A Report onREAL ESTATEForInternship AssignmentToSachin Jain(Industry Guide)

By:-Aamir Saleem(Team-Go Getter)

INTRODUCTIONReal estateis "property consisting of land and the buildings on it, along with itsnatural resourcessuch as crops, minerals, or water, immovable property of this nature, an interest vested in this, an item of real property, buildings or housing in general. Also, the business of real estate; the profession of buying, selling, or renting land, buildings or housing.

REAL ESTATE IN INDIA AND NCRThe real estate sector in India assumed greater prominence with the liberalization of the economy, as the consequent increase in business opportunities and labor migration led to rising demand for commercial and housing space. At present, the real estate and construction sectors are playing a crucial role in the overall development of Indias core infrastructure. The real estate industrys growth is linked to developments in the retail, hospitality and entertainment industries, economic services and information technology enabled services. Residential real estate industry has witnessed stupendous growth in the past few years owing to the following reasons: Continuous growth in population Migration towards urban areas Ample job opportunities in service sectors Growing income levels Rise in nuclear families Easy availability of finance Demand for houses increased considerably whilst supply of houses could not keep pace with demand thereby leading to a steep rise in residential capital values especially in urban areas.

The Indian Real estate market size is expected to touch USD 180 billion by 2020. At present FDI is USD 12 billion which is expected to grow to USD 25 billion by 2014-15. Demand is expected to grow at a compound annual growth rate (CAGR) of 19-20% by 2014 with Tier-I metropolitan cities projected to account for about 40% of this.

It is the second-largest employment-generating sector after agriculture. Growing at a rate of about 20% per annum and this sector has been contributing about 5-6% to Indias GDP. Not only does it generate a high level of direct employment, but it also stimulates the demand in over 250 ancillary industries such as cement, steel, paint, brick, building materials, consumer durables and more. The Indian real estate industry has been on a roller coaster ride since 2005. Consequent to the governments policy to allow Foreign Direct Investment (FDI) in this sector, there was a boom in investment and developmental activities.

FDI in Real EstateForeign Direct Investment in India is prohibited in Real Estate Business. FDI is 100% permitted under automatic route without any approval. Construction Development includes townships, housing, built up Infrastructure and other construction development projects (which would include, but not be restricted to, housing commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level Infrastructure).

Basic GuidelinesThe Department of Industrial Policy and Promotion, vide Press Note No. 2 (2005), has permitted FDI up to 100% under automatic route in townships, housing, built-up infrastructure and construction development projects, subject to the following guidelines:1. The minimum area to be developed under each project would be as follows:a) In case of development of serviced housing plots, a minimum land area of 10 hectares.b) In case of construction development projects, a minimum built-up area of 50,000 sq.mts.c) In case of a combination of the above two projects, any one of the above two conditions would suffice.2. The minimum capitalization norm shall be US$ 10 million for a wholly owned subsidiary and US$ 5 million for joint ventures with Indian partner/s. The funds would have to be brought in within six months of commencement of business of the company.3. Original investment cannot be repatriated before a period of three years from completion of minimum capitalization. However, the investor may be permitted to exit earlier with prior approval of the Government through the Foreign Investment Promotion Board.4. Development of at least 50% of the integrated project has to be completed within a period of five years from the date of obtaining all statutory clearances. The investor would not be permitted to sell underdeveloped plots. The investor must provide this infrastructure and obtain the completion certificate from the concerned local body/service agency before being allowed to dispose of the serviced housing plots.5. The project shall conform to the norms and standards, including land use requirements and provision of community amenities and common facilities as laid down in the applicable building control regulations, by-laws, rules and other regulations of the State Government / Municipal / Local Body concerned.6. The investor shall be responsible for obtaining all necessary approvals, including those of the building / layout plans, developing internal and peripheral areas and other infrastructure facilities, payment of development, external development and other charges and complying with all other requirements, as prescribed under applicable rules/bye-laws/regulations of the State Government / Municipal Body / Local Body concerned.7. The State Government / Municipal / Local Body concerned, which approves the building / development plans, will monitor the developers compliance to the above conditions.

Driving Forces Stated below are the reasons that have led to the real estate boom in the country Booming economy; accelerated GDP to 8% p.a. Indias emergence as an attractive offshoring destination and availability of pool of highly skilled technicians and engineers, Development of large captive units of major players include GE, Prudential, HSBC, Bank of America, Standard Chartered and American Express. Rise in disposable income and growing middle class, increasing the demand for quality residential real estate and real estate as an investment option. Entry of professional players equipped with expertise in real estate development. Relaxation of legal rulings and processes by the governing bodies encouraging investments in real estate. Improvement in infrastructure facilities. Urbanization. Government policy. Growth in tourism. Easier financing.

As per various government sources, the size of the Indian real estate market was around USD 16 billion in 2006 and it is estimated to reach USD 90 billion by 2015, growing at a C AGR of 21% during this period . Further, it is expected to touch USD 180 billion by 2020, registering a C AGR of around19% from 2006 to 2020.

Market segmentation in Real estate

Real Estate

ResidentialSEZRetailHospitality Commercial

Residential SegmentThe residential segment dominates the industry with a lions share of nearly 75% of total turnover of the Indian real estate sector. Housing alone contributes around 5-6% to the countrys GDP. Growing disposable income, shifting trend towards nuclear families, rapid urbanization, and favorable demographics are some of the factors driving demand for residential real estate. While demand for housing has increased substantially over the years, supply has not kept pace. As per the 11th five-year plan (2007-2012), an estimated shortage of 26.53 Million houses offers a big investment opportunity.The Technical Group has estimated that at the start of the 12th Five Year Plan (2012-17), the total housing shortage in the country is 18.78 million. The below table exhibits the components that contribute toward the estimated urban housing shortage at the start of the 12th Five Year Plan, as of March 2012.

Commercial SegmentOfficeIncreasing demand for office space is one of the major growth drivers for the domestic real estate market. The domestic office market has been driven by the IT-BPO sector where India has emerged as one of the key offshoring destinations. Other growing industries such as financial services and telecom are also key contributors. According to DTZ, a leading global real estate advisory and consultancy firm, the +7,000 Indian IT and ITES firms account for 70% of the office space requirements, followed by financial services and pharmaceuticals at 15%; the remaining 15% is divided between other industrial sectors.

HospitalityThe hospitality industry in India has emerged as one of the key industries driving the countrys economic growth. Over the years, India has emerged as one of the major tourists destinations. This industry is projected to grow at 8% P.A led by growth in the number of foreign tourist arrivals (FTAs) and domestic tourist visits.

Industrial SEZThe Special Economic Zones (SEZs) in India were set up to promote exports of goods and services and create employment opportunities. As of Oct 2010, there were 580 formally approved SEZs in India, of which 363 are notified. IT/ITeS parks account for around 62% each of the formally approved and notified ones. A large share of supply in the IT/ITeS space is expected to come from these SEZs.

Retail SegmentThe domestic retail market is largely unorganized. According to Investment Commission of India, retail sales were USD 262 billion during 2006, constituting more than 30% of Indias GDP. The organized retail market constituted only 4.6% of total retail sales of USD 12 billion as of 2006, but it increased at a fast pace of around 40% p.a. during its previous two years. The organized retail sector is being driven by rising income and customer aspirations, demographic changes, changing lifestyles, and increasing rate of urbanization among others.

Niche sector expected to provide growth opportunity

Tourism

Foreign tourists arrivals in India are expected to rise at a CAGR of 10.5% by 2015. Over 8.9 million tourist are expected to arrive by 2015. The number of hotel rooms in India as of 2011-12 was 121000 which is to be raised to 443000 by 2015. Issues and Challenges Land availability and acquisition issue. Variable prices of raw materials. Lack of transparency. High stamp duty charges. Absence of a centralized regulatory authority. Constraints on funds.

Delhi NCR region:-Delhi NCR real estate market is expected to see more traction in this year. The overall economic scenario in the country is expected to improve in 2014. As per an Asian Development Bank (ADB) report, the countrys GDP is expected to increase to 5.7 per cent from the present 4.7 per cent. The interest rates are also expected to come down in 2014, which in turn will spur real estate demand. Delhi NCR will continue to be the largest real estate market in India with almost 40 per cent share in new residential launches.Delhi NCR, on an average, sees new construction of 100,000 residential units per annum, out of which approximately 60 per cent are in Noida. As per a recent report by International Property Consultants (IPC), in terms of unsold inventory, Delhi NCR fares much better than other cities, such as Mumbai, which are reeling under the pressure of huge unsold inventory of 48 months. There is an unsold inventory of only 15 months in Gurgaon and approximately 21 months in Noida and Greater Noida.

Noida has experienced a period of unprecedented growth over the last few years, which is expected to continue in future also. It has emerged as a well developed micro market having substantial office and retail space, with deepening commercial activity in various sectors.Rapid commercial development has led to a spillover of housing growth in and around the region. Also, benefitting from metro extension, expressways, wider highways and release of land parcels,Noida promises to be a great residential destination in this year.

Ghaziabad is facing a shortage of approximately two lakh housing units in the below Rs 10 lakh category. Ghaziabad Development Authority understands that providing a home below Rs 10 lakh is difficult for the developers. Thus, we are planning an affordable policy scheme for the developers, wherein we will offer concessions, such as free registration, direct buying from farmers, no land conversion charges, no external development charges etc. Apart from this, there are a few plots left in Madhuban Bapudham scheme, near Govindpuram. This scheme may be advertised in the near future. However, there is no new plotted development coming up soon. GDA is planning several infrastructure development projects in the area. We will build the Northern Peripheral Road (NPR) that will cater to the heavy traffic originating from Delhi and going towards Meerut, Kanpur and Lucknow. It is planned for free flow of traffic on the northern side of the city. Another infrastructure project that is planned is the Eastern Peripheral Expressway, which will form a third ring road around Delhi, along with the Western Peripheral Expressway, to decongest both Delhi and Ghaziabad.

The realty market of Gurgaon is expected to get a major boost with the upcoming Dwarka Expressway that connects Dwarka and Gurgaon and will be operational sometime in 2014. Second, the affordable housing policy of the Haryana government is likely to be implemented. It will be a forward move towards inclusive growth as commercial and luxury segments significantly dominate Gurgaons property market. We also expect both the state and central governments to move further on the Delhi Gurgaon-Rewari-Alwar Regional Rapid Transport System (RRTS). These factors will drive the realty market in 2014.

Investing in real estateFlying high on the wings of booming real estate, property in India has become a dream for every potential investor looking forward to dig profits. All are eyeing Indian property market for a wide variety: Its ever growing economy which is on a continuous rise with 8.1 percent increase witnessed in the last financial year. The boom in economy increases purchasing power of its people and creates demand for real estate sector. India is going to produce an estimated 2 million new graduates from various Indian universities during this year, creating demand for 100 million square feet of office and industrial space. Presence of a large number of Fortune 500 and other reputed companies will attract more companies to initiate their operational bases in India thus creating more demand for corporate space. Real estate investments in India yield huge dividends. 70 percent of foreign investors in India are making profits and another 12 percent are breaking even. Apart from IT, ITES and Business Process Outsourcing (BPO) India has shown its expertise in sectors like auto-components, chemicals, apparel, pharmaceuticals and jeweler where it can match the best in the world. These positive attributes of India is definitely going to attract more foreign investors in the near future. Competitive risk adjusted returns High tangible asset value Attractive and stable income return Inflation hedging Portfolio diversificationThe relaxed FDI rules implemented by India last year has invited more foreign investors and real estate in India is seemingly the most lucrative ground at present. The revised investor friendly policies allowed foreigners to own property, and dropped the minimum size for housing estates built with foreign capital to 25 acres (10 hectares) from 100 acres (40 hectares). With this sudden change in investment policies, the overseas firms can now put up commercial buildings as long as the projects surpass 50,000 square meters (538,200 square feet) of floor space. Indian real estate sector is on boom and this is the right time to invest in property in India to reap the highest rewards

Risk in investment1. Foul play2. Infra pitch3. Title disputes4. Delayed projects5. Valuation risk6. Home loan7. Circumventing rulesReasons to buy residential/commercial Unlike stocks, mutual funds, gold and commodities, the chances of downfall in value of real estate investments is extremely low in India Investing in property with rentals is the safest way to secure your retirement properties give you uninterrupted, passive, inflation proof stream of income Reasonable good research will lead you to real estate investments with CAGR of 15% plus per annum in Indian conditions only equity gives better returns but even equity has ups and downs. In India, real estate investment is akin to a FD that commits 15% returns year over year with almost zero risk. Higher return Very less devaluation risk Higher saving

Investment option in real estate Residential properties - flats Landed residential properties houses with land Commercial properties shops /offices Land commercial/ industrial/ residential Land agricultural. Real Estate Investment Trust (REIT) Real estate funds Real estate equity

Residential properties flats In good locations flats give 3% rental returns (after 5 years) and a capital appreciation of around 15% per annum (doubling in value in 5 years) a total return of 18% p.a. Minimum investment required is Rs 40 lacs - 80% of this can be through loans.

Landed residential properties houses with land Houses with land need to be bought with care as the upfront investment can be very high Trick is to buy in areas where the land values are low now but will appreciate due to developments around Typical rentals are 2-3% ( 5 years after purchase) and capital appreciation is 20% plus Typical investment required is Rs 50 lacs plus - 80% of this can be through loansCommercial properties shops /offices This is a smart investment option that people miss. Typical investment starts at Rs 15 lacs - 80% of this can be through loans. Rentals are around 7-10% of the invested amount from year 2 (as compared to 3% on residential properties). Capital appreciation is also about 15% per annum. Every investment savvy person would most likely.Land commercial/ industrial/ residential Investment in land must be done after reaching financial independence. Land investments give no cash flow, are fairly difficult to exit but give superior returns - more than 20% per annum. Typical investment starts at 15 lacs and value doubles every 3 - 5 years. Lower value land investment start at 5 lacs but the initial appreciation takes about 5-8 yearsLand agricultural. In many states only farmers can buy agricultural land farmers are defined as someone who has agricultural land already and who has a non-agricultural income of less that 2 lacs per annum If you are qualified to buy these lands it makes sense to buy agricultural land next to any town, build a farm house and wait for the town to grow to your property in 15 years. Agricultural lands near areas of development give a reasonable capital appreciation however it completely depends on the location.

MASTER PLAN 2031 The Interim General Plan for Greater Delhi was prepared in 1956 and then the first Master Plan of Delhi prepared in 1962 suggested that serious considerations should be given for the planned decentralization of large scale economic activities from Delhi and the development of towns around Delhi. This paved ways for the development of Industrial units and warehousing at various locations around Delhi, resulting in speculative land dealings and potentials for unplanned and unauthorized development activities. Finally on April 17, 1976 the Government of Uttar Pradesh notified 36 villages of Yamuna-Hindon-Delhi Border Regulated Area as New Okhla Industrial Development Area wide its notification No. 415.7 Bha-U-18-(II), Lucknow, dated 17.4.1976 under the provisions of U.P. Industrial Development Act, 1976. a master plan for the area for the year 1991Plan had the following objectives:i. Provide developed sites for about 10,000 small-scale industrial units;ii. Provide employment to about 41,000 industrial workers; andiii. Achieve a conducive living and work environment for the workers engaged in manufacturing and allied activities, and develop an integrated township for an ultimate population of 3,75,000 workers.

The plan was revised several time in its preparation due to economic instability, more than stipulated growth of population, income of people, government policies etc.The prepared master plan was revised in 1979, again in 1982 and several times during the period before it was finally accepted as planned for 2031.

In the meantime, a statutory plan for the National Capital Region of Delhi (of which Noida is a part) was finalised and enforced in 1988 for perspective year 2001. Also, a Perspective Plan for Delhi - 2001 was finalised by the Delhi Development Authority and enforced since 1990 for the perspective year 2001. Both these Plans had significant implications for the development potential of Noida.NCR Planning Board revised the Regional Plan in 2005 for the perspective year of 2021.Another factor, which is likely to have far reaching implications for the growth potential of Noida is the development of Greater Noida and Yamuna Expressway Industrial area townships on a contiguous territory east of the river Hindon.In view of the fast changing development scenario in the region, growth of Delhi, Ghaziabad, Gurgaon, Faridabad, Greater Noida and other cities in the region various large size projects of infrastructure comprehensive revisions were considered in the Master Plan 2021 which were suggested in the form of Noida Master Plan 2031. It had the following objective:Within the framework of broad policies for the development of U.P. Sub- region of NCR and taking into consideration the proposed strengthening of the road and rail infrastructure and the development pressures due to the creation and development of various activities in the adjoining area, Greater Noida, Delhi, Ghaziabad etc., prepare a Master Plan for Noida 2031 for: Achieving integrated development of Noida and its environs; and Accommodating future growth of population up to the year 2031To capitalize on the areas high growth potential due to its proximity to the metropolitan city of Delhi and public investment expenditure not only in the area but also the environs.

To promote employment generating activities such as small scale industrial work opportunities, offices spaces, institutions, commercial centers, IT parks, etc., at places which are well suited for such activities and provide a conducive environment for people to work and enjoy good quality of life.

The Authority approved the Draft of Noida Master Plan 2031 in its 172 board meeting held on 29-032011 and decided to send the draft to the State Govt. and NCR Planning Board for suggestion.Further, the Authority in its 174 Board meeting held on 25.8.11 approved few changes in the plan to incorporate the suggestions of NCR Planning Board and residential area proposed for allotment of plots to the farmers.

The master plan has the objective to analyze the land in terms of physiographic features, topography, regional context, soil, climate, land uses pattern etc.This analyzing of the land would be very helpful to the real estate developer. This would help them plan in advance to what type of infrastructure to develop residential or commercial. The cost of development of the project etc.

The analysis that would be of great importance to the real estate developer as per the Master Plan document are following: Regional context. Physiographic, demographic features and topography. Soil characteristics and climate. Land utilization pattern. Hydrological study for surface flow, underground water table and aquifer low lying areas and flood prone areas. Transport patterns. Settlement pattern.

Industrial development Phased development of industries which would give the idea about the type of infrastructure needed by the industries being attracted to the area.

Presently the following types of industrial units are being attracted to Noida: Electrical Home Appliances, Machinery, Ready-made Garments, Paper Products, Electronics, Rubber/ Plastic Products, Dies, Tools and Machinery, Wooden Furniture, Leather Products, Beverages and Food Products Automobile Parts Building and Finishing Material Pharmaceuticals Fabrication

In the future, the following types of industries are likely to be attracted: Electronics, Electrical Goods, Ready-made Garments, Plastic Molds, Packing Materials, Dies, Tools and Machinery, and Steel FabricationThis would generate the employment for the people or population in the area and would also provide with the information about demographic i.e type of people employed, housing infrastructure they need, institution for the children, transport facility, type of organized retail market they need, this would be very helpful for the real estate developer.Thus the commercial development will be the need for the great importance.

Infrastructure development Water Supply Sewerage and Waste Disposal Institutional Facilities Medical Facilities Transportation Hierarchy of Roads Traffic Volume Characteristics Parking FacilityNeed of railway station for connection and other express way linkage to Faridabad and dadri dedicated freight corridor will pass through Noida and rise the industrial growth as well as real estate. With the development of DMRC from Noida to Greater Noida will increase the mobility of the population and thus help to extend the real estate development.Development perspective and planning conceptNOIDA is to be developed as an independent city, no longer a satellite town to Delhi. It is envisioned that by the year 2021, the city will begin to acquire an accentuated commercial and institutional focus reflecting on its location at the center of a large megalopolitan conurbation comprising of the surrounding cities such as Delhi, Gurgaon, Faridabad, Bulandshahar, Sikandrabad, Ghaziabad and Meerut. The type of industries will also experience a gradual shift from the traditional small and medium scale industries to hi-tech industries like Information Technology, Biotechnology etc. and their ancillary R&D platform. The focus will also be to develop it as an integrated town with all the amenities and the infrastructure for the resident population in place to create conducive living environment.

Planning imperativesWithin the framework of policy for the development of the NCR and UP sub-region and taking into consideration the development pressures due to the development of Yamuna expressway from Noida to Agra and rail connections to NOIDA, the master Plan is prepared with following underlying imperatives: o Integrated development of NOIDA to accommodate future growth of population up to the year 2031. o Capitalize on the areas high growth potential due to its proximity to the metropolitan city of Delhi and evolving transport linkages.

o Promote a conducive environment for people to earn livelihood and enjoy good quality of life. o Promote small-scale industrial, Institutional and other work opportunities at places which are well suited for such activities.

Land Use:

Social Infrastructure and Facilities:Health and Educational FacilitiesSocio-Cultural Facilities CenterTelecommunication and Postal FacilitiesSecurity and Fire Fighting ServicesDistributive Service Milk and Vegetable BoothsLPG Godowns and Petrol Pumps/ CNG StationPublic Utilities:Water SupplySewerage SystemSolid Waste DisposalPower Supply

Development of transportation and mobility within NoidaTransportation is an important sector for achieving development objectives of an area. The role of transport in enabling and directing urban development has been long appreciated. In the planning for a transport system, a number of objectives form the base. In case of Noida, the following objectives have been identified: i) To enable the mobility of people and goods, and faster economic development and enhance social interactions. ii) To improve the accessibility of Noida particularly to and from the sub-region and there by promote the nodal functions of Noida. iii) To encourage inter sectoral integration and ensure intra sectorial coordination.iv) To conserve resources (land, material, money, energy etc.)v) To maximize safety. vi) To promote the environmental quality of the area and enhance the quality of life.

Regional linkage road Transport facilities i.e Bus terminal, Railway station and Yard, Transport Nagar, elevated roads Expansion of public transport, integrate mode of transport, emission control, parking policy etc

Recreational areas Recreational Green Parks Playgrounds Green Belts Sports City

Disaster Management Plan:Flood HazardEarthquake HazardFire HazardFire Risk MitigationHigh Wind Hazard Risk MitigationMan Made Hazard