Tarun mrp

DEVI AHILYA VISHWAVIDYALAYA, INDORE

MAJOR RESEARCH PROJECT on

“To Study the Various factors that Influence Investor’s Perception towards Real Estate Investments”

A Research Dissertation Submitted in Partial Fulfillment for the Award of the Degree of Masters of Business Administration

(2010-2012)

Submitted to: Submitted by:

Prof.Vasanti Dutta Tarun Thakur MBA II Year Section ROLL NO.

CERTIFICATE FROM INTERNAL & EXTERNAL EXAMINER

This is to certify that “Tarun Thakur” of MBA (Full Time) Semester IV in Sanghvi Institute of

Management and Science, Indore has carried out a Major Research Project titled “To Study the

Various factors that Influence Investor’s Perception towards Real Estate Investments”. The

work done by him/her is genuine and authentic.

The work carried out by the student was found satisfactory. We wish him/her all the success in

career.

Internal Examiner External Examiner

CERTIFICATE FROM CHAIRPERSON & FACULTY GUIDE

This is to certify that “Tarun Thakur” of MBA (Full Time) Semester IV in Sanghvi Institute of

Management and Science, Indore has carried out a Major Research Project titled “To Study the

Various factors that Influence Investor’s Perception towards Real Estate Investments”.

The work carried out by the student was found satisfactory and it is as per the guidance of faculty

guide.

Signature of Chairperson Signature of Faculty Guide

DECLARATION

I, “Tarun Thakur”, a student of School of Management, Sanghvi Institute of Management &

Science, Indore, hereby declare that the work done by me to do the Major Research Project titled

“To Study the Various factors that Influence Investor’s Perception towards Real Estate

Investments” is genuine and authentic.

Signature of the Student

ACKNOWLEDGEMENT

I sincerely and religiously devote this folio to all the gem of persons who have openly or

silently left an ineradicable mark on this research so that they may be brought into consideration

and given their share of credit, which they genuinely and outstandingly deserve.

This expedition of research encountered many trials, troubles and tortures along the way. I

am essentially indebted to my guide “Vasanti Dutta” for this sweating learning experience.

He/She overlooked my faults and follies, constantly inspired and mentored via his proficient

direction. It was a privilege to work under his/her sincere guidance.

I express my thanks to Dr Manoj Bhatia, Director (MBA / PGDM), Sanghvi Institute of

Management and Science, Indore for his considerate support whenever and wherever needed. I

honestly acknowledge the support provided by the Chairperson, Prof Gaurav Singh.

I express my indebtedness to the management of Sanghvi Institute of Management and Science,

for inspiring us to grab and utilize this opportunity.

With profound sense of gratitude, I would like to truthfully thank a recognizable number of

individuals whom I have not mentioned here, but who have visibly or invisibly facilitated in

transforming this research into a success saga.

Above all, I would like to conscientiously thank the Omnipotent, Omnipresent and

Omniscient God for His priceless blessings!

Signature of Student

CONTENTS

Topic

Introduction

Literature of Review

Rationale of study

Research Methodology

Data Analysis & Interpretation

Scope of Real estate

Factor Analysis

Conclusion

Bibliography

Appendix

Questionnaire

INTRODUCTION

Investment is putting money into something with the expectation of profit. More specifically,

investment is the commitment of money or capital to the purchase of financial instruments or

other assets so as to gain profitable returns in the form of interest, dividends, or appreciation of

the value of the instrument.

Investment is involved in many areas of the economy, such as business management and finance

no matter for households, firms, or governments.

An investment involves the choice by an individual or an organization such as a pension fund,

after some analysis or thought, to place or lend money in a vehicle, instrument or asset, such as

property, commodity, stock, bond, financial derivatives (e.g. futures or options), or the foreign

asset denominated in foreign currency, that has certain level of risk and provides the possibility

of generating returns over a period of time. When an asset is bought or a given amount of money

is invested in the bank, there is anticipation that some return will be received from the

investment in the future.

Investment in Terms of Economics

According to economic theories, investment is defined as the per-unit production of goods,

which have not been consumed, but will however, be used for the purpose of future production.

Examples of this type of investments are tangible goods like construction of a factory

or bridge and intangible goods like 6 months of on-the-job training.

Investment in Terms of Business Management

According to business management theories, investment refers to tangible assets like

machinery and equipments and buildings and intangible assets like copyrights or patents and

goodwill.

Investment in Terms of Finance

In finance, investment refers to the purchasing of securities or other financial assets from the

capital market. It also means buying money market or real properties with high market liquidity.

Some examples are gold, silver, real properties, and precious items.

Financial investments are in stocks, bonds, and other types of security investments. Indirect

financial investments can also be done with the help of mediators or third parties, such as

pension funds, mutual funds, commercial banks, and insurance companies.

Personal Finance

According to personal finance theories, an investment is the implementation of money for buying

shares, mutual funds or assets with capital risk.

Types of Investment

Equities

Equities are a type of security that represents the ownership in a company. Equities are traded

(bought and sold) in stock markets. Alternatively, they can be purchased via the Initial Public

Offering (IPO) route, i.e. directly from the company. Investing in equities is a good long-term

investment option as the returns on equities over a long time horizon are generally higher than

most other investment avenues. However, along with the possibility of greater returns comes

greater risk.

Mutual funds

A mutual fund allows a group of people to pool their money together and have it professionally

managed, in keeping with a predetermined investment objective. This investment avenue is

popular because of its cost-efficiency, risk-diversification, professional management and sound

regulation. You can invest as little as Rs. 1,000 per month in a mutual fund. There are various

general and thematic mutual funds to choose from and the risk and return possibilities vary

accordingly.

Bonds

Bonds are fixed income instruments which are issued for the purpose of raising capital. Both

private entities, such as companies, financial institutions, and the central or state government and

other government institutions use this instrument as a means of garnering funds. Bonds issued by

the Government carry the lowest level of risk but could deliver fair returns.

Deposits

Investing in bank or post-office deposits is a very common way of securing surplus funds. These

instruments are at the low end of the risk-return spectrum.

Cash equivalents

These are relatively safe and highly liquid investment options. Treasury bills and money market

funds are cash equivalents.

Non-financial Instruments

Gold

The 'yellow metal' is a preferred investment option, particularly when markets are volatile.

Today, beyond physical gold, a number of products which derive their value from the price of

gold are available for investment. These include gold futures and gold exchange traded funds.

Real Estate

In real estate, investment money is used to purchase property for the purpose of holding, reselling or leasing for income and there is an element of capital risk. Residential real estateInvestment in residential real estate is the most common form of real estate investment measured

by number of participants because it includes property purchased as a primary residence. In

many cases the buyer does not have the full purchase price for a property and must engage a

lender such as a bank, finance company or private lender. Different countries have their

individual normal lending levels, but usually they will fall into the range of 70-90% of the

purchase price. Against other types of real estate, residential real estate is the least risky.

Commercial real estate

Commercial real estate consists of multifamily apartments, office buildings, retail space, hotels

and motels, warehouses, and other commercial properties. Due to the higher risk of commercial

real estate, loan-to-value ratios allowed by banks and other lenders are lower and often fall in the

range of 50-70%.

According to real estate theories, investment is referred to as money utilized for buying property

for the purpose of ownership or leasing. This also involves capital risk.

Indian Real Estate Scenario

India is the seventh largest country by geographical area, the second most populous country and

the most popular liberal democracy in the world. India is now the fourth largest economy in the

world and the second fastest growing economy.

One of the noticeable recent developments has been in the field of Real Estate. India real estate

market is booming. Some 80,000 Indians today have liquid assests greater than 5 cores and this

http://propertybytes.indiaproperty.com/index.php/newsbytes/indian-real-estate-scenario

No. is increasing by 13 % a year. According to well-known source India’s large cities boasts

400-500 house listed at 5 crores+.

India’s emergence as a hub for global outsourcing and the consumption-driven growth of India’s

economy is contributing to its new found real estate investment image. For example upcoming

glitzy shopping malls, entertainment centers, luxury hotels and multiplexes.

Foreign Investment and the likes of Wal-Mart is already fuelling the demand for commercial

property. Foreign companies can set up subsidiaries or joint-ventures to develop property,

provided that their money is locked in for three years and that plots are of at least a minimum

size.

However, India’s property market remains unorganized and underdeveloped. This creates risks

for investors. In the absence of 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.

The growth was initially fuelled and subsequently sustained mainly by cheap housing loans.

Years ago, when India was a closed economy with lots of government control and intervention,

the interest rates for house loan used to be as high as 18% per annum. But the gradual

liberalization of the Indian economy and opening up of the domestic market, unrestricted flow of

FDI and full current account convertibility of Indian currency (Rupee) brought down the PLR

(prime lending rate) substantially.

Also there has been an increase in the income level of Indian middle class who are now

considerably investing in new property in prime metro cities like Delhi, Mumbai, and Bangalore.

Several mega projects offering international lifestyles are on the anvil in different cities in India.

The most developed are the Bangalore Property, Mumbai Property and Delhi.For example

Property market with luxury apartment and villas selling like hot cakes.

The Indian stock market and Indian real estate are quite related. The stock market has been

witnessing a nonstop bull run for an unusually long time. During last couple of years share prices

have gone beyond all expectations.

One can draw parallels between that and 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.Several mega projects offering international lifestyles are on the anvil in different cities in

India.

Types of Real Estate Properties

Real estate property comes in various types with each having its own distinctive structure. There

are three major property types in the real estate business.

1.Vacant Land Property

Vacant land is popular with ranchers and cultivators. The extent of property is considerable and

the price high.

2.Residential Properties

Residential property types include:

2.1Single Family Residence Property

Single-family residences are single units, typically with a front and back yard, a driveway

and an attached garage.

2.2.Duplex Property

A duplex is a structure designed for residential use and contains two living blocks sharing

a common wall. Duplex properties may be listed residential or commercial, depending on

the purposes they serve.

2.3.Condominiums Property

Condominiums, or condos, are apartments that are independently owned minus a yard

and with common parking facilities and offer many amenities.

2.4.Town House Property

Classic townhouses are doubled storied row of homes, with common sidewalls. The

living room is situated below with the bedrooms above and there is a little fenced in yard.

2.5.Manufactured Home Property

Manufactured homes are erected in a factory and set up on the dwelling site. They must

conform to the federal construction regulations.

2.6.Patio Home

A patio home is a single story home with one joint sidewall and a patio towards the back

facing the common area. Patio homes normally contain 2-4 homes in each structure and

may have a backyard.

2.7.Loft Property

Lofts are usually found downtown and have high roofs, huge wide windows, metal

staircase and cement floors, but no yard.

3.Commercial Properties

Commercial property can refer to vacant land developed for commercial use, or an

already existing commercial structure(s).

Specifics about certain commercial property types:

3.1.Multi-Family Property

Multi-family property comprises of buildings meant for numerous family groups, leased

on a permanent basis. They typically contain five or more living units with shared

amenities, such as doorways, foyers, lifts, staircases and walkabouts.

3.2.Rooming House

Rooming house properties usually have no more than 20 furnished units with common

bathroom and kitchen facilities given out on a temporary basis.

3.3.Mobile Home Parks Property

Mobile park homes are a blend of single and double spacious homes, sited in decent

neighborhoods and with at least three-fourth occupancy. Depending on the surroundings

and facilities provided mobile home parks are given star ratings.

3.4.Retail Space

Retail space comprises of single construction taken by single or multiple tenants and

exclusively meant for retail use such as sales and display of garments and electronics.

3.5.Office Buildings & Complexes

This type refers to a single structure intended for office use, or a set of offices in one

structure or a group of buildings and are ideally located on the main road.

3.6.Mixed-Use Properties

Mixed-use properties are a blend of residential and commercial units such as a retail store

and a multi-family home in the same structure.

3.7. Healthcare Properties

This property type includes hospitals and nursing homes, health care centers and assisted

living facilities. A license is mandatory to run the facility.

3.8.Bed & Breakfast Properties

Bed and Breakfast inns are normally single buildings family units meant for temporary

boarding.

3.9.Restaurant Property

Restaurants are built for the making and selling of food and drinks, and include canteens,

pubs, and inns.

3.10.Hotel Properties

Hotel properties are constructions that provide a suite of facilities and services, typical of

the hospitality industry. Hotels are classified as either Complete Service or Restricted

Service. Hotels can also be affiliated to a national franchise chain.

3.11.Day Care Centers

Day Care centers provide childcare, disabled, and elderly care services; or are learning

centers, such as kindergartens and nurseries. They have playrooms, rest rooms, and

simple kitchen amenities.

4.Industrial Property

Industrial property types are designed for industrial commercial functions. They include:

4.1. Self-Storage Properties

These are mini-warehouses and comprise of tiny compartments that are rented for private

storage.

4.2. Warehouse Properties

Warehouses are commercial buildings built for holding goods and consist of massive

open inner sections.

4.3.Flex Space Properties

Flex space is a blend of industrial and office property. It is an arrangement that has a

workplace and display area together with the industrial area.

5. Manufacturing Property

Manufacturing property is designed for producing goods for sale or lease like factories.

5.1.Cold Storage Property

Cold storage property is a specialized structure that makes available storage in a chilled

or icy setting.

5.2.Automotive PropertyAutomotive structures are built specifically for the automobile industry and usually have a small office cubicle, car lifts, and overhead doors. They include repair units, used car hubs, and tier fixing facilities. Detailed study of property types and their comparative values is crucial in deciding the best option to work with and the possible monetary benefits accruing from each.

Investment properties pros & consIn general, property is considered a fairly low-risk investment, and can be less volatile than

shares (although, this is not always the case). Some of the advantages of investing in property

include:

1. Tax benefits

A number of deductions can be claimed on your tax return, such as interest paid on the loan,

repairs and maintenance, rates and taxes, insurance, agent's fees, travel to and from the property

to facilitate repairs, and buildings depreciation.

2. Negative gearing

Tax deductions can also be claimed as a result of negative gearing, where the costs of keeping

the investment property exceed the income gained from it.

3. Long-term investment

Many people like the idea of an investment that can fund them in their retirement. Rental

housing is one sector that rarely decreases in price, making it a good potential option for long-

term investments.

4. Positive asset base

There are many benefits from having an investment property when deciding to take out another

loan or invest in something else. Showing your potential lender that you have the ability to

maintain a loan without defaulting will be highly regarded. The property can also be useful as

security when taking out another home, car or personal loan.

5. Safety aspect

Low-risk investments are always popular with untrained "mum and dad" investors. Property fits

these criteria with returns in some country areas reaching 10% per year. Housing in

metropolitan areas is constantly in demand with the high purchase price being offset by

substantial rental income and a yearly return of between 6% and 9%.

6. High leverage possibilities

Investment properties can be purchased at 80% LVR (loan to valuation ratio), or up to 90%

LVR with mortgage insurance. The LVR is calculated by taking the amount of the loan and

dividing it by the value of the property, as determined by the lender. This high leverage capacity

results in a higher return for the investor at a lower risk due to having less personal finances ties

up in the property (80% of the purchase price was provided by the mortgagee).

By choosing a property intelligently, investors can make this form of investment work for them.

However, as with all investments there are some disadvantages to be aware of.

Disadvantages of investment properties

1. Liquidity

It's true; you can sell the property if things go bad. However this can take many months unless

you're willing to accept a price less than the property is worth. Unlike the stock market, you will

have to wait for any financial rewards.

2. Vacancies

There will be times when mortgage payments will need to be covered out of your own pocket

due to your property being untenanted. This could just be a result of a gap between tenants or

because of maintenance issues.

3.Bad tenants

It's every investment property owner's worst nightmare: problem tenants. They can significantly

damage your property, refuse to pay rent and refuse to leave. Disputes can sometimes take

months to resolve.

4. Property oversupply

In recent years, inner-city builders have created a glut of high-rise apartment blocks, resulting in

fierce competition and many units being increasingly difficult to rent out.

5.Ongoing costs

In addition to the standard costs associated with a property, ongoing maintenance costs,

especially with an older building, can be substantial.

6. Putting all your eggs in one basket

If you have all your money tied up in property, overexposure to one particular type of investment

can be a dangerous thing. If the property market crashes you can stand to lose significantly.

7. Capital Gains Tax

It is imposed by the Federal Government on the appreciation of investments and payable on

disposal.

8. Other costs

Negative gearing may offer tax deductions each financial year, however ongoing payments to

cover the shortfall need to be budgeted for every month. Also, costs involved in purchasing and

disposing of the property can be substantial.

Factors Affecting Investment

1.Management Outlook

If the management is progressive and has an aggressively marketing and growth outlook, it will

encourage innovation and favor capital proposals which ensure better productivity on quality or

both.

2. Frequency of return

The frequency with which the individual gets return on his investment is also very important.

These have to be very carefully followed for efficient reinvestment and also for the use of the

returns for various needs of the individual.

3.Liquidity

The investor has to understand the needs to have money in hand for either an emergency or even

a sudden change in investment strategy to earn a high rate of return on the investment.

4. Inflation

Each of the persons investments have to beat the inflation rate present at that time for the return

on investment to be positive. If the inflation rate is more than the return on the investment of a

person, then the return is negative when inflation is taken into consideration. Any investment has

to beat the inflation to be efficient.

5. Rate of Return

The main reason for people investing money is to earn a high return on the investment. An

individual may have various investments. Some may be fixed investments and others may be

high risk equity investments.

6. Age and risk taking ability:

All investment and insurance needs changes based on stage of life. Younger are able to invest in

every field and able to taking risk but in old age every investor wants to invest in securities.

7. Investment horizon

The length of time a sum of money is expected to be invested. An individual's investment

horizon depends on when and how much money will be needed, and the horizon influences the

optimal investment strategy. In general, the shorter the investor's horizon, the less risk he/she

should be willing to accept.

Sources and acquisition of investment property

Real estate markets in most countries are not as organized or efficient as markets for other, more

liquid investment instruments. Individual properties are unique to themselves and not directly

interchangeable, which presents a major challenge to an investor seeking to evaluate prices and

investment opportunities. For this reason, locating properties in which to invest can involve

substantial work and competition among investors to purchase individual properties may be

highly variable depending on knowledge of availability. Information asymmetries are

commonplace in real estate markets. This increases transactional risk, but also provides many

opportunities for investors to obtain properties at bargain prices. Real estate investors typically

use a variety of appraisal techniques to determine the value of properties prior to purchase.

Typical sources of investment properties include:

• Market listings (through a Multiple Listing Service or Commercial Information Exchange)• Real estate agents• Wholesalers (such as bank real estate owned departments and public agencies)• Public auction (foreclosure sales, estate sales, etc.)• Private salesOnce an investment property has been located, and preliminary due diligence (investigation and

verification of the condition and status of the property) completed, the investor will have to

negotiate a sale price and sale terms with the seller, then execute a contract for sale. Most

investors employ real estate agents and real estate attorneys to assist with the acquisition process,

as it can be quite complex and improperly executed transactions can be very costly. During the

acquisition of a property, an investor will typically make a formal offer to buy including payment

of "earnest money" to the seller at the start of negotiation to reserve the investor's rights to

complete the transaction if price and terms can be satisfactorily negotiated. This earnest money

may or may not be refundable, and is considered to be a signal of the seriousness of the investor

to purchase. The terms of the offer will also usually include a number of contingencies which

allow the investor time to complete due diligence and obtain financing among other requirements

prior to final purchase. Within the contingency period, the investor usually has the right to

rescind the offer with no penalty and obtain a refund of earnest money deposits. Once

contingencies have expired, rescinding the offer will usually require forfeit of earnest money

deposits and may involve other penalties as well.

Sources of investment capital and leverage

Real estate assets are typically very expensive in comparison to other widely-available

investment instruments (such as stocks or bonds). Only rarely will real estate investors pay the

entire amount of the purchase price of a property in cash. Usually, a large portion of the purchase

price will be financed using some sort of financial instrument or debt, such as a mortgage loan

collateralized by the property itself. The amount of the purchase price financed by debt is

referred to as leverage. The amount financed by the investor's own capital, through cash or other

asset transfers, is referred to as equity. The ratio of leverage to total appraised value (often

referred to as "LTV", or loan to value for a conventional mortgage) is one mathematical measure

of the risk an investor is taking by using leverage to finance the purchase of a property. Investors

usually seek to decrease their equity requirements and increase their leverage, so that their return

on investment (ROI) is maximized. Lenders and other financial institutions usually have

minimum equity requirements for real estate investments they are being asked to finance,

typically on the order of 20% of appraised value. Investors seeking low equity requirements may

explore alternate financing arrangements as part of the purchase of a property (for instance, seller

financing, seller subordination, private equity sources, etc.)

Some real estate investment organizations, such as real estate investment trusts (REITs) and

some pension funds, have large enough capital reserves and investment strategies to allow 100%

equity in the properties they purchase. This minimizes the risk which comes from leverage, but

also limits potential ROI.

Risk management

Management and evaluation of risk is a major part of any successful real estate investment strategy. Risk occurs in

many different ways at every stage of the investment process. Below is a tabulation of some common risks and

typical risk mitigation strategies used by real estate investors

Risk Mitigation Strategy

Fraudulent sale Verify ownership, purchase title insurance

Adverse possession Obtain a boundary survey from a licensed

surveyor

Environmental contamination Obtain environmental survey, test for

contaminants (lead paint, asbestos, soil

contaminants, etc.)

Building component or system failure Complete full inspection prior to purchase,

perform regular maintenance

Building component or system failure

Overpayment at purchase

Obtain third-party appraisals and perform

discounted cash flow analysis as part of the

investment pro forma, do not rely on capital

appreciation as the primary source of gain for

the investment

Cash shortfall Maintain sufficient liquid or cash reserves to cover costs and debt service for a period of time,

Economic downturn

Purchase properties with distinctive features in desirable locations to stand out from competition, control cost structure, have tenants sign long term leases

Tenant destruction of propertyScreen potential tenants carefully, hire experienced property managers

Underestimation of risk

Carefully analyze financial performance using conservative assumptions, ensure that the property can generate enough cash flow to support itself

Market DeclinePurchase properties based on a conservative approach that the market might decline and rental income may also decrease

Fire, flood, personal injury Insurance policy on the property

Tax PlanningPlan purchases and sales around an exit strategy to save taxes.

Scope of Real Estate

In India, small real estate investors currently do not have as much scope as institutional

investors. They can hold multiple properties, but banks will generally not fund beyond a second

home loan.

That does not mean they cannot invest beyond that from their personal accruals. They certainly

have the option of investing in rent-generating assets, which can fetch very decent returns if they

have been purchased wisely.

Despite the present limitations for small investors, a property investment can give the buyer

protection against inflation. Like gold, real estate tends to retain its intrinsic value. However,

unlike with gold, it is possible to earn a regular income on it.

REVIEW OF THE LITERATURE

Sullivan and Ross (1999) the senior investment market is expanding as a large segment of

investors. Age is predictive of investment clients' attitudes and behavior. They concluded that

older clients tend to be frugal, regard investing in the stock market as an emotionally threatening

experience, and want firm recommendations from their financial advisors. Kaplan (1999)

indicated that most seniors want help and information in order to understand their investment

choices. Different asset allocations have been recommended across age groups (Stovall, 1997).

Likewise, Weil (1999) and Bakshi and Chen (1994) investigated life-cycle investments. Less risk

was recommended for older investors. Moreover, the literature seems to suggest that

conservative investing and guidance from the financial advisor are needed for older clients.

Greco (1991), Marsh (1998), and Schumell (1996) that the women's investment market is

increasing although men have traditionally controlled most of the wealth but women's financial

holdings are on the rise. Smith Barney noted that the percentage of women clients jumped from

28% in 1995 to 40% in 1997. Marsh, 1998; Schumell, 1996). Greco (1991) and West (1996)

reported that women are often unprepared to manage finances. They need education and want to

trust and learn from their investment advisor. Women may also be more cautious and trade less

than men (Barber &Odean, 2001). Thus, the women's market may require substantial time and

service from financial advisors and brokers.

Wang (1994) according to this study, sales representatives at brokerages take female investors

less seriously than men. The brokers studied tended to spend more time with men and

recommend higher risk and return investments to men. Jacobius (2001) reported that women are

less involved with their retirement accounts than are men. Conversely, Friedman (1996)

contended that baby boomers and women are gaining financial sophistication. Women are

developing the ability to distinguish between levels of investment service quality. Inadequate

broker attention and recommendations could lead to dissatisfaction on the part of knowledgeable

women clients, which in turn may cause brokers to lose clients from this market segment.

Shukla Ravi (2004), analyses the value of interim portfolio revision, an integral component of

active management of mutual funds by comparing the returns on actively managed mutual fund

portfolios with the returns the fund portfolios would have earned had there been no interim

revision. The results show that, on an average, excess returns from interim portfolio revision do

not cover the incremental trading costs, even over holding periods as long as 6 months. Across

mutual funds, we find evidence of a positive relationship between the excess returns and mutual

fund expense ratios suggesting that those managers who generate higher excess returns charge

higher fees from the stockholders.

Robert A. Olsen , 2001, O'Barr and Conley according to the author this article suggests that,

even with equivalent training, experience and information, investment managers make different

decisions based on identifiable cultural differences. This study focuses on professional men and

women investment managers who perceive and respond to risk differently. Author suggests

cultural factors may be responsible for this risk related gender effect. There is extensive evidence

that when faced with social and technological hazards, women are more risk averse than men.

Tahira K. Hira and Cazilia Loibl,2008, Gender Differences in Investment Behavior The

objectives of this chapter are to identify significant personal and environmental factors that

influence investment behavior and to specify the investment decision-making process,

particularly with respect to female investors. It is expected that the results presented here will

help readers to consider new approaches to investment education. Specifically, this chapter aims

to: (a) explore differences between men and women in a variety of financial behaviors,

investment decision-making process; (b) identify patterns of investment involvement and

learning preferences; and (c) determine socio-economic and behavior factors that explain gender

differences in specific investment behavior (portfolio diversification).

According to Ronald &lisa (1998) This paper examines the extent to which real estate returns are

driven by continental factors. This subject is relevant for determining the country allocation of

international real estate portfolios. If returns are driven by a continental factor, investors should

look for diversification opportunities outside their own continent. This paper finds strong

continental factors in North America and especially in the United States. For the Asia–Pacific

region, real estate returns are not driven by a continental factor. The results suggest that, for

European, North American and Asia—Pacific real estate portfolio managers, the Asia—Pacific

region provides attractive international diversification opportunities.

According to Robert A. Nagy and Robert W. Obenberger (1994) Previous studies of retail

investor behavior have examined motivation from economic perspectives or studied relationships

between economic and behavioral and demographic variables. Examination of the various utility-

maximization and behavioral variables underlying individual investor behavior provides a more

comprehensive understanding of the investment decision process. These variables can be

grouped into seven summary factors that capture major investor considerations. Data collected

from a questionnaire sent to a random sample of individual equity investors with substantial

holdings in Fortune 500 firms reveal that individuals base their stock purchase decisions on

classical wealth-maximization criteria combined with diverse other variables. They do not tend

to rely on a single integrated approach.

RATIONALE OF THE STUDY

There are various segments of investors according to age, occupation, annual income etc.

Different type of investors wants to invest indifferent sectors such as gold, insurance policies,

mutual funds, silver, , national saving certificate, fixed deposit, real estate etc. The real estate

investor has a bit more control over the risks to that cash flow also and property is considered a

fairly low-risk investment, and can be less volatile than shares. This research will help us to

understand investor’s perception toward the real estate investments. And the factors in which

attention should be focused to increase number of investors in real estate.

OBJECTIVE OF THE STUDY

To Study the factors Influencing Real estate Investment decisions.

RESEARCH METHODOLOGY

1. THE SAMPLE

The present research is to be conducted on a sample of 100 prospective customers.

Population:Our populations are the investors of real estate in Indore.

Sample Size:We have used a small number of items or a small portion of a population to draw

conclusions regarding the whole population. Our sample size is 100 respondents.

2. THE TOOLS FOR DATA COLLECTION

Collection of Data

As there are several research techniques, there are a number of data collection methods as

well.

Secondary Data- A secondary data is concerned with the analysis of already existing

data that is related to the research topic. We have gathered data from books, journals,

articles, through internet.

Primary Data- Primary data is that data which is collected directly from respondents

using data collection methods like survey interviews, questionnaires, direct observation,

or charts. We have collected primary data through questionnaires.

For the analysis of the data collected, various statistical tools as well as SPSSsoftware

was used as per the requirements.

LIMITATIONS

In spite of every care taken on the part of the researcher there are certain limitations which could

not be overcome:

• Sample size is limited to 100 customers and may not adequately represent the whole

market.

• The research is confined to a certain part of Indore.

The above are some of the aspects which posed real problems in the way of completion of the

research work but the majority of respondents were cooperative.

Data Analysis & Interpretation

Graph AnalysisThe present research is conducted on a sample of 100 of prospective customers. The brief diagrammatic descriptions of each of respondents are as follow:-

Q1. Are you interested to invest money in Real Estate?

32%

38%

22%8%

Strongly AgreeAgreeNeutral DisagreeStrongly Disagree

After study we found that 0% investors are strongly disagree, 8%people are disagree, 22%people are neutral, 38%people are agree and 32%people are strongly agree with the statement.

Q2. Investment based on profit percent?

30%

49%

15%5% 1%



Q3. Real Estate is better option for investors?

22%

35%

32%

8% 3%



Q4. Real Estate investment giving high return.

32%

32%

24%

12%



Q5. Real Estate investment is safe investment?

21%

40%

23%

15%1%



Q6.Location influences the investor’s perception towards the investment?

39%

30%

23%

4% 4%



Q7. Price play important role in Real Estate investment?

30%

45%

16%7%

2%



Q8. Economy growth affects the Real Estate investment?

30%

26%

30%

12%2%



Q9. Volatile market affected investment decision in Real Estate.

20%

23%

26%

20%

11%



Q10. Real Estate is low risk investment?

18%

38%

24%

19%1%



Q11. Interest rate have major impact on the Real Estate Investment?

20%

46%

23%

11%



Q12. Government policies affect the Real Estate investment?

23%

34%17%

18%8%



Q13. Tax benefit is a very important aspect when a person invests his money.

24%

45%

14%

10% 7%



Factor Analysis

Total Variance Explained

Component

Initial Eigen values Extraction Sums of Squared Loadings

Total% of

Variance

Cumulative

%Total

% of

Variance

Cumulative

%

1 2.625 20.195 20.195 2.625 20.195 20.195

2 1.888 14.526 34.721 1.888 14.526 34.721

3 1.550 11.927 46.648 1.550 11.927 46.648

4 1.248 9.601 56.249 1.248 9.601 56.249

5 1.031 7.931 64.181 1.031 7.931 64.181

6 .970 7.463 71.644

7 .842 6.475 78.119

8 .657 5.056 83.176

9 .593 4.558 87.734

10 .470 3.614 91.348

11 .425 3.266 94.614

12 .356 2.738 97.352

13 .344 2.648 100.000

Rotated Component Matrixa

Component

1 2 3 4 5

VAR00012 .805 .207 .031 .048 -.042

VAR00009 .754 -.039 .020 -.016 .228

VAR00008 .725 -.171 -.041 .268 -.086

VAR00007 .570 .112 .149 -.146 .159

VAR00013 .155 .809 -.146 -.002 -.127

VAR00002 -.061 .683 -.066 .135 .489

VAR00006 -.248 .514 .483 -.294 .156

VAR00011 .242 .435 .391 .213 -.121

VAR00005 -.014 .084 .719 .326 .176

VAR00010 .184 -.343 .715 -.053 -.038

VAR00001 -.076 .043 .156 .809 -.104

VAR00003 .148 .035 .010 .688 .314

VAR00004 .195 -.016 .111 .074 .852

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization a. Rotation converged in 8 iterations.

Variable Number Variable Name

VAR00001 Interest

VAR00002 Profit Percent

VAR00003 Better Option

VAR00004 High Return

VAR00005 Safe Investment

VAR00006 Location

VAR00007 Price

VAR00008 Economic Growth

VAR00009 Volatile Market

VAR00010 Low Risk

VAR00011 Interest Rate

VAR00012 Government Policies

VAR00013 Tax Benefit

Grouping of Variables:

Groups Groups Variables Total load of GroupGroup 1 Variable 12 + Variable 9 + Variable 3 +

Variable 70.356+0.593+0.657+0.842=2.448

Group 2 Variable 13 + Variable 2 + Variable 6 + Variable 11

0.344+1.888+0.970+0.425=3.627

Group 3 Variable 1+ Variable10 1.031+0.470=1.501

Group 4 Variable 5 + Variable 8 2.625+1.550=4.175

Group 5 Variable 4 1.248

Analysis:-On the above basis it can be concluded that all the variables of group 1, that is Government Policies, Volatile Market, better option , Price, have load of 2.448, and group 2 that is Tax Benefit, Profit Percent, Location and Interest Rate have load of 3.627 and group 3 that is interest, Low Risk have load of 1.501 and group 5 that is High Return have load of 1.248. But variables of group 4 that is economic growth and safe investment have been adopted more significantly with maximum load of 4.175.So we can understand from the result that variables like and economic growth and safe investment is more important while taking decision regarding real estate investment.

CONCLUSION

It can be concluded from the study that factors which can influence the decision regarding real

estate investment are divided into five different groups and first group include four factors which

highly affect the real estate investment decision. These are better option, Price, Volatile Market,

and Government Polices. Most of the investors depend upon it. Second group also have four

factors which affected the investor’s perception less than first group. These factors are Tax

Benefit, Interest Rate, Location and Profit Percent. The third group is low affective then the

second group. This group have only two factors. These are Low Risk and interest.Only two

factors are present in fourth group that is safe investment and economic growth. Data analysis

result shows that these factors are moreaffective in Real Estate investment. Group five have only

single factor High Return. This has negligible affect because most of the investors know that it is

possible only in long term investment. All the factors affects investment decision but economic

growth and safe investment factor are more affective towards the real estate investment decision.

For investors, a property investment can give the protection against inflation.From the research

study It can beconcludedthat Real estate is a great investment option. It can generate an ongoing

income source. It can also rise in value overtime and prove a good investment in the cash value

of the home or land that you buy. However you need to be sure that you are ready to begin

investing in real estate.

BIBLIOGRAPHY

Books Referred:Boo

Dr. Jai Narain Sharma, The discipline and its Dimension, Deep & Deep Publications Pvt.

Ltd., New Delhi.

R. Panneersevam, Prentice-Hall of India Pvt. Ltd, New Delhi, 2008.

Dr. S. Shajahan, Research Methods for Management, 2nd Edition, 2004.

Websites:

www.valueresearchonline.com

http://www.ebook3000.com/Investment-Analysis-and-Portfolio-Management---

Solutions-Manual_html

http://www.wepapers.com/Papers/Investment_Analysis_and__Portfolio_Management

http://www.experiment-resources.com/research-methodology.html

http://www.saching.com/Article/Factors-that-can-affect-investment-decisions-for-

maximum-return-on-investment

Search Engines:

www.yahoo.com

www.google.co.in

www.rediff.com

Appendix

http://www.saching.com/Article/Factors-that-can-affect-investment-decisions-for-maximum-return-on-investment

http://www.saching.com/Article/Factors-that-can-affect-investment-decisions-for-maximum-return-on-investment

QUESTIONNAIRE

We are approaching you with this questionnaire to know your Perception towards the Real Estate investment”. The information provided by you would be kept confidential and will be used for academic purpose only. Kindly tick your choice against each statement.

Name : ___________________________________________________________Gender : __________________________________________________________Age : ____________________________________________________________Qualification : _____________________________________________________Income Status : ____________________________________________________

S. NO.

Statements StronglyAgree

(5)

Agree

(4)

Not Sure(3)

Disagree

(2)

Strongly Disagree

(1)1. Are you interested to invest money

in Real Estate2. Investment based on profit percent.

3. Real Estate is better option for investors.

4. Real Estate investment giving high return

5. Real Estate investment is safe investment

6. Location influence the investors perception towards investment

7. Price play important role in Real Estate investment

8. Economy growth affect the Real Estate investment.

9. Volatile market affected investment decision in Real Estate.

10. Real Estate is low risk investment

11. Interest rate have major impact on the Real Estate investment

12. Government policies have a important affect to invest in Real Estate.

13. Tax benefit is a very important aspect when a person investshis money.

.

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