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ANSAL PROPERTIES & INFRASTRUCTURE LTD.
Summer Training Report
__________________________
Project Title
REAL ESTATE INVESTMENT TRENDS IN
NORTHERN INDIA
___________________________________________
BY:
BHARTI GUPTAPGDBM-IIISECTION-A
ROLL NO.11NDIM
Acknowledgement
The project title “REAL ESTATE INVESTMENT TRENDS IN NORTHERN INDIA”
has been conducted by me during 14th may and 9th July 2007 at Ansal
Properties & Infrastructure Ltd. I have completed this project, based on the
primary research under the guidance of Mr. Alok Agnihotri (General Manager,
Marketing) and Mr. Vipin Sheoran (Assistant Manager, Marketing).
I owe enormous intellectual debt towards my guides Mr. Alok Agnihotri
(General Manager, Marketing) and Mr. Vipin Sheoran (Assistant Manager,
Marketing), who have augmented my knowledge in the field of Marketing.
They have helped me learn about the process and giving me valuable insight
to understand how I can suggest new and innovative ways. They have
provided me a true learning platform, and have been the perfect mentors, in
giving me the necessary guidance regarding my project.
I would like to thank them in enriching my thoughts in this field from
different perspectives.
I would like to thank all the respondents without whose co-operation my
project would not have been complete.
I feel indebted to all those persons and organizations that have provided
help directly or indirectly in successful completion of this study.
At the end, ANSAL API, was a great experience to work in, where I feel, the
dedication of its employees is one of the vital factors of its success.
Executive Summary
Real estate is a 12$ billion (revenue) industry in India. There has been a
rapid growth in the industry in the past few years. In the residential sector, a
growing middle class is enjoying rising income levels. Combined with smaller
household sizes, this demographic change has boosted demand for more
modern housing and home loans. Meanwhile, increasing consumer spending
power has encouraged growth in organized in organized retailing – both
feeding off and contributing to the spear of ‘mall culture’ and the popularity
of other large-scale retail property developments.
In the commercial property segment, strong growth in the services sector –
particularly in the IT and ITES sectors – and corporates’ growing scale of
operations have led to greater demand for commercial space, including
modern offices, warehouses and lodging space.
Many Developers have substantial plans to increase both their size and
geographical spread. They are also expanding into different kinds of
properties, which can boost the firms’ franchise values and reduce
concentration risks. However, managing and financing such activities can be
a challenge, and puts a premium on financial flexibility, capital access and
operational infrastructure.
The project assigned to me has an objective to find and analyze the current
scenario of Real Estate, covering the preferences of current as well as
prospective customers. The major part of the project also analyses the size
of investment in various states and mind set of the customers regarding this
as well as the perceptions of customers towards major leading Real Estate
players.
The study was carried out with a methodology, in order to collect as much
primary data as possible. Data was collected by getting the questionnaires
filled from Real Estate Agents across Delhi and NCR.
Areas covered in Delhi: North, East, West, South and Central Delhi.
Areas covered in NCR: Gurgaon, Indirapuram, Vaishali
Once the data was collected, this data was analyzed using Microsoft Excel as
a tool and various conclusions were drawn. This analysis is depicted in the
form of various charts and graphs. Along with the questionnaires, Agents’
viewpoints on various issues were also taken in order to get a more insight
into the Real Estate.
Following is the analyses done and conclusions drawn:
Plots, Apartments and Rented Offices are the most preferred
investment options in Real Estate people prefer for investment.
The states that people prefer for investment and anticipate a good
return in those states are:
NCR
DELHI
PUNJAB
Delhi, seen as a market of End-Users, rather than investors.
People from all over are interested in investing in NCR, including a
good amount of population of NRIs.
In other states, a declining trend is seen; NCR is into a stagnant state,
where there are least chances of the market going worse in the near
future.
Real Estate Scenario In Various States
RAJASTHAN:
General size of investment in Rajasthan
92% of the people responded that the current size of investment in
Rajasthan is
below Rs.25 lac.
Most Preferred Developer
Omaxe, Ansal API
Preferred Cities
Jaipur, Bhiwadi
PUNJAB:
General size of investment in Punjab
95% of the people responded that the current size of investment in Punjab is
below Rs.50 lac.
Most Preferred Developer
Ansal API, Emaar MGF
Preferred Cities
Mohali, Amritsar
U.P.
General size of investment in U.P.
92% of the people responded that the current size of investment in U.P. is
below Rs.25 lac.
Most Preferred Developer
Parsvnath, Omaxe
Preferred Cities
Lucknow, Agra
HARYANA:
General size of investment in Haryana
94% of the people responded that the current size of investment in Haryana
is below Rs.50 lac.
Most Preferred Developer
Ansal API, Omaxe
Preferred Cities
Sonepat, Panipat
DELHI:
General size of investment in Delhi
85% of the people responded that the current size of investment in Delhi is
above Rs.50 lac.
Most Preferred Developer
DLF, Unitech
NCR:
General size of investment in NCR
98% of the people responded that the current size of investment in NCR is
above Rs. 25 lac.
Most Preferred Developer
Emaar MGF, DLF
Preferred Cities
Gurgaon, Noida
DLF, most preferred developer in NCR, fact remains, DLF, a company
for High-End investors, rather than small investors.
Emaar MGF, one of the biggest developer with huge amount of capital
in its hands, since none of its projects are complete as of now, real
estate agents are still not clear with its position amongst the investors.
Emaar MGF is likely to come big in the near future.
Parsvnath in Delhi has created a place for itself by setting a trend of
Metro Malls.
BRAND NAME and PREVIOUS TRACK RECORD of the company that
counts most for the prospective clients to invest into a particular
project. This is for a reason that projects in Real Estate cannot be
accurately forecasted for success or failure. So, counting on the Brand
name and previous track record is the only option prospects are left
with.
People nowadays go for Short-Term investment plans. This is mainly
because, Real Estate is not at a boom, so people, who are interested in
investing want to invest and realize as soon as possible.
74% respondents: Own funds that people use for investing into a
particular project.
94% respondents: Nearby housing facility does influence investors to
invest in commercial properties in remote areas.
92% respondents: future govt. plans, somehow influence the
investment decisions in these areas.
Investments Options preferred other than Real Estate:
42% respondents: Equity & Commodities
37% respondents: Mutual Funds
12% respondents: Insurance
9% respondents: Fixed Deposits
CURRENT TREND OF REAL ESTATE
UPWARD: North Delhi(Pitampura, Rohini, Netaji Subhash Place
and Adjoining Areas, Dwarka, South Delhi(End-Users), East Delhi.
DOWNWARD: Gurgaon(Stagnant), Rajasthan, U.P., Indirapuram, Gaziabad
UPWARD situation will last for: 1-2 yrs.
DOWNWARD situation will last for: 1-2 yrs.
TABLE OF CONTENTS
1. Company Profile
2. Product Portfolio
3. Introduction to Real Estate
4. Real Estate as an Investment Option
5. Research Methodology
6. Findings & Analysis
7. Conclusions & Suggestions
Bibliography
Questionnaire
COMPANY PROFILE
VISION OF ANSAL API
To fulfill growing aspirations of our customers by:
Building world class real estate solutions
Redefining lifestyle standards.
IDENTITY
The color Red stands for RAJA/REGAL. It stands for passion, heat,
energy, dynamism & purity. It exhibits group’s rich heritage.
Black occurs when an object absorbs all the other colors. Black is
significant to the group as it represents the proposed amalgamation
of all group companies into “Ansal API”, thereby creating the new
and vibrant Sushil Ansal Group.
The Slogan, Building Lifestyle since 1967, encapsulates the Group’s heritage
and vision in creating a better life for Indians in various sphere like- homes,
offices, places of entertainment, hotels, shopping malls & educational
institutions.
ANSAL API was established as a result of a dream, shared by its visionary
founders. A dream that was to, radically improve the lifestyle standards of
the citizens by building world class real estate solutions.
After four decades of spectacular growth Ansal API is at a stage where the
company has acquired immense experience, consolidated and established
assets- physical and intellectual and at the same time retained youthful
energy & zeal. With foundations entrenched in the solid bedrock of technical
expertise and financial stability its pinnacles are rising new heights with
foresight and innovations for future requirements of resurgent India.
Ansal API as an organization can be best envisaged as a creator of man
made social infrastructure, where modern life blooms, in collaboration with
the environment. The ascent of Ansal API to the top of the Real Estate acme
is a direct product of Mr.Sushil Ansal's foresight and his dynamic leadership.
Ansal API, the corporate manned by professionals at all levels with its
strong base and lineage is now in a state of renaissance; all the companies
of Sushil Ansal Group will now be under one banner i.e. the Ansal API.
The new "Ansal API" identity, is the first communicator of this phase of
resurgence, excellence and modernity. The rectangular shape signifies
solidity, cohesiveness and strength, the red colour stands for passion, heat,
energy, dynamism & purity and the black colour signifies the proposed
amalgamation of Ansal Township and Projects Limited into Ansal
Properties and Infrastructure Limited. The slogan, ' Building lifestyles
since 1967', encapsulates their heritage and vision in creating a better life
for Indians in various spheres like - homes, offices, places of entertainment,
hotels, shopping malls and educational institutions.
Ansal API is focusing on ushering in new lifestyle ventures in cities like-
Greater Noida, Gaziabadh. Meerut, Agra, Lucknow, Batindha, Mohali,
Amritsar, Ludhiana, Jalandhar, Jaipur, Jodhpur, Ajmer, Sonepat, Panipat,
Karmal, Kurukshetra, Faridabad, Gurgaon to name a few.
It is said that actions speak louder than words and nothing highlights this
adage better than Ansal API's effort to give something back to the society
of which they are a part. Ansal API believes that today's children are
tomorrow's leaders and in order to hone their young minds, Ansal API has
forayed into the education sector with schools like the Chiranjiv Bharati
School at Palam Vihar and Sushant Lok, premier institutions like the Ansal
Institute of Technology and the Sushant Schools of Art and Architecture.
Ansal API in its endeavour to fulfill its duties to payback in form of green
cover for the society have created manmade verdant ambiance at projects
like the Aravali Retreat, Pushpanjali Farms, Satbari Farms.
Ansal API plans to create an ambiance of peace and tranquility for the
people who have served their duties and are now in their dusk of life to relax
and enjoy their retirement by building old age homes.
Touching every facet of modern lifestyle with its signature of excellence,
Ansal API has changed the skyline of India with its versatile portfolio of
residential complexes, educational institutions, hotel and hospitality
avenues, shopping malls, farmlands and IT parks amongst others. With its
deep-rooted foundation of ethics and values, Ansal API continues to
conquer new horizons, thus pioneering and identifying new vistas of growth
for the real estate sector.
PRODUCT PORTFOLIO
1. COMMERCIAL
2. TOWNSHIP & GROUP HOUSING
3. RETAIL/MALLS
4. HOSPITALITY & ENTERTAINMENT
5. IT PARKS/INDUSTRIAL PARKS/SEZs
6. EDUCATION
7. FACILITIES MANAGEMENT
INTRODUCTION TO REAL ESTATE
Real estate is a 12$ billion (revenue) industry in India. There has been a
rapid growth in the industry in the past few years.100% FDI is allowed in real
estate development subject to minimum scale norms of either: 25 acres in
case of serviced plots or integrated townships; or 50,000 sq. mtrs. of built-up
area for construction development projects.
Commercial and office complexes mushrooming in major Indian metros
present a minefield of opportunities. Over 20 million new housing units
required in the next 5 years. The real estate market is projected to grow to
$50 billion by 2010 CAGR of over 30% p.a. is expected over the next five
years. Increasing demand for commercial and office space especially from
the rapidly growing Retail, IT and Hospitality sectors and the Urban
Infrastructure Renewal mission is expected to give a boost to the sector.
Other factors include:
$11.5 billion earmarked over the next five years for 60 cities.
Investment opportunities exist in almost every segment business ;
About 20 million new units expected to be built in five years in office
space for IT and five-fold increase in office space requirement over the
next 3 years.
Commercial space for organized retailing: 200 million sq. ft. by 2010.
Hotels and hospitality: Over 50,000 new rooms in the next 5 years;
Investment opportunity of over $50 billion in the next five years.
Various Real Investment Options are:
Real Estate Investment Options
Agriculture Land
Residential/Plotted development
Apartments/Villas
Commercial Spaces
Farm Houses
Real Estate Mutual Funds
AGRICULTURE LAND
Agriculture Land in India is the most protected area by the State and Central
Govt. Identification of Agricultural Land requires a bit of analysis about the
rate and assessment of future development in the nearby area. Due to fast
growing urbanization and development of infrastructure the price of
agriculture land zooms quickly. Agricultural land can be given on contract to
cultivators with sharing of crop model, to make small but regular tax-free
earnings. Rural agriculture land is completely free from capital gains tax and
income from lease out or sale of crop is also exempt as per the provision of
IT Act, 1961.
RESIDENTIAL PLOTTED DEVELOPMENT
Most state governments have loosened their fists and have implemented
land reforms that make the conversion of agricultural land into residential
land much easier. The process of township development takes a period of
about 5 to 10 years. Initially, the prices of plotted development are quite low
which rapidly increases with the pace of development and with the rise in
inflation factor.
APARTMENTS/VILLAS
As per the assessment made in the Indian Habitat Policy 1998, the demand
for houses in urban area is to the tune of 22 million houses. The gap in
demand and supply in housing stock has thrown big investment
opportunities. Booking at the launching stage and getting the exit at the
completion stage ca offer shining returns on investments. In this process the
stamp duty and other taxes can be legally avoided.
COMMERCIAL/RETAIL SPACES
The retail boom in India has fueled huge demand for commercial/shopping
spaces. Many MNC’s and big corporate retailers prefer to take prime
commercial properties on long-term lease basis. The option offers regular
returns besides appreciation in capital value, taking both the returns
together gives handsome return and a wonderful combination of regular and
a wonderful combination of regular and long-term returns.
FARM HOUSES/SECOND HOMES
Many developers are offering lifestyle with smart returns through farm
houses/second homes. The offer comprises of sale of farm houses at
affordable rates with professional property management giving lifestyle and
capital appreciation together.
REAL ESTATE MUTUAL FUNDS
Securities Exchange Board of India (SEBI) has recently allowed the launch of
mutual funds which can invest in physical property. Many corporates such as
HDFC and IDBI are in the process of launching real estate mutual funds.
FACTS AND FIGURES
In India Construction is the second largest economic activity after
Agriculture. Investment in construction accounts for 11 percent of India’s
Gross Domestic Product (GDP) and nearly 50 percent of Gross Fixed Capital
Formation (GFCF). Construction accounts for nearly 65 percent of total
investment in infrastructure and is expected to be the biggest beneficiary of
the surge in Infrastructure Investment over the next five years. According to
the Economic Survey, India has the potential to absorb US$ 150 Billion of
Foreign Direct Investment in the next five years in the Infrastructure sector.
The sector is expected to grow at a CAGR of 15 percent over the next few
years.
The sustained growth and positive outlook for the future has increased focus
on Infrastructure development. Opening of the Infrastructure development to
private players, FDI and increased investment commitments from the govt.
has thrown a host of opportunities for companies in the infrastructure
development sector, innovative projects like the metro Rail and Sky Bus,
along with the proposed SEZ projects have provided additional opportunities
for the SME’s in the sector. While majority of the infrastructure development
projects are given out by the government Agencies, the private sector is also
actively participating through development projects like SEZs and
commercial construction.
Along with the government bodies and funding agency, various
infrastructure development companies, machinery and materials suppliers,
ancillary suppliers and allied support industries would play an important role
in meeting in demand the for infrastructure development.
The Indian Infrastructure Sector is currently going through a vast
transformation. The Government’s decision to throw open the construction of
roads, Bridges Airports and ports to the private sector and allowing 100
percent Foreign Investment in real Estate Projects has provided a boost to
the construction Industry as well as generate demand for construction
machinery. Housing and Infrastructure Projects like Roads, Bridges and Ports
are expected to grow about 20 percent per annum for the next 15 years.
The new and expanding housing and infrastructure construction ventures
have generated substantial demand for construction machinery
manufacturing and servicing, including erection, commissioning and
maintenance. Several multi national firms are already present in the country.
REAL ESTATE AS AN INVESTMENT
OPTION
Is Real Estate A Good Investment Option?
Are you fatigued by the diminishing income and risk-factors associated with
main-stream investment avenues – fixed deposits, stocks, mutual funds,
etc.? Think `real estate': a lesser explored investment option.
Why real estate investment stands out?
• Quantum of investment required is high
• Investment horizon is long
• Dual returns are available in form of rental income and capital
Appreciation
What are the promising avenues of real estate
investment?
• Offices
• Shopping malls
• Retail outlets
• Industrial warehouses
What is the current Indian real estate scenario?
• Periodic returns on commercial property ranges from 10 to 13 percent
Per year
• The Indian real estate industry has a growth rate of 35 to 40 percent
Annually
• The demand for real estate is picking up as the IT industries set up their
Base in India or look for expansion in these cities.
• Top financial companies have recognized the advantage of India as a
Business process outsourcing destination and had started expanding
their business.
• Companies are increasingly switching over to renting office premises.
This offers flexibility in operations and avoids locking capital.
• Companies operating in automobile design, auto components
Manufacturing, computer aided design and drawing are also entering
India in search of acquisition of space preferably as ready-to-occupy
premises.
• Real estate developers are offering premises on long lease to the
companies.
• Individual investors are benefiting from the developing commercial real
Estate market in India by investing in pre-leased properties.
• Norris / Pies are investing in real estate as the rental income and capital
Used to purchase the property is easily reparable .
What are funding sources supporting investment in real
estate?
• Banks
• Financial institutions
• High net worth individuals
• Real Estate Mutual Funds
What are the procedures to be followed before investing
in real estate?
• Find out credibility of the developer.
• Check out the attractiveness of property to tenants/ buyers
• Weigh future value potential
• Get to know the chances of project completion (in case it’s under
Construction)
• Investigate the quality of project
• Explore the availability of financing option
• Take advice from a reputed and a credible real estate consultant.
• Consult a reputed financial institution
Selecting a right option to invest hard earned-money is always a matter of
big confusion. The decision making process requires in depth analysis of
available options which suits the needs of a particular person or
organization. A complete analysis and overview of investment decision
making with innovative solutions are given hereafter.
INVESTMENT NEEDS
The investment needs depend on the requirements of a particular person
about the liquidity of funds and his capacity and temperament bear risk.
The tax implication on return of investment to the investor is always a
crucial matter for choosing the right option.
FACTORS AFFECTING INVESTMENT DECISION
MAKING
After Tax ROI
Safety
Liquidity
TaxImplication
ConvenienceTo Invest
INVESTMENT OPTIONS:
The following are the major options available to the investors:
PO/Bank/Govt.SecuritiesPO/Bank/Govt.Securities
Bonds/DebenturesBonds/Debentures
Bullion (Gold/Silver)Bullion (Gold/Silver)
Shares/Mutual FundsShares/Mutual Funds
Real EstateReal Estate
All the options have different features with respect to various factors
having implication on investment decision making. The following Chart
depicts the analysis of features of various options at a glance:
*based on prevailing market rates
**based on last 25 years track record
Features→
↓Options
Liquidity
Options
Safety Convenien
ce
Tax
Benefits
Approx.
ROI
P.O/Bank/Got.
Securities
Reasonab
le
Good Good Good 6-8%*
Bonds/
Debentures
Reasonab
le
Reasonab
le
Reasonabl
e
NIL 8-10%*
Shares/Mutual
Funds
Good High Risk Reasonabl
e
Reasonab
le
12-15*
{With
high level
of
uncertaint
y}
Bullion[Gold and
Silver]
Good Good Good Reasonab
le
5-7%**
Real Estate Reasonab
le
Reasonab
le
Not so
Convenien
t
Good 14-24%
{High
Returns}
Comparative Features of Investment Options
GRAPH ON RETURN ON DIFFERENT INVESTMENT
OPTIONS
REAL ESTATE AS AN INVESTMENT TOOL WITH
SPECIFIC REFERENCE TO RAJASTHAN
Population (2001 Census)
– 5,65,07,188
• Urban population
– 23.38%
• Literacy rate - 61.03%
– Male - 75.7%
– Female - 43.9%
• Major industries
– Mineral based
– Agro based
– Heritage based
Rajasthan at a glance
Abundant availability of minerals.
Open & responsive Government
Proximity to Gurgaon & Delhi, which are now getting saturated.
Relatively better law & order scenario as compared to many other
States in North India.
Very good living conditions –
– Good civic infrastructure –
– Residential, Educational and Medical facilities.
– Road, Power and Water.
– Avenues for re-creation and tourism.
Recent emphasis on technical manpower will yield results in near
future.
Easy access – International Airport (Direct flights to
Thailand,Singapore, Dubai).
Continuously improving telecommunication infrastructure as a result of
Free Right of Way facility.
Strong focus now on Knowledge Sector at the highest level in State
Government.
Jaipur: A Magnificent Metropolis in Making
Salient Features of Jaipur Master Development Plan-2011:
• Master Development Plan 2011 has been prepared not only to meet the
future
requirement of the city and the region but also to tackle the day to day
problems of the city.
• Jaipur is a fast developing city. By 2011 population of Jaipur is expected to
reach about 42 Lacs. The plan has been prepared to accommodate about 35
Lacs in the city & the remaining seven lacs in the satellite towns of Chomu,
Bagru, Bassi, Achrol, Shivdaspura, Goner, Balawala, Jamwaramgarh, Kanota
and Kakus etc.
• Jaipur is a tourist city. The plan provides for conservation and preservation
of
its architectural heritage and to augment tourist facilities.
• The land use plan along with the land use zoning code facilitates easy
implementation of the master plan proposals.
Mega Projects in Pipeline :
• Mahendra City (S.E.Z) on Ajmer Road…3000 Acres
• World Trade Park
• Film City
• IT City
• Knowledge Corridor
• Ring Road
• Gems and Jewelry Market
• Rope-Way
• Medi-Tech City
Proposed Projects:
• International Convention Centre
• Sports City
• Green field Airport
• International Golf Course
DYNAMICS OF REAL ESTATE PRICING
The Interest rate factor has a direct relationship with the pricing of the
immovable property. Future properties are discounted by the market at a
particular rate of discounting factor to calculate the present market value,
when the discounting factor reduces by few points, the prices of immovable
property increases many fold as the present value of the future property
gets increased.
The following chart shows the present value of Rs.1000 after 1 to 15 years.
The chart clearly shows that present value of Rs.1000 after 15 years
discounted @ 20% is Rs. 65, while if the same is discounted @ 10% the
present value comes to Rs. 239, it is amazing to note that 50% (from 20% to
10%) curtailment in interest rates increases the present value from Rs. 65 to
Rs. 239 reflecting a jump of 267%. This dynamic works in future property
pricing.
CASE STUDY TO UNDERSTAND THE DYNAMICS OF REAL
ESTATE PRICING
Year 2000
Belief: Agriculture Land in Shivdaspura is a future property of 2015 and at
time the price level shall be Rs. 50.00 lakh per bigha.
Discounting factor: 20%
Present Value (PV) in the year 2000, of Rs. 50.00 lacs in years 2015 was
50.00 lacs×0.065* = 3.25 lacs ** approx
*
*Discounting factor of Rs.1 after 15 years @20% p.a.
%/ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Nyrs. 10% 909 826 751 683 621 564 513 467 424 386 350 319 290 263 23920% 833 694 579 482 402 335 279 233 194 162 135 112 093 078 065
**The same was the approx. then prevailing price.
Year 2006
Belief: Agriculture Land in Shivdaspura is a future property of 2015 and at
time the price level shall be Rs. 50.00 lack per bigha.
Discounting factor: 10%
Present Value (PV) in the year 2006, of Rs. 50.00 laces in years 2015 was
50.00 lacs×0.424* = 21.20 laces ** approx
*Discounting factor of Rs.1 after 9 years @ 10% p.a.
**The present prevailing price is more than that which is pushed by other
driving forces.
INDIA: REAL ESTATE SCENARIO
GROWTH ACROSS GEOGRAPHIES
India’s Property Sector: Credit Strengths
In the residential sector, a growing middle class is enjoying rising income
levels. Combined with smaller household sizes, this demographic change has
boosted demand for more modern housing and home loans. Meanwhile,
increasing consumer spending power has encouraged growth in organized in
organized retailing – both feeding off and contributing to the spear of ‘mall
culture’ and the popularity of other large-scale retail property developments.
In the commercial property segment, strong growth in the services sector –
particularly in the IT and ITES sectors – and corporates’ growing scale of
operations have led to greater demand for commercial space, including
modern offices, warehouses and lodging space.
Many Developers have substantial plans to increase both their size and
geographical spread. They are also expanding into different kinds of
properties, which can boost the firms’ franchise values and reduce
concentration risks. However, managing and financing such activities can be
a challenge, and puts a premium on financial flexibility, capital access and
operational infrastructure.
The property industry is also wrestling with oversupply in certain areas, such
as in India’s commercial property sector, which may lead to rent reductions
and value drops. Meanwhile, property firms must also cope with a reduction
in customer advances on new construction, increasing land values (making
acquisition and development deals tougher), rising interest rates since 2005,
and increased difficulty in arranging capital. The latter is exacerbated by
rising interest rates and property prices, which have encouraged banks to
become more selective in granting loans as they try to preserve asset
quality.
Moreover, the Reserve Bank of India (RBI) has increased risk weighting for
real estate exposure, which has served to curtail direct lending to this sector.
The property business in India also faces political risks. These risks may
come in various forms, but include the stalling of decisions over acquisitions
or planning permission during elections, while some approvals have even
been rescinded following elections and changes to state governments.
Property financing remains largely conducted through conventional
mortgages, with the volume of more modern, transparent and liquid
products-such as shares in public property firms and CMBS-still negligible.
This is partly due to high registration charges and transaction costs and
structural impediments in the securitization legal framework.
Furthermore, mutual funds lack the appetite of long-tenure deals, and mostly
invest in high quality debt, while pension funds and insurance companies
have yet to invest in structured paper either.
RESEARCH METHODOLOGY
Project Title:
Real Estate Investment trends in Northern India
Objectives of the Study
1. To identify the scope of investment in various states, especially outside
NCR & Delhi.
2. To identify the current trend of Real Estate, in areas across Delhi, NCR,
Rajasthan, Punjab, U.P., Mariana.
3. To identify the reasons of investment in various states.
4. To identify the reasons of people for not investing in various states.
5. To identify the preferences of customers.
6. To evaluate the effectiveness of major real estate players.
Type of Data
The data collected is Primary data and Secondary data which is both
quantitative and qualitative data, which was further analyzed in order to
draw conclusions and suggestions.
Data Collection
Data was collected by visiting Real Estate Agents across Delhi and NCR and
getting the questionnaires filled through them. Five areas of Delhi were
covered, being, North, East, West, South and Central Delhi. Areas covered in
the NCR region were Gurgaon, Indripuram, Vaishali, Vasundhra.
Limitations of the study
1. Biasness of the real estate agents towards a particular company.
2. Lack of knowledge of the agents about areas outside their scope.
3. Agents catering to a specific kind of market, tend to favor those
options.
4. Some generalizations by the targeted agents.
FINDINGS & ANALYSIS
CONCLUSIONS & SUGGESTIONS
What Cities Need To Do In Order To Attract
Investments?
• BESIDES FINANCIAL POLICY FRAMEWORK – MANAGEMENT OF LAND IS
A PRECURSOR OF GROWTH FOR ANY REGION
• ITS CONTRIBUTION IS MANIFOLD IN ALL SYNERGISTIC AREAS OF
GROWTH
• Give a different identity to each city
• Have INTL. level Planning and infrastructure – physical and social
• Antiquated Land Policies need to change
• Effective implementation
• Conducive policies
• Get an Image Makeover
13. SWOT ANALYSIS OF RELIANCE ENERGY LIMITED
STRENGTHS
1. Long experience in creation of world class assets at competitive schedules and costs
2. Experience in setting up of power projects and distribution of electricity to over 5 million
consumers
3. Strong project management and execution expertise
4. REL is ranked amongst India’s top 25 listed Private Co. in terms of financial parameters
including assets, sales, and profit and market capitalization.
5. Most valuable power company with a market capitalization of over Rs 10,000 crore
6. Group contributes nearly 16,000 million units of power to over 25 million consumers in
Mumbai, Delhi, Orissa and Goa across an area covering 1, 24,300 Sq. Kms.
7. Brand Equity and Brand name.
8. Governmental Supports through grants.
9. Internet usage drives down distribution costs.
WEAKNESSES
1. Financial losses.
2. Increase in wages and salaries.
3. Increase in debt to cover the operating expenses.
4. The acquired distribution circle is in bad state in terms of technology, investments and
consumers.
OPPORTUNITIES
1. Northern region has looming power deficit due to which economic growth is hampered,
which discourages further investments by corporate and industrial investors.
2. The challenges for power reforms in distribution in various states are vast and the private
sector participation in distribution has huge potential. Even if one state in India opens up
this sector every year, this will be a value creating opportunity for the customer and the
state.
3. Decline in interest rates.
THREATS
1. Reliance has very little expertise in distribution.
2. The risk factor in the strategy is the timing of the state government in allocating new
distribution licenses.
3. The competition in this Industry is increasing very fast.
CONCLUSIONS
1. Investors have a great amount hope from ANSAL API. Although, there
are delays in some ANSAL Projects, even then, investors feel secured
in investing in ANSAL API projects.
2. Clients often face problems with the company follow-up and allotment.
3. In the view of real estate agents, Unitech & DLF are the best service
providers.
4. Circle rates of Plots must go up. Government should control the non-
committed trend of upcoming builders. With prices of property,
infrastructure should also grow.
5. Bank Loan Interest rates must go low for the survival of real estate.
6. People are not too keen to invest outside NCR, and block their money
for long term.
7. There should be no hidden costs, and everything should be crystal
clear, which poses a great influence on building brand image.
8. Developers should come up with timely projects. Companies should
keep constant correspondence with its customers. There should be a
commitment of prices by the company.
9. Pre-Launching is a major problem, thereby customers feel cheated by
the Developers/Agents.
10. Tough for small developers, due to frauds by companies like
OSB, etc.
11. Good Scope of agricultural land in Rajasthan.
12. As, in U.P. there is a problem of electricity, so developers should
focus on issues like these.
13. It is observed that as far as Rajasthan is concerned, people are
not aware of its scope as an option, and have very limited information
about the prevailing price hike and future scope.
14. In Delhi, in some places like South Delhi, there is a high demand
of floors, than its supply.
15. A significant reason for people to not invest outside NCR, is that
there are still good options left in NCR.
16. It is noted that there is a good amount of scope on NH-8, as the
foresight of the agents see many colonies flourishing on the highway.
17. It is anticipated, Rajasthan will take a time period of around 10
years to see a boom.
18. It is seen that there is a great demand for 2 Bedroom
Apartments in Gurgaon, but lack supply.
19. People find a reason to invest in a particular city. In Rajasthan
there is no such reason except the tourism Industry. People come to
Delhi for work and not Rajasthan.
