Real State

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PROJECT REPORT ON

AWARENESS AMONG CHANNEL PARTNERS

ABOUT IT

ITES OFFICE SPACE IN REAL ESTATE

SUBMITTED IN PARTIAL FULFILLMENT OF DEGREE

OF MASTER OF BUSINESS

ADMINISTRATION

SUBMITTED BY:

SHAHIN ALI

DEPARTMENT OF MANAGEMENT STUDIES

JAMIA HAMDARD,

NEW DELHI 110062


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Declaration

I, SHAHIN ALI, of JAMIA HAMDARD UNIVERSITY, of MBA I,

hereby declare that I have completed a summer project on AWERNESS

AMONG CHANNEL PARTNERS ABOUT IT-ITES OFFICE SPACEIN REAL ESTATEin the Academic year 2008-09. The information

submitted is true and original to the best of my knowledge.

(SHAHIN ALI)


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TABLE OF CONTENTS

1. Acknowledgment

2. Project title

3. Company introduction

(i) Brief history of the company

(ii) Ongoing project

(iii) Upcoming project

(iv) Realty boom in imt manesar gurgaon

(v) Map of the propsed project

4. Major competitors of the company

5. Common terms used in real estate6. About the real estate industry in india

7. Adout IT-ITES sector in india

8. Market overview

9. Indian economy- overview

10. Future collaboration of real estate and IT-ITES sector in india

11. Ongoing real estate projects in IT-ITES sector

12. Scope of investment for small investors in real estate

13. Initative taken by yhe government to safeguard the interest of

investors in real estate

14. Propsed bill by the government

15. Regulatory development in real estate

16. Benefits of REMF


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17. Cost-comparison of office space in india with other countries

18. demand of office space in different cities of india

19. Factors which are hindering the growth of real estate in india

20. The real approach of investors while investing in real estate

21. Effect of economic slowdown on real estate sector

22. Suggestion for effective development in real estate in india

23. Conclusion

24. Market strategy

25. questionare


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ACKNOWLEDGEMENT

I wish to take this opportunity to express my deep gratitude to the persons

and the organization that have helped, encouraged, inspired and

enlightened me with their constructive ideas and overall support towards

the completion of this project successfully. This project would have been

incomplete without the active co-operation and guidance of senior

persons ofVIGNESHWARA DEVELOPERS [NOIDA BRANCH].

I am very thankful to Mr.MOHD SALEEM (branch manager), and his

senior staff members for helping me throughout my project showing me

the right direction towards the completion of my project.

I am very grateful to MR.KULDEEP TYAGI [SENIOR MARKETING

EXECUTIVE] for providing me their expertise in the completion of my

project.

I am thankful to MR.SHAHZAD ALAM for guiding me in referring thebooks for my projects.

No words and language can ever be sufficient to express my gratitude to

the above-mentioned persons who provided me with the support to

prepare this project.

SHAHIN ALI


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Project title:

AWARENESS AMONG CHANNEL PARTNERS

ABOUT IT-ITES OFFICE SPACE IN REAL ESTATE

Project objectives:

To learn how channel partners deals in the market

To study how to maximise the communication channel with

channel partners.

To study the different components of working methods of channel

partners

To study how VIGNESHWARA DEVELOPERS should

penetrate the existing market


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COMPANY INTRODUCTION

ABOUT VIGNESHWARA DEVELOPERS

The company pride itself in pioneering the concept of integrated IT

Corporate Centre in India. Its efforts serve to create self sufficient

communities out of pockets of land and provide our customers the highest

lifestyle standards with ultra modern working environment. In the

companys projects, your office, garden, shops, restaurants, swimming

pool, Club, Service Apartments, Basic Medical Facilities and other

recreational facilities will all be just a pleasant walk away within the

campus. The companys commitment to employ environment friendly

processes and ensuring that the communities are lush and verdant willgive you the chance to enjoy a breath of fresh air right at your workplace.

Vision


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To reach the pinnacle of industry by 2020 following high ethicalstandards, transparency in transactions and quality in development.

Mission

To empower Indian real estate by inculcating knowledge and innovation

that will be the catalyst of growth for the nation. Impacting hitherto

unknown areas to drive growth by winning the customers buying

decesions through logical reasonoin and industry facts

PAST PERFORMANCE

Its a 15 year old company, functioning earlier under the banner name of

Shree Ganesha Estate & Developers.

The company has developed several successful projects; some of them

are as follows

Mohan Garden in West Delhi.

Rural Infrastructure Township Project in Nahar Park, Faridabad

covering 400 acres of land with 300 farm houses.

A Trans-Yamuna Group Housing Society development project

titled as Rosewood Apartment in Mayur Vihar.

UPCOMING PROJECTS

11 acres of Commercial district in Gurgaon

Opposite proposed Metro Station


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Office space, retail & recreation (Club, Hotel & BusinessCentre)

11 acre Technology Park in Gurgaon

Based on the unique idea of Work, Live, Shop, Play

24x7 ultra-modern campus

Proposed helipad

400 acre Technology City on Sohna-Alwar Road

Just 35 kms. From Gurgaon

30 mins shuttle service to major drop points in Gurgaon / Delhi

Planned air strip for air traffic


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ABOUT THE LANDMARK OF IT PARK PROJECT IN IMT,

MANESAR:

DARSONS AND KISSONS I VALLEY PROJECTS.

It is in this strategic time and location, that the landmark project is

located. Vigneshwara Developers has acquired 10 acres out of the 150

acres plot allotted by HSIDC for the development of this project named

Darsons & Kissons I Valley.

India is the fastest growing IT hub in the world and IT-ITes industry

outsourcing is growing at 58% (NASSCOM).Gurgaon has emerged as an

important hub for IT companies and MNCs in India. The Haryana

government is also taking some vital steps to support and promote

infrastructure development. Haryana State Industrial Development

Corporation (HSIDC), a Haryana Govt. undertaking, is promoting a

campus of 150 acres as a proposed Special Economy Zone (SEZ) for

Technology parks in IMT, Manesar. The proposed SEZ will be the

biggest IT corridor in North India.

The central government has promulgated the SEZ act in 2005; these SEZs

have been declared duty free enclaves with no restriction in investments

and import of goods and services. To attract FDI the government has

offered several incentives like:


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Access to domestic tariff area. Hundred percent FDI under automatic route

Flexibility w.r.t FOREX earnings.

The campus promoted by HSDIC for setting up the technology park can

be used for several purposes including

IT /ITeS

Robotics, Nano Technology.

Chip Manufacturing

Bio-Technology including Genetics.

Research and Development facilities.

Mobile Computing/communication, other frontier technologies.

OPERATIONAL FACILITIES AND INCENTIVES FOR END

USERS

Being developed as Ready to use Built-up Space

Income tax exemptions under section 10A of IT Act to

companies manufacturing or rendering the above mentioned services.

Income tax exemption to investors under section 10 (23) G of

Income Tax Act.

Investors eligible for income tax exemption u/s 88 of IT Act.

Exemption from service tax.

FDI permitted under automatic route.


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No Import License required. Duty frees Import of Capital Goods New or second.

No separate documentation required for customs and EXIM

Policy, in house Custom clearance.

Full freedom for sub contracting in domestic area or even

abroad. No fixed wastage norms

Job / work on behalf of domestic exporters for direct exports.

INFRASTRUCTURE / OTHER FACILITIES

Power Voice & Data Communications

Air-conditioning

Vehicle parking facility

Security & Safety

Environment - Sewage & Landscaping

Water Storage

Plug n play incubation centre for start up companies


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PROJECT I- VALLEY USPS

The project is located approximately 3 km from NH-8, easily accessible

from Delhi by a new age 8 lane expressway; the travel time from Indira

Gandhi International airport is just 20 minutes.


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This project is based on the unique idea of Work, Live, Shop and Play.

The Technology Park would have

International standard offices - covered in 85% area and with a total

of 6 towers.

Service apartments covered in 10% area

Retail malls & Recreation clubs covered in 5% area

Proposed Helipad facility defining International work style

Approximately 21 acres of 3 level basement parking space

EASY AND ATTRACTIVE MODE TO SUBSCRIBE YOUR

SPACE

Infrastructure investment is emerging as the most lucrative option today.

There is no limiting factor in the context of multiplier of money. So you

can invest your investments with the company for secure and guaranteed

optimum return of 12 %.

Current Price Rs.7, 500 per square feet

Minimum Area 500 Sq. Ft & its Multiples

Proposed Date of Completion Dec 2008


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PLANS AVAILABLE FOR INVESTORS

1. ASSURED RETURN PLAN

Investors get returns @ 12% per annum for 5 Years on their full depositagainst their investment for space they book.

Example:

Assured Return

Total Area Bought 1,000 Sq. Ft.

Rate per Sq Ft. Rs.7,500

Total InvestmentTotal Area (1000 Sq. Ft.) x Rate (Rs.7,500) =

Rs.75,00,000

Assured Rate of Interest per Annum 12%

ROI / Annum 75,00,000 x 12% = Rs.9,00,000

ROI / Month Rs.9,00,000 / 12 = Rs.75,000

ROI for 5 YearsROI p.a. (Rs.9,00,000) x No. of Years (5) =

Rs.45,00,000

Industry Growth Rate(Real Estate) 30%

Total Value Rs.75,00,000 x 5Yrs x 30%=Rs.1,87,50,000

Net Profit

Rs.1,87,50,000-Rs.75,00,000+Rs45,00,000 =

Rs.1,57,50,000

BUY BACK PLAN


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Some investors prefer buyback option @ 61.5% capital appreciation after

2.5 Years. This is an assurance by the developer to provide the investor

an option of buying back his unit against the current booking over a

period of 30 Months.

Example:

Buy Back Plan

Total Area Bought 1,000 Sq. Ft.

Original Rate per Sq Ft. Rs.7,500

Total Investment

Total Area (1,000) x Rate (7,500) =

Rs.75,00,000

Appreciation rate per sq. ft after 2.5 Years 61.5%

Rate per Sq. Ft. after appreciation of 61.5%

Rs.7,500 x 61.5 % =

Rs.4,613

Total rate per Sq. Ft. after 2.5 years

Rs.7,500+Rs.4,613 =

Rs.12,113

Buy Back Rate after 2.5 Years (30 Months) Rs.12,113

Total Value Rs.12,113 x 1,000 Sq. ft = Rs.1,21,13,000

Net Profit after 2.5 Years

Rs.1,21,13,000 Rs.75,00,000 =

Rs.46,13,000

PAYMENT PROCEDURE

S.No. Name Plan

1. At the time of Booking 10% of Total Down

Payment

2. With in 45 days of Booking 90% of Total Down

Payment


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Sample design of the New Propsed Project


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Reality Boom in IMT Manesar(Gurgaon)

Real estate in NCR began with market expansion moving to Delhis

suburbs. However, the situation is a pass now. The property boom has

reached the second phase of development. After the Capitals suburb, it is

a turn of Gurgaons suburb i.e. Manesar. Couple of years back no one

could have imagined such excellent real estate prospects for Manesar.

Some of the major points are given below:

1. The real estate market in Manesar, Gurgaon has been going at a

crazy pace ever since MNCs have taken the decision to set up their

establishments in this known city of Haryana. Manesar was earlier a

small village which has now been transformed into an industrial and

commercial hub over the past few years. The real credit goes to the

IMT Manesar Industrial Area, which has boosted up the

commercialization of the area.

2. Biggest ISBT and Metro connectivity in IMT Manesar as per

Master Plan 2021 has pushed the market to sky high.

3. Rates of commercial properties in Manesar have increased by 35-

60% in the last six months. Interestingly, residential properties in

Manesar have also got up on the boom bus, and have witnessed an

excellent jump of 35%.

4. The development of many Expressways mainly Dwarka-Manesar

Expressway (also known as Northern Peripheral Road) and KMP

(Kundli-Manesar-Palwal) Expressway is expected to cover a distance


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of 135 km - is believed to be the most expensive and the longestIndian expressway to be constructed, has just pushed the property

prices in Manesar to sky high.

5. Direct connectivity from Main Gurgaon via NH-8 Delhi Jaipur

Express Way.

6. Saturated market & scarcity of land in Delhi-Gurgaon for

development purposes is one of the major reasons encouraging

property developers to move further afield to Manesar and scout new

construction prospects.

In addition to being an Industrial Town, a multitude of builders and

construction companies from Gurgaon and Delhi look at Manesar as their

next destination for construction purposes. Manesar would emerge as a

Mecca of industry specific infrastructure, service ancillaries, commercial

services, and an array of other essential services.

Manesar's inclusion in the integrated plan is good news for the entire

district. Home to global industrial units, and now part of the Millennium

City, it is all set to give competition to Noida.

Gurgaon: Manesar is no longer just a weekend getaway tucked away in

the Aravallis. Home to global industrial units, and now an integrated part

of the millennium city, it's a mega-city in the making. And if the

government's claims are anything to go by, it may even take on Greater

Noida very soon.


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Managed by Haryana State Industrial Development Corporation(HSIDC), and spread over 5,000 acres, the reasons for Manesar's

popularity is not hard to guess. Located on the Delhi-Jaipur highway, it is

extremely well connected to both Delhi and Gurgaon. It is just 32 km

from the international airport, 8 km from Gurgaon, and 45 km from

Connaught Place. This has made it a great favourite with investors from

Japan, France and UK who have set up about 450 industrial units here.

Now, a residential area spread over 900 acres is coming up here for the

employees of MNCs and HSIDC. Under the integrated master plan, the

residential sectors in Manesar have been increased from one to four to

allow the staff to stay around the industrial units and be able to simply

walk to office.

Competing with Noida

With the commercial and residential hub in Gurgaon town and the

industrial base in Manesar, the entire district is expected to gain an upper

hand over Noida. Said D S Dhillon, chief administrator of HUDA,

Manesar has expanded very fast. Investments from all over the world are

pouring in. This needs to be encashed. Moreover, in order to curb illegal

developments which had started mushrooming; Manesar had to be

included in the integrated plan. This has benefited both Gurgaon and

Manesar. Manesar is located on the intersection of NH-8 and Kundli-

Palwal-Manesar expressway. This will show it in a better light than even

Noida.

The development of Manesar will not only aid Gurgaon but also Delhi.

Said the deputy general manager of HSIDC, Rajesh Sharma, ``Almost all


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industries of the Capital have their units in Manesar. The trend witnesseda growth after the sealing drive in Delhi. We give incentives to

companies with an investment of

More than Rs 30 crore. Residents of Delhi who work in Manesar will

now be able to live in Manesar due to the new residential sectors.''

Better connectivity

Said Rajeev Arora, MD, HSIDC, We are developing wide roads. The

area of the open space has been increased. There is a 12-km long green

belt traversing Manesar-Gurgaon boundary. HSIDC has a dedicated

power station of 220 KV and four substations of 66 KV to cater to the

needs of both the industrial and residential areas. Apart from the vast

industrial base, institutionally also, Manesar is being developed. We have

a resort, Heritage Village, the NSG base and the National Brain Research

Centre here which attract both MNCs and the general public.''

Favourite of MNCs, developers

MNCs and Indian corporate houses that are operational in Manesar

include Honda Motorcycle & Scooters India, Denso Haryana, Mitsubishi

Electricals, Maruti Suzuki Metal from Japan, Frigo Glass India from


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Norway, Baxter India from USA, Johnson Matthey India from UK,Jamna NHK Napino Auto, Bundy India, Munjal Showa, Hero Motors

Ltd, Samsung Telecommunications.

For developers also, Manesar has become a hot destination. DLF is

planning to come up with a SEZ around Manesar belt. Said a

spokesperson of DLF, Manesar, with its excellent connectivity, an

established industrial base and a better law and order situation will act as

a catalyst in making Gurgaon more alluring. The government will benefit

by tapping all the investments pouring globally into Manesar.

Earlier, Manesar was supposed to be developed as a joint effort of the

government of Haryana, Government of India and a Japanese firm, but

was finally acquired by the HSIDC in 1997 to be developed exclusively

as an industrial base. Manesar has been divided into four phases. HSIDC

developed 1,750 acres of land in phase I, while development of phase-II

and phase-IV are in progress. HSIDC has allotted around 600 acres in

phase-III to Maruti Udyog Limited for their expansion project.

Leisure activities

Other features in Manesar include an auctioned plot for service apartment

and budget hotel. A technology park spread over 150 acres is being

developed in Sector-8. Here, campus sites of 10 acres each have


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already been allotted to 12 companies. HSIDC is also developing a golfcourse for entrepreneurs, while a club is already in operation. HSIDC has

plans to develop three- to five-star hotels and a 100-bed hospital too.

Distance

8 km from main Gurgaon, 45 Km from Connaught Place

Connectivity

Located on the intersection of NH-8 and KMP (Kundli-Manesar-Palwal)

Expressway (under construction), also getting connected through

Northern Peripheral Road (expressway from Dwarka-Village Kherki

Daula on NH-8 with metro on it).

Moreover, biggest ISBT is also coming up near IMT Manesar, Gurgaon.

Map:


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MAJOR COMPETITORS OF THE COMPANY:

AMARPALI GROUP

PURVANCHAL GROUP

TDI LTD.

MAPSKO DEVELOPERS.

SPIRAL ADGE

SOME COMMON TERMS THIS IS USED IN REAL ESTATE

SECTOR

(i) Carpet area- Useable area that can be carpeted from wall to wall.

(ii) Covered area- Carpet area plus area of peripheral walls. As per

the industry standards, it is the sum of carpet area plus 4% of the total

carpet area.

(iii) Super area- Covered area plus 40% of the covered area. It means

covered area plus proportionate area that is used by the customers to

access a shop, like common passage, corridor, and stairways area.

(iv) Common Area Mall Maintenance (CAMM) - It is the cost of

utilities needed to heat, cool, light and clean and maintains common

areas such as atrium, corridors, toilets, etc. Including power

consumption and security. The operational cost of these services is

borne by the tenents of the unit/shops on pro-rata basis. It is charged

on super are on per sq.ft basis.]


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ABOUT THE REAL ESTATE INDUSTRY IN INDIA

The Indian information technology sector has been instrumental in

driving the nation's economy onto the rapid growth curve. According to

the Nasscom-Deloitte study, the IT/ITES industry's contribution to the

country's GDP has increased to a share of 5.2 per cent in 2007, as against

1.2 per cent in 1998.

Further, the IT and BPO industries are poised to clock revenues worth

US$ 64 billion by the end of fiscal year 2008, registering a growth of 33

per cent with exports expected to cross US$ 40 billion and the domestic

market estimated to clock over US$ 23 billion, according to a study.

Simultaneously, the Indian IT services market is estimated to remain the

fastest growing in the Asia Pacific region with a CAGR of 18.6 per cent,

as per a study by Springboard Research.

India's IT growth in the world is primarily dominated by IT software and

services such as Custom Application Development and Maintenance

(CADM), System Integration, IT Consulting, Application Management,

Infrastructure Management Services, Software testing, Service-oriented

architecture and Web services.

A report by the Electronics and Software Export Promotion Council


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(ESC) estimates software exports to register a 33 per cent growth in the

current financial year with export figures during FY 2008 expected to

reach US$ 45 billion. The country's IT exports have, in fact, come quite

far, starting from a few million dollars in the early 1990s. The

Government expects the exports turnover to touch US$ 80 billion by

2011, growing at an annual rate of 30 per cent per annum.

Outsourcing

A research by Gartner forecasts India as the undisputed leader in the

outsourcing space in the year 2008. The Outsourcing Service Provider

Performance Study 2007, undertaken by sourcing advisory firm Equa

Terra, reported that the majority of UK businesses offshore all or parts of

their IT functions to India and plan to continue with this strategy as India

emerged the favorite outsourcing destination for businesses in UK in

terms of satisfaction.

Another study conducted by Nasscom jointly with the Everest consulting

firm reports the Indian outsourcing sector logged a 35 percent annual

growth over the last five years with annual revenues touching US$ 11billion, with the bulk coming from exports. India has ousted China as a

contender for offshore services and tops the list of 30 countries on

criterias such as language, government support, labour pool,

infrastructure, educational system, cost, political and economic

environment, cultural compatibility, global and legal maturity, and data

and intellectual property security and privacy.


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No wonder, twenty-nine India-based companies have been listed among

the best 100 IT service providers in a new survey carried out with a view

to assist business heads of major outsourcers identify reliable, innovative

and tech savvy partners.

MARKET OVERVIEW

Real estate industry is currently estimated to be US$ 16 billion with a

CAGR of 30%

Total economic value estimated to be US$ 40-45 billion accounting

for 4-5% of the GDP (Source: UBS Investment Research)

Growth driven primarily by IT/ITeS, growing presence of foreign

businesses in India, the globalization of Indian corporates, and the

rapidly increasing consumer class providing a huge market potential

The real etate sector is in an early growth stage, can be segmented

into residential, commercial, retail and hospitality asset classes

Demand-supply gap across all segments for quality real estate

Source: Industry Sources, E&Y Analysis

Commercial Office Space

Growth Drivers


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Growth in IT/ITES sector at 30% annually (source: NASSCOM) Significant growth in FDI

Market Structure

Dominated by a few large national developers with pan-India

presence

Regional players are expanding to achieve a Pan-India presence

Shift in the type of operations from Sale Model to Lease & Maintain

Model

Segmentation

Commercial Space can be classified broadly into Grade A and B

Business activity shifting from CBD to SBD and from Tier I, II & III

Outlook

Commercial market expected to grow at CAGR of 20-22% over the

next 5 years

IT/ITeS sector expected to require in excess of 250 million sq. ft of

commercial office space by 2012-13


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Residential Space

Growth Drivers

Rapid Urbanisation: Urban Population expected to touch 590

million by 2030

Decreasing Household size: Average H/h size fell from 5.4 in 1981 to

5.1 in 2000 Increasing working age population (Almost 64% in 16-64 age

group)

Increasing income levels: Average salary levels increased by 13.5% in

2005

Easier access to mortgae, long tenure loans and tax incentives

Market Structure


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Highly fragmented and unorganized Regional players are expanding to achieve a Pan-India presence

Segmentation

Broad categories include Low cost/Mid market/Premium housing

Luxury segment growing annually at 25-30%

Outlook

Current shortage close to 25 million units, predominantly in

middle and low income group

Expected to grow at CARG of 18-19% upto by 2010

Mortage finance will be increasing penetration into the urban housing

finance sector

Retail Space

Growth Drivers

Rising consumerism with doubling of disposable income

Growth in Organized Retailing

Entry of international retailers

Market Structure

Dominated by unorganised retail

Large corporate houses entering the organized retail sector

International retail brands are tying up with Indian partners


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Growth of Retail IndustryOrganized Unorganized

FY2004

FY2005

FY2006

FY2010

$210 billion

$2224 billion

$238 billion

$306 billion

0

20

40

60

80

100

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

East

West

North

Source: Edeliwiss, E&Y Research

Segmentation

Organized retail contribution to the retail industry grew from 2% in

2003 to 4.4% in 2006

International retailers are present through franchise route

Outlook

FDI norms are likely to be relaxed in next 2-3 years

Oranised retail expected to grow at around 30%

Share of organised retail, by sales expected to reach 10% by 2010


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Absorption of Organised Retail Space

Total Absorption: 19 million sq. ft (2006-07)

Source: E&Y estimates for top seven cities

21%

5%

12%

9%

4%

6%

Hospitality Space

Growth Drivers

More than 4.4 million international visitors and 430 million domestic

tourist visits in 2006

Low cost airlines

India recquiring recognition as a medical tourism destination


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International events such as Commonwealth Games Imergence of India as a MICE destination

Market Structure

Entry of several corporate houses such as Reliance

Existing hotel operators are scaling up their opetations

Developers are tying up with major international chains

Developers have set up RE funds to finance their Ventures

Segmentation

Classification on the basis of Star Rating of 1 to 5 star deluxe

100,000 hotel rooms in India in various categories, Five Star and Five

Star Deluxe contributing close to 30,000 rooms

Outlook

Demand to grow at 10% CAGR for the next 5 years

Room supply to increase

Tremendous potential for budget hotels

Service Apartments, Hostels, Wellness space gaining popularity

Special Economic Zones (SEZs)

Under the new SEZ Policy, formal approvals have been granted to 366

SEZ proposals

142 have already been notified as SEZs, as on 30th August 2007


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Fiscal benefits to IT Parks expected to come to an end in 2009; SEZslikely to be preferred for IT/ITeS commercial office space

development

Policy allows usage of as high as 50% of area as non-processing zone,

offering immense potential for residential & other support

infrastructure.

Industry - Wise classification of formally approved SEZs

Electronics Hardware, IT/ITES/Electronics/ Pharmaceuticals

Biotechnology Gems & Jewellery

Engineering Textile

Others

69%

4%

5%

2%

5%

4%

11%

Key Regulations for FDI in Real Estate

Guidelines for FDI in Real Estate in India


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Conditions for Development

Minimum 10 hectares to be developed for serviced housing plots

For construction-development projects, minimum built-up area of

50,000 square meters prescribed

In case of a combination project, any one of the above two conditions

should suffice

At least 50% of project to be developed within 5 years from date of

statutory clearances

Conditions for Investment

Minimum capitalization of US$ 10 million for wholly

ownedsubsidiaries & US$ 5 million for joint ventures with Indian

partners

Infusion of funds within 6 months of commencement of business

Original investment cannot be repatriated before a period of 3 years

from completion of minimum capitalization.

Investor may be permitted to exit earlier with prior Government

approval


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Miscellaneous Conditions

Investor not permitted to sell undevelopedplots

Project to conform to norms and standards lay down by respective

State authorities

Investor responsible for obtaining all necessary approvals as

prescribed under applicable rules/ by-Iaws/regulations of the State

Concerned Authority to monitor compliance of above conditions by

developer

FDI Experience in Indian Real Estate

Several Global investors & Developers keen on investing in India

Share in FDI has increased from 4.5% in 2003 to an estimated 25% in

2006

US$ 16.3 billion FDI committed for real estate projects

Major Countries investing in Indian Real Estate

Dubai Indonesia Singapore Malaysia Others

Majority of the direct investment is from West Asia with overall

commitment of US$ 9.7 billion from Dubai based developers

Further, investor from USA and Europe have shown keen interest with

the launch of several RE funds


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Source: Industry sources, E&Y Research

Regulatory and Policy Interventions

Rationalization of process:

Rationalization of the regulations in governance affecting real estate

For example, improved land records, rationalizing stamp duty across

states, simplifying urban development guidelines etc.

Social Infrastructure:

Focus from both public and private sector

Different models for foreign investment being evaluated

Government incentives:

SEZ Act, 2006 provides major Tax benefits,

Tax relief and Single window clearance and approval

Urban Infrastructure Development:

Focus on urban infrastructure

Urban Reform schemes

JNNURM

City Challenge Fund

Mega Cities Fund


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Indian Economy Overview1) Accelerated yet Stable Reforms Process

Broad consensus on importance of reforms

Reforms momentum continued despite changing leadership

especially in areas of FDI & infrastructure

2) Robust Economic Fundamentals 4th largest economy in the world in terms of PPP

GDP growth rate of 9.4%

Forex reserves at US$ 204 bn

Services sector accounts for more than 50% of GDP, while

manufacturing sector average growth is at 6%,

3) Fast improving socio-economic profile

Per Capita GDP is US$ 831 in 2006-07 and is expected to increase

further by 25% in 2007-08

Favorable demographics with more than 60% of population

estimated to be in the working age (15-60 years) till 2050

Growing lifestyle spending with increased expenditure on

consumer durables, eating out and communications.


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4) Increased Foreign Investment

Indias policy on foreign investment has been gradually relaxed

with sectors such as construction, telecom and banking allowed.

Another route of foreign participation is portfolio investments.

Total FDI investment of about US$ 8 Billion in FY 2006-07

5) Focus on Infrastructure Development

India has a well developed road and rail network. Large

investments are underway in areas of:

Highway development & Air-connectivity (Domestic &

International)

Upgradation of ports with their privatisation

Power sector

The Impact of Macroeconomic Factors on Demand &

Supply of Real Estate

Economic Growth - Broad based GDP growth rate of 8-9 %

per annum forecast

Demand driven by the growth in services sector

Growth expected to fuel demand across all the asset classes

Inflation - Has significant role in supply-demand of real

estate

Continues to remain a major concern

Money Supply - Growth is higher than RBI estimates

Liquidity is key to inflation and over-heating


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Restricted availability to reduce options forbuilders/developers

Interest Rates - Higher rates lead to higher cost of borrowing

Developers seeking other options, consumers are re-

evaluating options

Credit Take-off - Easy availability of capital has led to

growth in valuations Restrictions have increased the cost leading to alternate

sources like PE/VC

Economic Growth - Liberalization of FDI has led to an

interest from new players

Valuation standards and greater transparency

Service tax on commercial rental to affect retail space

Demand Pull & Supply Push Factors

Supply Push Factors

Policy & Regulatory reforms (100% FDI Relaxation)

Positive outlook of global investors

Fiscal incentives to developers

Simplification of urban development guidelines

Infrastructure support and development by Government

Demand Pull Factors

Robust and sustained macro economic growth

Upsurge in industrial & business activities, especially.

new economy sectors

Favorable demographic parameters


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Significant rise in consumerism Rapid Urbanization

Gamut of financing options at affordable interest rates

Resultant Impact

Entry of number of Domestic & Foreign players

increasing Competition & Consumer affordability

Easy access to means of Project financing

Increases developers risk appetite and allows large scale

development

Improved quality of real estate assets

Development of new urban areas and effective utilization of prime

land parcels in large cities

Resultant Impact

Increasing occupier base

Significant rise in demand for office/industrial space

Demand for newer avenues for entertainment. Leisure & shopping

Creation of demand for new housing

Booming Indian Real Estate

Growth Rate

High growth of around 30% in last 2-3 years

Expected to maintain the same growth in the medium term (5-7 years)

Structure

Highly unorganized sector

Entry of numerous new players


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Phase of consolidation expected in 5-7 years Entry of large number of international players

Preference towards strategic development alliances Market

Concentration

Highly concentrated within top 6- 8 cities in the country

High concentration leading to significant property price rise in such

cities

Growth to be driven primarily by Tier-II and Tier-III cities in the near

future, across segments

Emergence of at least 10-15 new cities as growth centers

Increased development of planned cities Competition

High competition with 4-6 key national players and numerous regional

players

Shift in competition towards product focus/ differentiation

Extent of Regulations

Moderate-No functional regulatory body

Region/Location specific building laws

100% FDI is allowed under the automatic route

Stringent regulations expected to be introduced inline with

international norms

Reforms in local development guidelines financing

30-40% annual increase in the home loan disbursements loan

disbursals from Indian housing finance companies

Loan tenures have increased: 150 months (2001) to 173 months

(2006) due to declining age of borrowers


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Larger mortgage penetration Introduction of globally accepted instruments/modes such as REITs &

REMFs

Market Trends and Outlook

Branding Penetration

Low-Commoditized market in most regions

Brand-consciousness growing in Tier-I cities

Strong focus on brand development

Developers to have multiple brands focused on specific

Product segments Product Focus

Market driven product supply

Developers undertaking activities across asset classes with not

much differentiation between product classes

More focus to cater to the premium end consumer

Enhanced focus on need driven product supply

Emergence of firms with niche asset class focus

Ownership

Developers prefer to exit through sale to end consumer

Only few large developers prefer to hold properties. Most

developers prefer to sell

Foreign Investors

ASCENDAS, Singapore

Present in India since 1997


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Established a wholly owned subsidiary, Ascenda India Private Limited Operating 5 IT Parks across Banglore, Hydrabad and Chennai having

BUA of 4.4 million

Plan to develop two new IT Parks in Pune and Nagpur at a cost of

US$ 375 million

Plans to invest another US$ 325 million launched in 2007

Ascendas India IT Fund for US$ 520 million launched in 2005

EMAAR, Dubai


Developing integrated township at Mohali over 3000 acres

Plans to develop integrated townships, commercial offices, IT Parks,

SEZs and Hotels

Planning to venture into healthcare and education sector

Joint Venture with MGF Development Limited, India

EmaarMGF has JV with Accor Hotels (France) & Premier Travel Inn

(UK)

Capital outlay of US$ 4 Billion for group projects in real estate in

India

Salim Group, Indonesia



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Developing township at Howrah over 450 acres Plans to construct expressways and bridges, a multi-product SEZ in

Haldia and a Chemicals SEZ in East Midnapore and Health and

Knowledge cities

Joint venture with Unitech and Universal Success

Plans to invest US$ 4.2 billion for projects


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Domestic Players in Real Estate

Unitech

Operating various asset classes in residential, commercial and retail

segment

Developed more than 7 million sq.ft. Of built up area (BUA)

Specialises in planning residential, commercial, SEZ development,

retail and hospitality, integrated townships

430 million sq.tf. Of BUA under planned projects

Major presence in National Capital Region and other areas such as

Kolkata, Chennai and Hyderabad

DLF Developed Asias largest private township DLF City at Gurgaon,

Haryana spread over 3000 acres

Present across all the asset classes: Residential, Commercial and

Retail.

Developed more than 220 million sq.ft. Of BUA

Specialises in planning Hotels, Infrastructure and SEZs 574 million

sq. ft. of BUA under planned Projects

Pan-India footprint, major presence in Gurgaon & Kolkata

K Raheja Corp

Present in Commercial, Retail & Residential asset classes

Developed over 5 million sq. ft. of BUA

Developing 15 self-contained townships and 10 hotels


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Planning to construct 13.2 million sq. ft. of BUA Major presence in Mumbai with operations in Banglore, Ahamedabad,

Goa, Pune and Hyderabad.

Ansal Properties

Operates primarily in Residential & Commercial asset classes

Developed over 2850 acres in Gurgaon and Delhi

Developing integrated townships, malls, hotels IT parks and SEZs

Plan to construct 157.6 million sq.ft. Of BUA

Pan-India footprint with major presence in 16 North-Indian cities

acress 4 states

Sobha Developers

Asset classes include Residential, Commercial, Development of plots

and Contractual projects

Developed over 4.5 million sq. ft. of BUA

Planning residential and retail projects

101 million sq. ft. of BUA is planned under various projects

Major concentration in Banglore with presence in other areas such as

Cochin, Chennai and Pune.

Parsvnath Developers

Presence in Residential, Retail Commercial asset classes

Developed over 3.8 million sq. ft. of BUA

Plans to develop IT Parks and 12 SEZs across the country

Plannin to construct around 46.5 million sq. ft. of BUA


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Major Presence in National Capital Region Increasing Pan-India Footprint, active in over 46 cities across 17 states

Lowcost HousingRationale for Investment

Rural population of almost 72%

Huge market potential

A housing shortage of 23 million units and the need to invest over

US$ 97.6 billion over 10 years. Shift from rented to owned house

Easy Access to financing

Nuclear Families

Government initiatives such as extension of benefits u/s 80i to mass

housing projects, scrapping of the Urban Land Ceiling Act,

implementation of the Securitization Act

Unlocking of Land Assets

National Commission recommendations for formation or

reorganization of Institutions

Public Sector Units assessing their land holdings for commercial

exploitation


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Public Sector estimated to have more than 45,000 hectares of under-utilized land

VSNL 300 Ha

IDPL 1000 Ha

LIC 400 Ha

HIL 20 Ha

National Textile Corporation 280 Ha

Indian Railways 43,000 Ha

Private sector also plans to exploit their land banks

Private sector units assessing their land holdings to exploit them

commercially.

Industrial houses are developing excess land adjacent to industrial

sites

Major Private groups include Mukand. IVRCL, Kilburn Engineering,

Unichem, Indo Rama, Raymonds, Alembic Glass

Real Estate Development by Delhi Metro Rail Corporation

Adopts a PPP model

It leases out the land and private developer develops retail and

commercial offices

Earned US$ 66 million from real estate segment and only US$ 25

million from traffic operations

Real estate contribution increased from 6% to 25% for funding future

expansion of network


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RISKS AND CONCERNS

Overheating market

On the real estate front, persistent demand-supply gap has led to

spiraling property prices

Capital values raised by more than 100% in all key markets

Oversupply expected in few product classes IT SEZs, Luxury end

residential

RBIs measures to cool the real estate market

Change in preference share policy

Foreign investment coming as non-convertible, optionally convertible

or partially convertible preference shares would be considered as

Debt and shall require compliance with ECB guidelines


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Change in ECB Policy Utilization of ECB proceeds is no longer permitted in real estate;

exemption granted to integrated townships has been withdrawn

Risk weightage increase

In 2006, RBI increased the risk weightage on bank exposures to

commercial real estate from 125% to 150%

Rising interest rates

RBI has implemented various monetary measures to curb inflation and

growth in credit to real estate

Rising interest rates may cause higher loan defaults

Absence of REITs

REITs are a significant source of capital and liquidity for real estate

industry globally

Absence of REITs in India has restricted retail investor participation

and limited capital flows

Regulatory issues

ULCRA is yet to be repealed in some key states, such as Maharashtra,

Karnataka and West Bengal Stamp duty rates are still high in many

states resulting in high transaction costs

Tenancy laws are not in favor of owner

Unclear titles


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A high percentage of land holdings do not have clear titles Land is typically held by individuals/families, which hinders easy

transfer of title

Time-consuming Approval

Approvals required from multiple agencies,

Time consuming and circuitous procedures

Leads to project delays and affects marketability of projects

High Dependence on NRIs

Certain pockets are heavily dependent on NRI money

Leads to speculation and an asset bubble kind of situation

Prices become prohibitively expensive for domestic consumers

Speculative Supply

Certain pockets witnessing speculative supply

Some pockets are purely investor driven, end-user and genuine

consumers suffering

Oversupply leading to downward pressure on prices - price

correction

Overindulgence

Overindulgence of Developers on asset classes which are not demand

driven


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Overstretched commitments and hence quality risks

Future collaboration of REAL ESTATE

and IT-ITES sector in INDIA

After IT Parks and IT SEZs, the government has cleared a proposal for

creating much larger Information Technology Investment regions (ITIRs)

to give a fillip to the country's growing IT and ITeS sector.The Cabinet

Committee on Economic Affairs, which met under the chairmanship of


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Prime Minister Manmohan Singh on Thursday, cleared the policy forsetting up ITIRs, each having an area of at least 40 sq km.

"ITIRs were conceptualised keeping in view the need to boost the growth

of both IT/IT enabled services (ITeS) and Electronic Hardware

Manufacturing (EHM) units," an official statement said. These regions

would become major magnets for investment, creating employment

opportunities and economic growth in the area while reducing the

pressure on existing urban centres by enabling growth of new townships,

it added. The ITIRs will be much larger than IT SEZs. Each ITIR is

expected to be specifically notified investment region with minimum area

of 40 sq km planned for IT and ITeS and EHM units. The minimum

processing area would be 40 per cent of the total area of the ITIR.

The regions would be a combination of IT/ITeS and EHM units, public

utilities, residential areas, social infrastructure and administrative

services. According to the proposal, while the Centre will facilitate

development of national highways, airport and rail links towards the

ITIRs, states will help in the local infrastructure like power, water, health,

and education and state roads. The ITIRs would be developed in a phased

manner through Public-Private Partnership route.

Ongoing real estate projects in IT-ITESsector

New Delhi: The realty sector is projected to grow at the rate of 30 percent annually over the next decade, attracting foreign investments worth


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USD 30 billion, with a number of IT parks and residential townshipsbeing constructed across-India, industry body Assocham said.

Currently, the domestic real estate market is expected to be worth 15billion dollar in which the FDI is estimated to about 6 billion dollar, itsaid.

At present, the foreign developers can undertake construction activitieson a minimum space of 50,000 sq ft, Assocham President Sajjan Jindalsaid in a statement.

The ceiling of 50,000 sq ft would be lifted by the government in want ofmore FDIs and would go to 2 lakh sq ft in next 10 years, as perAssocham's estimate.

The sector would grow more as expected requirement by the IT sector(like IT parks) will be about 200 million sq ft space across the major andlarge townships, it added.

It is also estimated that in the residential sector, the housing shortage isaround 20 million units of which nearly 7 million units are estimated forurban India, it said.

Commenting on the problem faced by the sector, the Assocham said thatthe involvement of Center and a number of state agencies in setting up oftownships is needed.

SCOPE OF INVESTMENT FOR SMALL

INVESTORS IN


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REAL ESTATE SECTOR IN INDIA:

Is real estate financing one of the catalysts behind the boom that India is

witnessing in residential, retail and commercial real estate? Are REITs

and REMFs here to stay? What are the implications of these on the real

estate industry? These are some questions that one thinks of when

analyzing the trends of what used to be a largely disorganized industry in

the recent past. Read on for a perspective.

The Securities and Exchange board of India (SEBI) has been actively

screening proposals to structure an investment instrument known as Real

Estate Investment Trust (REIT). This comes in conjunction with the Real

estate Mutual Funds (REMF), for which norms are expected to be

finalized soon. Mutual Fund houses, such as Kotak Group, ICICI and

HDFC have already expressed interest in floating these funds.

While both these investment instruments are widely popular in the

developed economies, India is yet to witness the introduction of such an

investment option. Designed for a small investor, these instruments

enable you to benefit from the booming real estate industry. In a normal

scenario, you would need a lot of money to invest in real estate projects

but REITs and REMFs will enable you to invest even your little surplus

savings and reap substantial returns.


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These instruments will attract investments from the small investor andinvest in projects, construction companies and commercial malls. The

valuation mechanism of these instruments is still a question because the

duration of projects may vary and so would the risk. While valuation

norms of such instruments need to be considered carefully, you cannot

ignore the benefits that these instruments will provide to the small

investors as well as to the real estate industry. Some such benefits are:

The money that these instruments raise will help structure the entire

financial system supporting the real estate industry.

These could potentially become instruments for long term savings for

small investors and help in diversification of individual portfolios.

An increased transparency in data pertaining to the real estate industry

will help the consumer, the developer as well as administrative

authorities to take well informed decisions.

These instruments will definitely enhance liquidity for housing finance

companies as they would be able to invest in secondary mortgage

markets.

Developers will have access to funds generated from across the country.


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INITIATIVES TAKEN BY THE

GOVERNMENT TO SAFEGUARD THE

INTEREST OF INVESTORS IN REAL ESTATE:

New law is being enected to regulate real estate developers. Now they

have to exclude common space and balconies, from the floor space of

residential units.Mandatory for the builder to specify the area of an

apartment in the sale agreement.

Builder will be required to provide a break-up of what is being charged

for the apartment, along with a separate calculation for charges lavied for

commen spaces like corridors, parking and lifts.

PROPSED BILL BY THE GOVERNMENT:

It will ask the developer to exclude the common spaces, balconies from

far calculation of apartments. Any delay in granting possession of the flat

will attract penalty for the developer. The sales agreement will have to

specify the extra cost of facilities, such as corridors, parking, lifts, etc.

REGULATORU DEVELOPMENTS IN REAL ESTATE:

Indian venture capital firms are now allowed to invest in real estate

companies and projects. The cabinet committee of economic affairs of

India has allowed 100% FDI in the construction sector under the

automatic route. Foreign investors can now invest in commercial real


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estate developments projects with a minimum built area of 50,000sq.mtrs. Minimum area threshold for FDI in integrated township projects

has now been reduced to 25 acres from 100 acres. SEBI has also recently

approved for the guidelines for REMF, allowing them to invest directly in

real estate properties in India.

BENEFITS OF REAL ESTATE MUTUAL FUND (REMF):

REMF by SEBI would provide institional mechanism to the small

investors. REMF will help developers currently reeling under liquidity

crunch with low sales, lower margins and costly fund sourcing, as they

will now have access to alternate sources of funding.

It requires lakhes to invest in a physical property, under REMFs, people

can own a piece of property in the form of stock exchange traded units

with a mere investment of Rs. 10,000. REMFs and REITs will provide

safe investment with a very low ticket size. REMFs will derive much

better tax benefits in comparison to investment in physical real estate

property.

BIG PLAYERS OF REMF:

HDFC PROPERTY FUND.

DHFL VENTURE CAPITAL FUND.

KOTAK MAHINDRA REALTY FUND.


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COST-COMPARISON OF OFFICE SPACE IN INDIA WITH

OTHER COUNTRIES

The demand for office space in India continuous to be strong, despite

fears of some moderation in economic growth. According to the latest

report of global consultancy firm CB Richard Ellis (CBRE) on fastest

growing occupancy costs of office in the world, Mumbai, Banglore and

Delhi fetured at 8th, 22nd, and 45th positions.

While rentals in Mumbai grew at 40.7% in the last one year, they went up

by 22.6% in banglore and by 15.3% in Delhi. However, Mumbai slipped

from 2nd place in November 2007 to the 4th place at present. On the scale

of most expensive office markets in the world, Londons west end,

Moscow and Tokyo dominate the list of costliest places in the world, inthat order, Delhi continuous to be at 7th spot.

The drop in the ranking in most of Indias cities is due to the significant

increase in the rentals in Moscow, where they almost doubled in the last

one year. Although the number four position fo Mumbai is still very high

and is reflective of the tight supply of prime office space in Mumbai and

Delhi, and demand remaining constantly active


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According to the report, office space in Mumbai and Delhi are costlierthan Paris, New York, Stockholm, Milan, Geneva, among others.

This clearly suggests the non-availability of office space in India at

competitive rates. The report also says that although absorption of office

space remained brisk in most markets, continous increases in occupancy

costs have driven some companies to relocate beyond prime locations in

cities including Tokyo, Hong Kong, Singapore, and Mumbai.

According to the report, rentals in Central Bussiness Districts (CBD) in

Mumbai and Delhi are Rs.738 per sq.ft per month ($210.97 per sq.ft per

annum) and Rs.508 per sq.ft per month ($145.16 per sq ft per annum) As

against this, rentals in London are $300 per sq.ft per annum,$142per sq.ft

per annum in Paris, and $103.43 per sq.ft per annum in New York

By the report, in India, supply remained limited inCBD areas, while

facilities in secondary locations like Gurgaon, Noida have attracted office

occupires due to availability of superior facility office space.

What is encouraging in all this that no one doubts the Indian growth story

on a long term, despite the fact that stock market is in jittery. Inflation is

high and RBIs measure to contain inflation has created a liquidity crunch

in the market. This might affect the economic growth in near future


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DEMAND OF OFFICE SPACE IN DIFFERENT CITIES IN INDIA

Despite correction in the stock market, demand for office space in the

country remained buoyant with some moderation. According to a report

on office space by Cushman and Wakefield, the demand for office space

during jan-march 2008 remained upbeat across major cities and stood at

approximately 14 million sq.ft

There has been certainly a marginal slowdown in the rate of growth

across all segments of real estate and its probably good news for the

industry to have some degree of correction, since the long-term demand

continues to look robust and next cycle could be more sustainable and

strong

However, good demand growth for the real estate space suggests that

demand for residential real estate will pick up sooner or later. When


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space is readily not available, tenants commit for the space that is likely

to be built shortly. Such demand is known as pre-commited demand.

In the first quarter of the FY 2008, the NCR of Delhi witnessed a supply

of 2.8 million sq.ft, accounting for 15% of the total supply likely to enter

during the year. The entire supply likely was concentrated in Gurgaon

and Noida, with each accounting for 1.4 million sq.ft. The IT-ITES sector

accounted for about 65% of the total supply in the first quarter, of which

major portion came from Noida.

Interestingly, as more supplies are expected to enter the market, the

demand has also increased. This has resulted in the rental value.

CITIES 2007(S) 08(S)* Q1/08(S) ABSORPTION

/Q1/08

PRE-COMMIT

/Q1/08

DEMAND

/Q1/08

BANGLORE 9.59 14.7 5.95 3.63 1.51 5.14

CHENNAI 10 12 1.09 0.83 0.55 1.38

HYDERABAD 4.10 6 0.37 0.30 0.38 0.68MUMBAI 0.45 13.7 2.13 2 0.60 2.60

PUNE 7.8 12.8 2.52 1.22 0.14 1.36

KOLKATA 2.25 4.5 0.70 0.38 0.74 1.12

NCR 11.5 18 2.78 0.62 1.58 2.20

TOTAL 45.6 82.8 15.54 8.2 5.5 14.48


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0102030405060708090

2007(S)

08(S)*

Q1/08(S)

ABSORPTION

/Q1/08

PRE-COM

MIT/Q1/08

DEMAND

/Q1/08

BANGLORE

CHENNAI

HYDERABAD

MUMBAI

PUNE

KOLKATA

NCRTOTAL

S-SUPPLYValues in million sq.ft

Sources: Cushman and Wakwfield Research

*Expected

FACTORS WHICH ARE HINDERING THE GROWTH OF REAL

ESTATE IN INDIA AT PRESENT:

In the last half of the year the cost of cement, steel and other

necessary materials have increased manifold.

Market correction, lak of buyer and increase in the cost of primery

materials are making the realtors worried.


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There is an increased value of 20% to 25% in the material cost.

High rate of inflation

Increased value of EMI for buyers

Shortage of liquidity volume in the market.

THE REAL APPROCH OF INVESTORS WHILE INVESTING IN

REAL ESTATE

All developers would make us believe that the projects are primarily end

user driven. But, the fact remains that majority of the investment is being

done by the hardcore investors, who is characterized as an early entrant in


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a project, especially at the launch stage , and he exit equally fast, asopposed to the end user who enters at the fag end of the project and stays

on until he occupies the premises.

In the absence of any real single window offering generic advice on

investment in real estate and giving the overall real estate picture,

speculation has been the name of the game.There has been no organized

manner for advising investors and they have banked on gut instinct.

To avoid any malpractices by the developers and middle-men an investor

should keep in mind the following points-

An investor should know his actual time for entering and exiting

from a project, one must take in view the targeted ROI(return on

investment) and than decide to exit a project

Before foraying into new geographies, one should assess the place,

the developer and type of project.

Investment in commercial projects yields high return but with high

risk factor. It will require a minimum investment of Rs. 50 lakh.

The decision of investment should be best on factors such as

demand and affordability and hence certain price points where one

could look at investing to grow money

It is worthwhile to talk to the developer who may give the sense of

what RoIs to expect from any investment.

EFFECT OF ECONOMIC SLOWDOWN ON REAL ESTATE

SECTOR


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The impact of economic slowdown is now visible on the demand for thecommercial office space in india. According to the real estate consultant

group Cushman and Wakwfield, both Indian and international companies

are deferring their expansion plans. This has also affected the rentals of

the office space in the country.

The rentals of IT office space have declined between 3% to 13%. In

NOIDA particularly, the decline in the rentals of the IT office space is

maximum at 13% during the quarter ending june 2008. At present, the

space according to the report is available at Rs. 39 per sq.ft per month. In

GURGAON, the rentals for IT offices have declined by around 3%

during the period to Rs.76 per sq.ft per month.

The slowdown in the office space uptake will effect the demand for

residential units. Because of rise in the interest rate in the last one year,

the demand for residential accommodation is already under pressure.

With the slow down in the economy, demand is likely to further dwindle.

This will put pressure on the real estate prices in the country, which has

already shown some sign of decline in the last three months.


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SLOWDOWN IN OFFICE DEMAND

CITY T.P-08 S-Q1-08 A-Q1-08 P-C-Q1-

08

D-Q2-08

BANGLORE 14.73 3.11 1.97 - 1.97

CHENAI 12.66 3.80 0.91 0.64 1.55

HYDERABAD 4.88 0.75 0.10 0.37 0.47

KOLKATA 4.17 0.66 0.08 0.11 0.19MUMBAI 13.89 4.09 0.69 0.31 1.00

NCR 18.28 4.34 2.13 1.17 3.30

PUNE 10.42 1.02 0.44 0.75 1.19

AHMEDABAD 0.43 0.30 0.04 0.03 0.07

TOTAL 79.46 18.07 6.36 3.38 9.74

0

20

40

60

80

100

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

East

West

North

T.P- TOTAL PROJECTED

S- SUPPLY

A-ABSORPTION

P-C-PER COMMITMENT

D-DEMAND


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Suggestions for effective development in REAL ESTATE in INDIA:

(i) Dearth of knowledge in this booming industry should be

acknowledge

(ii) Sustained industry dialogue should be maintained

(iii) Lack of PPP should be shorted-out

(iv) Need to strengthen technical know-how

(v) Research and adaptation of best practices alongwith sub-sectors of

real estate

(vi) The discussions shought to bridge this knowledge gap and

crystallise possible research areas.

(vii) Lack of transparency and credibility should be checked out.

(viii) Acute shortage of data and academic research and last a lack of

uniform laws and regulatory systems should be formulated.


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CONCLUSION

By the research itself I come to know that real estate in india is now

gearing up to proceed in the next phase of development which seems to

be true with adequate support from the government, interest of big

companies in real estate sector due to its high potential of profit, entry of

professional corporations in Indian market, etc.

The Indian real estate has never been in such a dynamic condition as like

now. With per annum growth of 30% its going to be one of the most

prolific industry in Indian economy at par with telecom, banking,

insurance, retail, etc. With growing potential of profit due to the hugedemand in future most of the big Indian companies as well as reputed

international companies are making tailor-made strategies for entering

Indian real estate sector.

Keeping apart the growth and development in real estate, right now due

to various negative factors in the economy the growth has been dwindling

for a while. High inflation rate , lack of liquidity volume, increased rate

of EMI, increased rate of material goods like cement, steel. Are making it

difficult for developers to control their operation cost which increases the

actual cost of finished product.

The silver lining in this difficult time is that by every research and survey

conducted upon real estate segment in Indian economy shows that in

long-term after correction of the market trend the sector will start to grow

rapidly also a very small market is yet tapped by the developers and a big


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chunk is yet to be attained mostly in 2

nd

and 3

rd

tier cities which couldyield high rate of return as these locations dose not requires huge amount

of investment and with the availability of skilled men-power with low

maintenance would become a big profitable venture specially for IT-

Companies.

MARKET RESEARCH STRATEGY:

SURVEY LOCATION- NOIDA (NCR OF DELHI)

TARGET OBJECT FOR THE SURVEY- PROPERTY

DEALERS.

VOLUME OF SURVEY NUMBER- 100

MODE OF CONDUCT OF SURVEY-

PERSONAL VISIT TO THE OFFICE OF PROPERTY DEALER.

TELEPHONIC INTERVIEW.

SOURCE OF CONTACT-

NEWS PAPERS.

INTERNET.


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LEADS GIVEN BY THE OFFICE.

QUESTIONAIRE FOR MARKET SURVEY

Name

Address Mob. No -

i. Why you deal in real estate?

(1) Profit (2) Low risk (3) Future growth (4)

Others

ii. Have you heard about Vigneshwara Developers ?

(1) Yes (2) No

iii. If yes than from where?

(1) Electronic Media (2) Print Media (3) Friends

(4) Others


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iv. Are you interested in investment in real estate ?(1) Yes (2) No (3) In future

v. Have you heard about Vigneshwara developers IT-Park Project in

Gurgaon-Manesar corridor ?

(1) Yes (2) No

vi. Which developers IT-Park Project you have heard about ?

Ans-

vii. Which is the best product of real estate?

(1) IT-Park (2) Commercial (3) Residential (4)

Others

viii. Why ?

Ans-

ix. Given the option which one will you opt for investment ?

(1) Residential (2) IT-Park (3) Commercial (4)

Others

x. Why investment in residential ?

Ans-

xi. Why investment in IT-Park ?

Ans-


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xii. Why investment in commercial ?

Ans-

xiii. Out of the following which one you think is the best option for

investment?

(1) Real estate (2) Mutual Funds (3) Stocks (4)

Others

xiv. Why ?

Ans-

xv. (15) Have you heard about Real Estate Mutual Fund [REMF] and

Real Estate Investment Trust [REIT]

(1) Yes (2) No

xvi. (16) Do you refer to real estate magazines and journels before

nvestment in real estate ?

(1) Always (2) Sometimes (3) Never

xvii. You see investment in real estate as-

(1) Long term investment (10 years and above)

(2) Medium term investment(5- 10 years)

(3) Short term investment (1-5 years)


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xviii. (18) Which is the most compelling factor for investment in realestate ?

(1) Long term investment (2) Good return on investment

(3) Better option in comparison to mutual funds, stocks, ulip, etc.

(4) Others

xix. (19)Which is the most important parameter while investment in

real estate ?

(1) Location (2) Return on investment

(3) Developers plan (4) Others

xx. (20)Which is the most important factor which deters from

investment in real estate ?

(1) High risk (2) Lack of transperancy

(3) Other better options (4) Others

Remark for Real Estate sector-

Remark for Vigneshwara Developers-


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OBJECTIVE OF MARKET SURVEY

i. To get the insight about the function of channel partners in the

market.

ii. To know how channel partners react to the certain real estate

products like commercial, residential, hospitality, and it-ites sector.


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iii. To know the market strategies of the competitors.

iv. To get the feedback about the companys ongoing project.

v. To know what is the current trend in real estate market.

BIBLIOGRAPHY

www.realestateonline.in
http://www.realestateonline.in/http://www.realestateonline.in/


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www.indianrealestateforum.com

www.ibef.org

www.realtybytes.com

www.zameen-zaidad.com

Times of India

Hindustan times

Business Today

Business World
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