities. In future 45 malls with over 9.5 million sq ft of retail real estate isexpected to come up in Tier II cities like Jaipur, Chandigarh, Ludhiana,
Nagpur, Baroda, Kochi etc by end of 2007.It is expected that government
will soon permit FDI in retail and this would further increase the demand
for shopping malls, multiplex etc. However opening up of FDI in retail
trading will not necessarily cause rent to rise as their demand will be
offset by additional stock.
Spiraling land prices (sign of overheating and excessive speculation):
The land prices have really shot up in the last 2-3 years. Builders continue
to get enough buyers for whatever absurd prices they quote. Now, that is
a very strange thing when seen in the Indian market perspective. India is a
very price-sensitive market. Whatever you sell you have to give the
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consumer a good value for money. So, when such people make a beeline
for things priced exorbitantly, there may be large amounts of speculative
investment money entering the market. Also, people now assume that
property prices moving up is a sure thing. There is nothing called a sure
thing in investing and this is a sign of overheating.
Uneven price growth: Prices of real estate across the country, or even
within cities, will have their own unique demand and supply factors. This
needs to be understood in detail. A number of transactions and also
corporate land bank values are ignoring this basic tenet of real estate
investing.
Questioning the capability to deliver: Although there have been huge
plans of development in all the areas of real estate development whether
residential, commercial, office, retail or SEZ, various questions have been
raised on the execution capability of the developers in delivering the
promised product within the specified time period.
Oversupply: With the real estate story getting big in India, major plans
are afoot for various types of real estate developments in big cities and
small towns. There have been concerns of an oversupply situation arising
2-3 years from now.
Still unorganized: India's property market remains unorganized and
underdeveloped. This creates risk for investors. In the absence of a clear
title to property, the risk of litigation is high. For those foreigners who
invest in India via real estate investment trusts, there are no rules on the
marking of their stakes to market or on whether they must pay stamp duty
on transactions.
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Relation to the stock market: The true origin of this bubble-like
situation may be traced to the stock market boom. The Indian stock
market has been witnessing a non-stop bull run for an unusually long
time. During the last couple of years, share prices have surpassed all
expectations. The present situation can be compared to Japan's real estate
crash in 1991. Prior to the crash, both the stock market and the property
market were on fire. Profits from the stock markets used to be transferred
to the property market and vice versa. The same thing is happening in
India as well.
MAJOR PLAYERS OF REAL ESTATE MARKET IN
DELHI COMPETING MAXHEIGHT CONSTRUCTIONS
UNITECH LIMITED
Unitech is the largest listed real estate company in India with a market
capitalization of over US$5bn. It operates in India and exports engineered
construction products to the Middle East. Unitech was among the first
players to enter organized infrastructure development. Unitech works
closely with various state governments to develop SEZs across the
country. New Kolkata International development project is one of the
largest infrastructure development project undertaken in the country.
Unitech has tied up with International Amusement to create "E-city" in
Noida. Its business strategy is to build a Pan-India presence while
maintaining a leadership position in each city of India.
DLF UNIVERSAL LIMITED
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DLF is a leading player in Indian real estate industry with six decades of
experience. Since its establishment in 1946, it has developed 21 urban
colonies aggregating 5,816 acres, as well as an entire integrated 3,000-
acre township which is popular as DLF City. Future projects include
development of 100,000 acres over the next few years and it aims to
become the single largest real estate company in the country.
ANSAL PROPERTIES & INFRASTRUCTURE LIMITED
Ansal Properties & Infrastructure Limited (APIL), one of the major
players in real estate industry, is promoted by the Delhi-based Ansal
Group engaged in civil construction and real estate development in India
and overseas. In March 2006, APIL tied up with Malaysia-based facilities
management company Faber Group Berhad in a joint venture to foray
into healthcare facilities management. HDFC realty bought 33% of Ansal
SPV. APIL has big plans to invest Rs.30,000cr in the next 3-4 years to
build 16 townships.
As the focus on infrastructure development by the government has been
strengthening, growth prospects of Indian real estate sector looks bright.
A study by housing development finance reveals that India is short of 20
million housing units. Deutsche Bank researchers forecast that by 2030India will need up to 10 million new housing units per year. Another
driving factor for the industry is SEZs, which come with tax exemptions
like 10-year corporate tax holiday. Besides this, the fifth most attractive
market in the world, the retail market of India, has also been contributing
significantly on a large scale for the growth of the sector. Leading
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national and global players have big plans to invest in the infrastructure
and construction of the retailing business.
All these positive signals indicate that there is huge growth potential forthe real estate industry. Joint ventures and consolidations will become the
order of the day in realty space. However, there are challenges like
fragmented industry with less transparency and high transaction costs.
The condition can be improved with the increase in the professionalism
of the industry and flow of organized money into the sector. Given its
huge growth potential, real estate can be vindicated as the best investment
avenue for long-term investors.
The following is the overall assessment about the real estate industry in
India-
Real estate sector is a major contributor to GDP (Gross domestic
product of India), over the last decade, the average household income in
urban areas has grown at a CAGR of 5%. According to estimates, 80% of
the real estate developed in India is residential space and the remaining
20% comprises of offices, shopping malls, restaurants and hospitals.
According to the 10th Five Year Plan, there will be a shortage of 22.7
million housing units by the year 2007. The changing lifestyles of
Indians and better incomes have led to the development of retail andhyper malls. This, in turn, has led to the demand for space from the retail
sector.
Real estate has proved to be a real engine of growth The real estate
sector in India is emerging as the next engine of economic growth going
by the fact that it is the second largest employer next only to agriculture.
It has significant linkages with several other sectors and over 250
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associated industries. According to estimates, every rupee invested in this
sector results in 78 paisa being added to the GDP. Accordingly, a unit
increase in expenditure has a multiplier effect and the capacity to
generate income is as high as five times. For instance, if the economy
grows at the rate of 10%, the sector has the capacity to grow at 14% and
generate 3.2 million new jobs over a decade. The sector size is close to
$12 bn and grows at 30% per annum. Presently, it is contributing 5% of
the country's GDP and is expected to rise up to 6% within three to four
years. Along with the residential property, the sector has also witnessed a
spurt in demand in commercial property mainly driven by fast-growing
IT and ITES services along with BPO boom. According to estimates, 42
million sq. ft. of space will be required every year till 2010 only in these
services in cities like Delhi, Bangalore, Chennai, Hyderabad and Pune.
As the cost of land in leading metros is skyrocketing, developers are
getting interested in developing townships in Tier II cities and industrial
towns where the growth of real estate is relatively slow. It is expected thatin the very near future, even these cities will witness abnormal prices.
THE KEY DRIVERS IDENTIFIED BEHIND THIS GROWTH
ARE-IN CASE OF RESIDENTIAL PROPERTY:
Higher affordability (higher salaries, easy credit); tax benefits to
borrowers; existing shortages; social structural changes in urbanized areas
(splitting of joint families).
In case of Commercial: IT/ITES sector expansion, the local
consumption story leading to higher growth in corporate earnings; order
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books full; corporates expanding, multinationals entering India to service
huge middle class.
In Retail sector: Getting organized (3% of retail is organized as against
17% in China); foreign brands and local brands seeking visibility, new
formats being developed; disposable incomes rising; younger population
earning and spending well.
In terms of infrastructure Indian real estate sector is relatively poor
to global standards: If we compare Indian real estate sector with the
global real estate industry, we fare very poorly in terms of our
infrastructure. While in the US, no matter where you go, you have access
to high quality infrastructure (drinking water, well-planned roads,
greenery, power, communications, healthcare, education, etc.), here in
India, even our signature cities are crumbling. We have not been able to
create alternate cities in the manner that is required so as to release the
pressure on the few that we have. Until new towns/cities come up, the
few existing ones will continue to provide sub-standard quality of livingand at very high prices. Another sharp contrast is in the sphere of public
housing. While more than 50% of Mumbai lives in slums, most of
Singapore lives in (subsidized) mass housing provided by the
government.
Whether this boom will sustain or not, the answer could be both a yes anda no. Yes, because of the above mentioned positive drivers. No, because a
lot of factors/events can spoil the party; such as, an increase in interest
rates globally and locally, a political directive (overseas) to reduce
outsourcing to India, the emergence of China as an alternate outsourcing
hub, a major terrorist attack, the policies of the government with respect
to land and real estate supply, property prices becoming unaffordable,
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etc.Already in some locations it appears that the cost of land is way too
high in comparison to the finished product, and there is a price limit
beyond which resistance can set in. Therefore, there is a risk of having
unsold inventory at a high cost. In some sectors, there is a re-emergence
of the investor in large proportions. Hence, when the stock comes in the
market for absorption in large volumes, will there be actual users to
absorb it? That is still to be seen. On the retail front as a whole, though
we (as a country) have barely scratched the surface of organized retail, I
feel that in some locations there is an excess supply of mall space coming
up. With terribly poor efficiencies and very high running costs, not to
mention a complete lack of differentiation, its a matter of time before
these malls will come back in the market to be repositioned. Today, there
is a feeling of success seeing footfalls by the thousands, which reminds
me of the internet days eyeballsplenty of visitors, poor conversion
into shoppers.
BUYERS PERSPECTIVE:
1. Quality of Construction Obviously when one buys a property
he makes sure that the quality of construction is good. Everyone whilebuying a new product wants to buy quality stuff. Same applies to the
property. Every buyer wants to buy a well built house.
2. Pollution Free Environment The immediate surroundings of the
property is always evaluated by the buyer. These days developers give
due importance in making the surroundings beautiful with innovative
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and creative landscaping. They involve landscape architects from
different corners of the world to give their customers the best. The
NCR is becoming more and more popular among home buyers
because of its greenery and pollution-free environment.
3. Water Availability Water Availability, power backup and safety
and security are some very important factors which people do consider
while purchasing the property. All these factors are hugely responsible
for the transition of people from Delhi to housing complexes in NCR
as many colonies of Delhi faces problem of shortage of water and
power failure while availability of these essential facilities are ensured
in housing complexes by the respective developers.
4. Occupancy - Due to increasing crime this factor is becoming more
and more important for the buyers. They dont want to settle down in
such a place where hardly anyone else lives. People prefer to stay in areasonably well-occupied housing complex. But its also true that
people dont prefer to stay in highly populated areas as it was
observed in the case of Shipra Sun City, Ghaziabad where 5000
families living in one single housing complex fight for space and car
parking place.
5. Suitability of Home Type Nowadays due to the wide range of
options available people can afford to be choosy. Now they dont need
to compromise on anything. They dont buy a property till the time all
of the essential things match their requirements. Developers do pay
attention to the different requirements of different customers. Some
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want a flat on the second floor while some want a flat with two
bedrooms. All these requirements are tried to be met by the
developers.
6. Sport Complex / Recreational Facilities All work and no play
makes Jack a dull boy. People have started believing in this concept.
Now each parent wants that within the complex his/her kids get all
kind of sports to play. Even adults want different recreational facilities
to be available in the housing complex, which may help them in
eliminating work stress.
DEVELOPERS PERSPECTIVE :
1. The major external factors which people consider while purchasing
the property are Price, Availability of loan and Proximity to
workplace.
2. The major In-Locality factors which people consider while
purchasing the property are Quality of construction, Availability of
water and Pollution-free environment
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GLOBAL SCENARIO IN REAL ESTATE INDUSTRY
Real estate industry in developed countries has been mature while it has
been a growing market with huge potential in developing countries like
India. Anuj Puri , Managing Director of Trammell Crow Meghraj Private
Limited opines: "Globally, these funds are very popular, especially in
developed economies such as the US, Australia, and Japan. They have
given excellent risk-adjusted returns. As per NAREIT, the five-year
compounded annual growth rate (CAGR) on such funds is 12.1%. In
Japan, this is 15.5%. This compares well with equity mutual funds. For
real estate, the risk is lower than equity." Real Estate Investments Trusts
(REITs) in the US are the trusts established by wealthy promoters who
usually invest in shopping malls, office spaces, commercial complexes,
hotels, and warehouses. The origin of REITs dates back to 1960 and has
gained popularity over a period of time. These trusts make profits either
by rental income or by capital gains resulting from sale of property. To be
qualified as an REIT, the company is liable to distribute 90% of its
income to the shareholders. This will in turn help the company to get
exemption from taxation. Based on the source of income, REITs are
categorized as equity REITS, which earn by owning and renting the
properties; Mortgage REITS, which earn by way of loans; and Hybrid
REITS, which earn by both the means. REITs offer ample liquidity to the
investors as REITs shares are usually listed on the major stock exchanges.
REAL ESTATE FINANCE:
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Property prices in India are rising fast, and not just in the biggest cities.
As the tech boom spreads across the country, as more Indians buy homes,
and as the economy grows at faster than 8% a year, real estate is
attracting more investors, many of them from abroad.
"India is one of the last few countries where there is primary demand for
real estate rather than individuals trading up," says Rajiv Sahney, who
runs the India operations of New Vernon Advisory, a $1.4 billion New
Jersey hedge fund. Merrill Lynch forecasts that the Indian realty sector
will grow from $12 billion in 2005 to $90 billion by 2015. "India is the
most exciting real estate market in Asia," says Michael Smith, head of
Asian real estate investment banking at Goldman Sachs. "It's one of the
last major countries in Asia with an improving market."
That improvement worries some. Concerns about an asset-price bubble
have led the Reserve Bank of India to raise the risk weight age on real
estate loans extended by banks, and mortgage rates have gone from 7.5%
to about 9.5% as a result. That's still well below the 15% rates that most
Indians were used to, but it's enough to raise questions about whether the
speculation of the past year and a half, which has driven land prices up by
30% to 100% and real estate stocks up as much as 2,000%, may be
coming to an end.
The run-up in prices has attracted the likes of Morgan Stanley, which has
invested $68 million in Mantri Developers, a midsized construction firm
in Bangalore, and Merrill Lynch, which invested $50 million in
Panchsheel Developers, a regional builder. Foreign companies have also
poured money into funds that invest in Indian developers. GE
Commercial Finance Real Estate, for example, has invested $63 million
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in an $800 million fund that is building IT parks, and Calpers and the
Oregon Public Retirement Fund have invested $100 million each in the
IL&FS India Realty fund.
Real estate funds set up to invest only in India have already raised more
than $2.7 billion. And new funds worth as much as $4 billion are being
planned by J.P. Morgan, Britain's Knight Frank, and other foreign
investors. Warburg Pincus, the largest private-equity investor in India,
says it is spending nearly a third of its time studying opportunities in this
area. And Deutsche Asset Management recently hired someone to head
its real estate activities in India. "As the largest active managers of real
estate funds in the world," says Edouard Peter, head of Deutsche Asset
Management Asia Pacific and Middle East, "we expect to be actively
raising and investing funds in real estate in India."
It isn't going to be a cakewalk. "It's not easy to do business in India," says
Seek Ngee Huat, president of GIC Real Estate, an arm of the Singapore
government that is planning to invest several hundred million dollars in
Indian real estate over the next two years. "It's difficult finding suitable
partners who have the same long-term objectives, as most firms are small
and family run."
Already margins have shrunk. "The vast majority of the planned real
estate funds are targeting annual rates of return of between 25% and 30%,
but I'm skeptical that the vast majority will cross 20%," says Mumbai real
estate advisor Rajiv Bhatia.
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To achieve the target returns, several funds are focusing on second-tier
towns and second-tier developers. "Many investors are going to lose their
shirt here, as it's an opaque market, and a wrong partner can easily do you
in," says S. Sriniwasan, executive director at Kotak Mahindra Realty fund
in Mumbai. There's also bureaucracy and corruption to deal with. Says
Ashwin Ramesh, who runs a boutique fund called Primary Real Estate
Advisors: "There are a couple of hundred malls currently being
developed across India, and predictions are that only 10% will be
successful. Yet every developer feels his mall will be among the
survivors."
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REAL ESTATE INVESTMENT
A recent report by the Chamber of Indian Industries pointed out that
globally real estate is and should always be considered as an income-
generating asset. Indeed, real estate is an attractive investment option, as
it gives regular returns and also provides capital appreciation. This
scenario is presently unfolding in India.
Before the start of the 1990s, real estate was always looked upon as a
place to invest money, since prices were always escalating because of
limited supply and heavy demand. Developers were building residential
and commercial projects, which were sold out even before the
construction began. Besides, during the course of construction, the
property changed hands several times before the completion of the
project, with further price increases.
But, those days are gone with the crash of the housing market in the mid1990s. The higher the rise in real estate prices, the steeper the fall. This
was true, especially, in the metros, e.g. Mumbai and New Delhi. The
supply increased enormously and the demand remained steady, as prices
had gone beyond the realistic levels. This decline in prices stabilised
towards the end of the decade as rates became more reasonable and
affordable.
In the meantime, the housing finance industry started to expand rapidly,
making home loans easily available to everyone. Besides the housing
loans boosting the market demand, the tax benefits provided by the last
four consecutive budgets have also encouraged the end-users and
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investors alike. Growing incomes of urban buyers coupled with fiscal
incentives and falling interest rates, has seen disbursements by Housing
Finance Companies grow at over 35% per annum in the past few years,as
shown in fig 1.
Figure I
To evaluate real estate as an investment option, use the followingguidelines.
Check out the various loan options to raise the finances.
Ensure that there is scope for infrastructure development around the
property under consideration.
Another factor is the location and the proximity to schools, hospitals,
markets, public transportation, etc.
Check out the rental returns and capital appreciation potential in the
area where the property is located.
Actual property taxes to be paid.
Finally, ensure that you are able to maximize the tax benefits to the limit.
The rental rates in India are among the highest in the world as returns on
investment on the capital value of the property. Figure II compares the
rental returns for various cities all over the world with the Indian cities.
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Investment in commercial property, where the returns are 10 to 15 per
cent, is a proven option, while residential property is always in demand
for leasing.
Figure II
Since the 9/11 attack in the US, investments in Indian markets have
gathered pace. India has encouraged Non Resident Indians (NRIs) with
tax incentives and relaxation of foreign direct investments (FDI) rules.
The sudden change in sentiments is clearly visible in Indias bulging
foreign exchange reserves, which are at a record high of over 60 billion
US dollars. And the RBI has relaxed the rules further for NRIs with
respect to repatriation of foreign exchange on real estate investments.
Besides being a safe destination, India offers 10 to 12 per cent returns,
perhaps the highest in the world. 30 per cent of all high major real estate
transactions in Mumbai are accounted by NRIs.
Moreover, with increasing volatility in stock markets and falling interest
rates, many investors have started considering investment in commercial
and residential properties. The bottom-line is that this is the time to go
shopping for property; as the market has started firming up already. As
the organised market develops, real estate as an investment is one of the
better options available today. As Naresh Malkani, CEO of
Indiaproperties, says, Considering the current property rates and housing
loan interest rates, it is worth investing in real estate in India.
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EXTERNAL ENVIRONMENT
Commercial which ranks next only to food and clothing amongst basic
human needs has always had and continues to have important socio-
economic implications. Especially in countries like India which are in
the throes of rapid development housing has come to assume a crucial
role as it contributes significantly to the national economy and nation
building. Arguably, housing has been the only industry in recent times
which has not only withstood the recessionary pressures, but has also
shown a consistent and healthy growth and if the future is to be
interpreted in light of the macro picture, the best is yet to come.
Housing and GDP are interlinked and contribute to each others growth.
It is, therefore, no wonder that Housing for All is invariably proclaimed
as a national priority by all major political parties and adopted as a goal
by the Government of India in the National Housing and Habitat Policydocument. Integrated housing development not only satisfy the basic
human needs but also facilitates holistic development within the
parameters of a planned welfare economy. Safe, secure and affordable
housing by any means increases employment and educational
opportunities for individuals and enriches communities leading
to a better civil society and better quality of life. Besides the direct
contribution which housing makes to GDP it increases social capital
which is intelligible wealth that comes with good social network at the
heart of which lies clean environment, hygienic living and quality
housing.
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India, with its billion plus population, still witnesses an acute shortage of
dwelling units. Despite sharp increase in the Usable Housing Stock from
70 million units in 1961 to170 million units in 2001, the shortfall in 2001
was estimated at 19 million dwelling units, although unofficial estimates
peg the figure at higher levels. This has occurred due to the high
population growth, especially in urban areas. Studies reveal that the
population in the five most populous cities of India, namely Mumbai,
Kolkata, New Delhi, Chennai & Hyderabad are set to increase at a
scorching pace of more than 50% between 1995 and 2010 and by 2025
the number will be more than double. The 2001 Census reveals that the
decadal population growth in the urban areas is one and a half times
higher than the national average. All these statistics point to a high level
of migration of population from rural and semi urban areas to a more
urbanized form of settlement. The percentage of population staying in
urban areas have steadily climbed from 23.34% in 1981 to almost28% in 2001. As on 2001, more than 5000 centres have been identified as
urban centres in India.
Coupled with the demand for dwelling units, another major factor which
has contributed to the buoyancy of Housing activity is the affordability of
properties. This, in turn, has been the result of a combined effect ofstabilized property prices, higher level of incomes and lower cost of
borrowings. In fact the boom witnessed by the Housing Finance sector
can be heavily attributed to these factors.
Housing has often been called the Engine Of Domestic Growth of the
Economy. An investment in Housing and construction triggers of a series
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of investments in various sectors. From Heavy Industries like Steel,
Cement to industries like Paint, Furnitures and even to Small Scale
Industries, Housing affects as many as 269 industries directly and
indirectly. Housing ranks third amongst 14 major industries in terms of
total linkage effect in the Economy. The linkage effect, particularly with
reference to the Steel and Cement Industries was also underlined by the
Government in the Economic Survey of 2002-2003.
In terms of contribution to the GDP, for every rupee invested in Housing
and construction, 78 paisa gets added to the GDP. Housing ranks fourth
in terms of the multiplier effect on the Economy, ahead of sectors like
transport and agriculture. The Investments in the Housing sector has
steadily increased from Rs. 1150 cr in the First Plan period to more than
Rs. 1,20,000 cr in the Ninth Plan period. Estimates of the Tenth Plan peg
the figure at about Rs. 7,00,000 cr.
Perhaps the greatest socio-economic impact of Housing is in employment
generation. Housing is the second largest employment generator in the
country after Agriculture. A host of vocations and professions derive their
livelihoods from Housing, either directly or indirectly. Construction
workers, builders, developers, suppliers, civil engineers, valuers, propertyconsultants, furnishers, interior decorators, plumbers the list is virtually
unending. In a developing nation like ours, Housing can be the solution to
the most nagging problem that any Government faces that of
employment. Apart from these various indirect benefits that the economy
derives from Housing, the Government itself is a direct beneficiary in
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terms of collection of stamp duty rising out of acquisition of real estate
assets.
It is therefore not surprising that the Government has left no stones
unturned to support Housing activities. The continued tax incentives on
Housing Loans to trigger a higher off-take in credit for retail Housing is a
reaffirmation of the Governments committment to aid the sector. Other
initiatives like extension of benefits u/s 80 I to mass housing projects,
scrapping of the Urban Land ceiling act, implementation of the
Securitization Act are all in line with the same objective of propelling
growth through Housing. However, it may also be added here that there is
scope of further improvement in various areas , mainly with reference to
streamlining of laws related to construction activities and rationalizing of
stamp duties on transfer, securitisation, etc.
When one looks at the future, the big picture appears to be very bright.A comparison of the Mortgage Finance to GDP ratio places India at the
foot of the table with a penetration rate of less than 2% , lower than the
9% of Thailand, 36% of Singapore and 51% of USA. There is thus much
room for the upside and a long way to go.
With the population of India steadily increasing, it will not be long beforeIndia overtakes China and emerges at the top position. Demographic
experts have predicted Indias working age population the segment
which has the highest demand for Housing to be the highest. This
ensures that the demand for Housing is a long and sustained one. Rapid
strides in Infrastructure development like the Golden Quadrilateral
Project and the National Highways Development Programme, which have
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progressed at an impressive speed is bound to trigger off a fresh round of
Housing and habitation through further development of semi urban and
rural areas as well as setting up of new Satellite Townships.
To sum up, a reference to the Goldman Sachs Report on the Development
of the BRIC Economies can be made, wherein India is projected to
have the fourth largest Economy in less than 30 years time from now. In
order to achieve that level of growth, it is imperative for the Housing
Industry to continue its contribution to the economy at an increased pace
in the future as well.
INTERNAL ENVIRONMENT
The last three budgets have provided enough incentives and the drastic
reduction in interest rates, making easier for the common man to achievehis distant dream of a home come true. But on the supply side very little
has been done to ensure that developers who are the producers of homes
get access to the required funds. It is conferences like these that helping
us carve out solutions for a better tomorrow.
The trade and industry was fairly to blame in the 80s when there werenot many professionals in the building trade. It is still one of the largest
unorganised sector in the country, but slowly companies deeply
committed to housing are becoming more responsible, accountable and
transparent.
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Like other industries, real estate developers are also processors and
producers of goods (i.e. the home) which is a tangible product and has
enormous cost from concept to completion. It is impossible for any
developer firm to bear the entire cost, hence the need for real estate
financing. The customer preferences have moved away from under
construction to nearing completion or completed projects and hence the
investments in the projects have changed.
Strangely other industries get financed by the same financiers for process
as well as end product (i.e. the automobile industry). The banks and
Financial Institutions have exposure to the producers and the purchaser
but when it comes to developers the very same Financial Institution shy
away. Now coming to the issue of funding developers norms have been
laid out and rating should be made mandatory. The one time pure vanilla
product construction finance is no longer available and it has out livedits purpose. Now the time has come for innovative products as the market
conditions have changed in the past 5 years. Receivable discounting - is
one option where projects in advanced stages can be financed. The
balance amount receivable against sold flats can be financed by Housing
Finance Institutions/banks (practice which is being followed) to infuse
liquidity and enable developers to complete the project within stipulatedtime period.
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ESCROW ACCOUNT MECHANISM
During the boom period between 1991 and 1995 developers had invested
heavily in land by diverting funds from other project and taking on huge
liabilities from banks and financial institutions. With the crash in the
markets the value of these investments were eroded. Most banks and
financial institutions today have frozen all their lending to the developers
community. The main reasons for this being the inability of the
developers to repay their debts. To instill confidence in the lenders the
developer community would need to organise themselves and bring about
greater transparency in their operations. In this respect developers must
explore the Escrow mechanism to tap funds from Banks and Financial
Institutions . Under the Escrow mechanism the loan amount is decided
after doing a thorough due diligence of the accounts of the developer. All
transaction (inflow and outflow) are routed through a designated EscrowAccount, the control in which remains entirely with the lender. The
progress of construction is monitored by the appointed auditors who
submit periodic progress reports. Disbursements are made strictly on the
basis of the progress reports. This system will not be successful without
the co-operation, commitment and support of the developer community.
Position on project / Venture Capitals The financiers takes a position
like private placement of area to be constructed at discounted rates and
funds the project. On completion of the project or during the construction,
the developer sells on behalf of the institution and gets their investment
back with return. All loans originating from these sales should go to the
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institution which funded the project. This the financiers can do after due
diligence as listed below:
RISK EVALUATION AND MITIGATION
Essential to establish counter party risks and mitigate them before
offering construction finance to borrowers.
Finance available to builders with established track record.
Minimum Net worth Criteria
Track record of successful completion of projects
Established source of cash flow and revenues
Loans are usually project specific.
In addition to builder risk, saleability of project depends on
Location
Demand & Supply of flats Pricing
Opinions from consultants are sought to mitigate these risks.
Due diligence of all transaction documents including
Title documents
MOU for land Power of Attorney
Municipal clearance
Line of Credit - Like working capital advanced by banks, in this case,
builders with track record are able to work out their financial requirement
and line of credit is approved by Housing Finance Institution. This is for a
minimum period of 4 5 years renewable on a year on year basis. This
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covers all the projects of the developers. This can be availed after the
institution is satisfied about the following items-
CRITICAL LENDER REQUIREMENTS
Builder to obtain statutory approvals prior to loan disbursal
Loan to be secured by mortgage of the property of the proposed
project.
Property should have clean title
Property should be easily marketable
STRATEGIC FACTOR ANALYSIS
Both serious academic research and informed business activity will be
enhanced by reliable collection of data relating to housing and
commercial real estate. Housing data, including prices, volumes of
existing and new housing transacted, housing starts, vacancy rates andhousehold formation rates, as well as other demographic data, segmented
by metros, states and at the national level need to be collected frequently
and in a reliable manner by local and central authorities and disseminated
widely. Real estate commercial data would be more or less the exclusive
domain of the private sector.
USE OF IT IS VITAL
Here India has an opportunity of leapfrogging ahead of a number of other
countries by harnessing its comparative advantage in information
technology. In some of the more developed countries online databases of
different kinds of real estate (office, retail and industrial/warehouse) with
data on city-wise vacancy rates, capitalization rates, the local economic
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situation, job and household creation help firms, investors and
businessmen make informed choices.
THE DISCIPLINE
Links with urban planning and regional economics, on the one hand, and
finance and macroeconomics on the other would go a long way in a better
understanding of the economy, its monitoring, regulation, management
and forecasting. It will also promote appraisal and valuation techniques.
In India, provision of housing credit may be a supply side issue since
banks cannot properly evaluate lending risks in the absence of
development of credit and risk assessment systems, and databases on
credit benchmarks and credit scoring. It is vital to develop these risk
management systems on the basis of sound data and proper, widely
available techniques. All these steps will promote analyses and researchthat could inform domestic or foreign investors to evaluate markets and
carry out risk assessment for purposes of property development and
investment. The establishment of the discipline of real estate economics
would help in the dissemination of a common language of discourse and
promote standardised procedures, both necessary for national market
development.
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REAL ESTATE DELHI AS THE TARGET MARKET
Delhi is now more or less saturated and the high demand for residential
properties has increased rates beyond the reach of middle class. As a
result, the suburban towns within the NCR; Gurgaon, Noida, Faridabad
and Ghaziabad have become destinations for new residential projects that
offer affordable quality housing to the middle class as well as luxury
housing for high end users. As these suburbs are now increasingly
generating employment, they will decide the future growth pattern of the
NCR.
The business and trader class still largely dominate old residential areas
in west and northwest Delhi. Similarly the large multi-storey societies in
East Delhi in mayur vihar and Patparganj have found preference with
the service class. The blue-collar segment remains limited to apartments
and society developments while big and small traders occupy the whole
of west Delhi, including Rohini. The elite class, in terms of social status,
i.e. politicians, bureaucrats and celebrities, restrict themselves to central
and south Delhi. Suburban areas like Noida and Gurgaon have developed
as alternative housing solutions and are inhabited mostly by professional
and service class people, as well as an increasing upper middle class
segment.
Gurgaon offers a good quality of living with many high-end residential
projects by private developers. These new developments offer
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uninterrupted power supply, community and health care centers along
with facilities like a swimming pool, clubhouse and other services. As per
industry estimates, projects with approximately 5000 dwelling units have
been announced in Gurgaon. Since it will be maturing as an independent
city, occupancies will improve but in the present context, it is an
oversupply situation.
Noida has experienced rising prices in its existing commercial, retail and
residential real estate. The new developing residential sectors are along
the Greater Noida expressway. Occupancies in Noida are good and prices
are looking northward. It is a good destination for the middle class, as far
as accessibility, social and physical infrastructure and growth perspective
are concerned.
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OBJECTIVE OF THE STUDY
To find out the reasons for transition of people from Delhi to National
Capital Region (NCR).
To find out the perception of people about the cities included in NCR
namely Gurgaon, Noida, Greater Noida, Faridabad and Ghaziabad
To know the degree of importance of various factors which people
consider while purchasing a house.
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RESEARCH METHODOLOGY
DATA COLLECTION METHOD:
Data was collected by using secondary methods of data collection.
SECONDARY METHOD
1) Magazines on Property
2) Internet sites on Property
3) Internet websites of popular property developers of India
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DISCUSSIONS
REAL ESTATE MARKET
Construction sector has been the focus sector for some time as its impact
on the economy is big by virtue of its being a huge employment
generator. The real estate market is booming. Its growing at around 12%
per annum.
Today its boom time in the real estate market and homebuyers couldnt
have asked for a better opportunity to buy a home. Indian developers are
now not talking of anything less than world class. Infrastructure and
economic development of some cities as well as the housing shortages are
driving the boom. There is a fundamental change in the approach of the
buyer, developer and the government. They all are seeking quality
development. The middle class demands the best that money can buy.
With the competition in the market, developers have to deliver the best
within specified time frames and the government, discharged from the
duty of construction has to keep everyones interest at heart.
The Major reasons for boom in the real estate market are:
EASY AVAILABILITY OF LOAN AND LOWER INTEREST
RATE
There is easy access to loans. The housing finance has posted a growth of
29 percent in the last fiscal, touching 53,685 crores. Further, interest rates
on housing loans have come down and are much lower, between seven to
eight percent as compared to 13-14 percent five years ago.
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AFFORDABILITY
Another major reason for boom is that housing in India has become more
affordable in recent times. A decade ago, a house cost nearly 15-20 times
an individuals annual salary. Today the cost of a house has come down
to just about three to four times an individuals annual pay package.
INCREASE IN NUMBER OF NUCLEAR FAMILIES
In the past, owing a home was a dream realized only after retirement.
Largely because people looked at it as a means of providing for their
children, having themselves lived in a joint family setup. Joint families
are progressively getting included in the pages of history book even in a
country like ours. Not surprisingly the rise in the number of nuclear
families is pushing demand for housing further to cater to a generation
that is not averse to taking risks. Nor are they hesitant when it comes to
paying a price to realize their dreams
INVESTMENT OPTION
Competitive offers by home loan companies combined with good quality
projects developed by reputed builders having a number of amenities
have made investing in properties very attractive Wherever there is
growth and opportunity, investors are bound to be around andtraditionally real estate has been a safe investment option. Property is
looked upon by many as an investment option that appreciates
substantially when compared to other traditional tools of investment.
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MIGRATION OF INDUSTRIES
Another major reason for boom in the real market is the migration of
industries to smaller towns leading to rural progress. With villages
turning into towns and towns becoming metros, the property market is
growing steadily. This revolution has directly resulted in greater demand
for not just housing but also for the overall real estate market with
heightened demand for better infrastructure, transportation facilities,
entertainment zones, shopping malls, multiplexes and more.
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CONCLUSION
The major external factors which people consider while purchasing the
property are Price, Availability of loan and Proximity to workplace.
1. The major In-Locality factors which people consider while
purchasing the property are Quality of construction, Availability of
water and Pollution-free environment
2. Perception of people about different cities of NCR
Location wise Gurgaon and Noida are adjudged the best by the
respondents
Business opportunity wise Gurgaon due to the mass presence of
BPO company and offices of MNCs and Noida due to itsproximity to Delhi are consider good by the majority of
respondents.
In Quality of living again Gurgaon and Noida leads the pack but
out of the two Gurgaon is better due to the existence of Higher and
upper-middle class people in large number.
In Law and Order all the places are bad as per the respondents but
out of the five Gurgaon is the best.
As far as infrastructural development is concerned Greater Noida
enjoys good reputation among the respondents of all the three
cities.
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3. In totality, both Location as well as Affordability together account
for more than 95 % of the total responses.
4. In Gurgaon major reasons other than affordability and location, to
purchase the property were proximity to workplace and healthy
environment.
5. In Noida and Ghaziabad other major reasons were almost the same
-desire to own an own house as well as need for better facilities.
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BIBLIOGRAPHY
BOOKS & JOURNALS
Real Estate in India , JM PUJARI, Manav Publication, 2006
INTERNET LINKS
www.unitechgroup.com
www.narang constructions.com
www.ansalspropertiesltd.com
www.maxheight.com
www.eldecogroup.com
www.omaxe.com
www.parsvnath.com
www.gurgaonproperties.net
www.realestatencr.com
www.gurgaonrealestate.com
www.estatedeveloper.com
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http://www.unitechgroup.com/http://www.dlf-group.com/http://www.ansalspropertiesltd.com/http://www.maxheight.com/http://www.eldecogroup.com/http://www.omaxe.com/http://www.parsvnath.com/http://www.gurgaonproperties.net/http://www.realestatencr.com/http://www.gurgaonrealestate.com/http://www.estatedeveloper.com/http://www.unitechgroup.com/http://www.dlf-group.com/http://www.ansalspropertiesltd.com/http://www.maxheight.com/http://www.eldecogroup.com/http://www.omaxe.com/http://www.parsvnath.com/http://www.gurgaonproperties.net/http://www.realestatencr.com/http://www.gurgaonrealestate.com/http://www.estatedeveloper.com/7/31/2019 Real Estate Project 2008
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1.) Marketing strategy of the company over its competitors.
2.) 4 ps of marketing.
3.) Specifications are superior thn others,it is just adjoining thn gt
road.
4.) 75-80% for the landscape area.
5.) Sesmic building have been designed for sesmic zone 5 wheras it
fall under zone 4.
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