SUMMER TRAINING REPORT SUBMITTED TOWARDS THE

PARTIAL FULFILLMENT OF POST GRADUATE DEGREE IN

INTERNATIONAL BUSINESS

Investors Perception

in Real Estate

SUBMITTED BY:

Ritika Honey Lal__

MBA-IB (2010-2012)

Roll No. : A1802010213

INDUSTRY GUIDE FACULTY GUIDE

Mr. Satender Chauhan Prof, (Dr.) Ajit Mittal

_Manager_

AMITY INTERNATIONAL BUSINESS

SCHOOL, NOIDA

AMITY UNIVERSITY – UTTAR PRADESH

1

CERTIFICATE OF ORIGIN

This is to certify that Ms.Ritika Honey Lal, a student of Post Graduate

Degree in International Business and Finance , Amity International Business

School, Noida has worked in the Finance department, under the able

guidance and supervision of Mr.Satender Chauhan, Manager, Good Living

Consultants Pvt Ltd..

The period for which she was on training was for 8 weeks, starting from 9 th

May 2011 to 9th July 2011. This Summer Internship report has the requisite

standard for the partial fulfillment the Post Graduate Degree in International

Business. To the best of our knowledge no part of this report has been

reproduced from any other report and the contents are based on original

research.

Prof.(Dr.) Ajit Mittal Ritika Honey Lal

(Faculty Guide) (Student)

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ACKNOWLEDGEMENT

I express my sincere gratitude to my industry guide Mr.Satender Chauhan, Manager,

Good Living Consultants Pvt Ltd., for his able guidance, continuous support and

cooperation throughout my project, without which the present work would not have been

possible.

I would also like to thank the entire team of Good Living Consultant Pvt Ltd., for the

constant support and help in the successful completion of my project.

Also, I am thankful to my faculty guide Prof. (Dr.) Ajit Mittal of my institute, for his

continued guidance and invaluable encouragement.

Signature

Ritika Honey Lal

3

TABLE OF CONTENTS

(Research Based)

1. Executive Summary 6

2. Introduction 7

3. Research Methodology 12

Objective

Hypothesis

Research Design

Sample Size

Limitations

4. Literature Review 15

5. Company Profile 22

6. Industry Profile 27

Major Players of industry 28

Factors that determine the Value of Real estate 30

Areas of investment in real estate 33

Reason for the success of real estate 36

Trends in real estate industry 38

Factors effecting decision of investment 40

7. Data Collection 42

Primary

Secondary

8. Finding and Analysis 44

9. Conclusion 53

10. Recommendations 55

11. Bibliography 56

12. Questionnaire 57

13. Case Study 59

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Executive Summary

The Indian economy is the second largest growing economy of the world and the Real

estate sector is one of the major contributors in the growth of the Indian economy. I have

undertaken this study to analyze the perception of the investor in the real estate sector and

also to identify the various reason contributing to the growth of the sector. The study is

based on the data collected both through primary sources such as questionnaires, personal

interviews and secondary sources like internet, journals, books and magazines. The

sample size taken for the study was of 75 respondents who were interviewed personally

and on telephonic interview.

The study also looks into the role of the government by way of different policies that

effect the investment decision of the investor.

A case study was made on Good Living Consultants Pvt Ltd. The case study is based on

the investment made by the company in Rajasthan. It overs the problems faced by the

company and the future prospect of that project.

5

INTRODUCTION

6

REAL ESTATE

Real estate means an immovable property, either commercial or residential which may

consist of a building or a structure. Real estate can be divided into 3 main categories:

Commercial

Residential

Agricultural/Vacant Land

Real estate involves the purchase, sale, and development of land, residential and non-

residential buildings. The main players in the real estate market are the landlords,

developers, builders, real estate agents, tenants, buyers etc. The activities of the real

estate sector includes the housing and construction sectors.

Real estate is a 12$ billion (revenue) industry in India. There has been a rapid growth in

the industry in the past few years. It is one of the fastest growing sectors in India. The

housing sector has been growing at an average of 34% annually. In the residential sector,

a growing middle class is enjoying rising income levels. Combined with smaller

household sizes, this demographic change has boosted demand for more modern housing.

Real estate is not just about housing these days it has become a beneficial investment

option as real estate can be pledged as collateral to secure a loan. One can also earn rental

income from the real estate properties .Profits can be earned from real estate as a result of

appreciation of real estate property prices. This is known as capital gains from real estate.

In the commercial property segment, strong growth in the services sector Specially the IT

and BPO industry have led to greater demand for commercial space.

The importance of real estate sector, as a major player of nation’s growth, can be seen

from the fact that it is the second largest employer next only to agriculture. 5 % of the

country’s GDP is contributed by the housing sector. In the next three or four or five years

this contribution to the GDP is expected to rise to 6%

The real estate industry has significant linkages with several other sectors of the

economy. It consists of a collection of industrial and services sectors of the economy,

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such as construction (housing construction, as well as construction of commercial offices,

retail and industrial buildings, and infrastructure projects such as dams, roads and

bridges), brokerage services, real estate finance services (mortgage banking, real estate

investment), real estate operations, property management, architecture and design.

The relaxed FDI rules implemented by India in the recent years have invited more

foreign investors and real estate sector in India is seemingly the most lucrative ground at

present. Private equity players are considering big investments, banks are giving loans to

builders, and financial institutions are floating real estate funds. Indian property market is

immensely promising and most sought after for the purpose of investment.

Growth Potential

India is currently the second fastest-growing economy in the World. The Indian

construction industry has been playing a vital role in overall economic development of

the country, contributing 6% to GDP. In 2005, the sector generated around 31 million

jobs (of which only 1 million were generated by the organized sector).

Developments in the real estate sector are being influenced by the developments in the

Retail, hospitality and entertainment (e.g., hotels, Resorts, cinema theatres) industries,

economic services (e.g., hospitals, schools) and information technology (IT)-enabled

services (like call centers) etc. Also with the growing quantum of domestic and

international capital inflow, economic growth is likely to continue, and with it, the

demand for infrastructure to maintain and accelerate the performance. As a result, the

public sector has remained a big investor in this sector, given the acute shortage of

infrastructure in India compared to the requisite level required to achieve the next growth

target.

The Government of India proposes to achieve 9.0% GDP growth during the Eleventh

Plan period. To achieve growth of this scale, adequate infrastructure is the most basic

requirement. In order to overcome the current constraint of insufficient modern

infrastructure, the government is developing a program for infrastructure investment

8

through both public and private sectors, and expects to more than double public

investments from 1.2% of GDP in FY07 to 2.8% by FY12. It is also partnering with

private companies on initiatives such as the ultra mega power projects and Golden

Quadrilateral project and Delhi Mumbai industrial Corridor.

Future Prospects on Real Estate Industry

The real estate market in India is yet in an emerging stage and the scope is simply

unlimited. It does not resemble a bubble that will burst. An unhindered growth for the

next twenty years is almost sure. This is because the outsourcing business in India is

growing at a rapid speed and this entails a huge demand for commercial buildings and

urban housing besides improvement in infrastructure. The organized retail market in

India is also accelerating with players like Wal-Mart, Bharti etc. looking forward to make

a mark, thus stepping up the demand for real estate.

The Government’s ambitious projects lined up for the Eleventh Plan period ,shows the

demand for construction is expected to grow by at least 8-9%, and 2.5 million

employment opportunities per annum are expected to be generated. Favorable

government policies for globalization and liberalization have put India on the fast track.

In fact, today India is the second, fastest-growing economy in the world, and is the centre

of attraction globally. With greater quantum of domestic and international capital flowing

into various sectors of the economy, growth is likely to continue. However, it has become

a necessity for India to modernize and expand its infrastructure not only to sustain, but to

benefit from the existing growth spree. Moreover, the government’s initiatives such as

the ultra mega power projects, Golden Quadrilateral project, have been of great support

for the sector. Moreover, increased investment outlay in the Eleventh plan, and higher

private investments, apart from the public-private partnership, would prove beneficial in

meeting the infrastructure needs of various segments of the economy.

9

Government Policies

The government has taken various initiatives to improve the real estate sector. It has

made the policies for FDI in real estate very liberal. The new stand adopted by Indian

government regarding foreign direct investment (FDI) policies has encouraged an

increasing number of countries to invest in Indian Properties. The positive outlook of

Indian government is the key factor behind the sudden rise of the Indian Real Estate

sector. The Government of India in March 2005 amended existing norms to allow 100

per cent FDI in the construction business. This liberalization act cleared the path for

foreign investment to meet the demand into development of the commercial and

residential real estate sectors. It has also encouraged several large financial firms and

private equity funds to launch exclusive funds targeting the Indian real estate sector.

Until now, only Non Resident Indians (NRIs) and Persons of Indian Origin (PIOs) were

permitted to invest in the housing and the real estate sectors. Foreign investors other than

NRIs were allowed to invest only in development of integrated townships and settlements

either through a wholly owned subsidiary or through a joint venture company in India

along with a local partner. The minimum land area for development by foreign investors

is lowered from the earlier floor of 100 acres to 25 acres which has further made the real

estate sector lucrative in the eyes of the foreign investors.

The Government is also initiating various projects like the ultra mega power project,

Golden quadrilateral project and the Delhi Mumbai Industrial corridor.

.

10

RESEARCH METHODOLOGY

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Research Methodology

Objective

To identify the factors affecting the value of real estate.

To identify the main areas of investment in Real estate.

To identify the current trends in real estate.

To identify the factors effecting decision of investing in real estate.

Hypothesis

1. Null Hypothesis: The disposable income is the main factor that drives the

investment decision in real estate.

Alternate Hypothesis : The disposable income is not the main factor for

investment decision in real estate

2. Null Hypothesis: Government Policies play a major role in Real estate

investment

Alternate Hypothesis : Government Policies does not effect the investment in

real estate.

Research Design

The data collected is Primary data and Secondary data which is quantitative data, which

was further analyzed in order to draw conclusions and suggestions.

Sample Sample

75 respondents were interviewed to conclude the result. The interview was taken face to

face and telephonically.

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Limitations

Small sample size

The sample size was only 75 respondents which a very small size to base a

research and give conclusion about the whole sector.These respondents are not

sufficient enough to base our conclusion for the group of investors.

Time bound research

The research was conducted in a short span of time.The responses of the

respondents may be affected by some particular situation prevailing at that

particular time. If the time duration would have been long it would have gien the

general idea or perception of the investors.

Might get biased response

As discussed earlier that the sample size was small also considering that the

interview were conducted in a short span of time, there is high probability that the

respondents might have given biased responses.

13

LITERATURE

REVIEW

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Literature Review

The real estate sector has become a major contributor of an economy’s growth. To

understand the significance of the sector and its implications there have been various

research on real estate industry both in India and abroad. The research are being

conducted to gain more knowledge about the various factors contributing to the growth of

the industry and also to analyze the factors which effect the decision of investment in the

sector. I have tried to study few such research papers to get a better idea about the current

scenario of the real estate sector.

Graeme Newell and Rajeev Kamineni in their research paper assessed the risk-adjusted

performance and portfolio diversification benefits for the real estate markets (office, retail

and residential) of New Delhi and Mumbai. The real estate markets were found to under-

perform the stock market in India over 1998– 2005, with most markets improving their

performance in more recent years, although there was some loss of portfolio

diversification benefits for office and residential real estate with stocks. Deregulation of

the capital markets and international investment in India is also likely to have a

significant impact on future FDI levels and the growth of real estate funds for real estate

investment in India. They also studied that offshoring in the cities like Delhi and Mumbai

has created huge demand for better infrastructure. This area of offshoring has significant

real estate investment issues; particularly concerning technology parks, access to Grade A

office space.

They have also concluded that deregulation of the Indian capital markets since 2004, and

less restrictive guidelines for foreign direct investment in real estate in India since

February 2005 have seen significant improvements in the real estate investment

environment in India for both local and international players. This has taken on increased

importance as India significantly expands its economic growth to potentially be the

world’s third largest economy by 2020, and international real estate investors seek global

investment opportunities; particularly in the emerging Asian real estate markets. The

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expected development of REITs in India in the next few years will also expand the real

estate investment opportunities available in India.

Vandna Singh and Komal (2009) in their research paper found that as the GDP

increases the real estate prices also increases because there is a high degree of Positive

correlation between the real estate prices and GDP. The Real estate prices also increases

with increase in the per capita income as there is high degree of positive correlation

between these two. The FDI into the country affects the real estate FDI and real estate

having a positive correlation leads to the boom in this sector. Increase in FDI from 2006

to march 2007 is 10%. Earlier it was 16% and now in 2008 it is 25%.

The interest rate also affects the real estate prices because it affects the lending and

borrowing by the investors. In residential segment, availability of easy home finance and

rising purchasing power has driven the growth. Builders are launching high-end, life style

residential products to cater to the growing bunch of high net worth individuals.

They suggested that due to high prices the lower income group is not able to purchase the

land, so govt. should take measures to protect the lower income group. The investors

should analyze the type of land in which they are going to invest and the potential

Returns from it. Due to lot of investment avenues in real estate in India, fraud cases are

also increasing day by day like in Delhi deconstruction of buildings. Thus careful

measures and laws should be enacted to deal with these types of situations.

Natalija stated that Advantage India: Real estate is one of the fastest growing sectors in

India. Market analysis pegs returns from realty in India at an average of 14% annually

with a tremendous upsurge in commercial real estate on account of the Indian BPO

boom. Lease rentals have been picking up steadily and there is a gaping demand for

quality infrastructure. A significant demand is also likely to be generated as the

outsourcing boom moves into the manufacturing sector. Further, the housing sector has

been growing at an average of 34% annually, while the hospitality industry witnessed a

growth of 10-15% last year.

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Jim Berry stated that the highest and best use analysis is another component of property

investment analysis, especially in the case of vacant land or deteriorated property that

needs to be redeveloped. Highest and best use is defined as the most profitable use at

which a site can be developed. Thus, highest and best use analysis is usually carried out

for land sites that are acquired for development purposes. A site’s highest and best use

will depend on a number of factors including site physical characteristics, its location,

make up and purchasing power of the population in its area of influence, competitive

projects in its area of influence, market conditions and prospects at the time of analysis,

and other factors. If the land site is zoned in an urban use, the highest and best use

analysis will focus on the feasibility and profitability of developing the alternative

allowable uses.

Future of Real estate in Indian Economy

Analyzing the current scenario there has been various researches forecasting the future of

the real estate industry. According to them the Real Estate potential in India is vast. The

market is expected to grow at 33% through 2005-2010 to US 50 billion as per Negandhi’s

(2007) estimates. Tremendous potential demand along with an improving regulatory

landscape, robust economic growth and gradually improving 27 corporate governance

standards of developers makes the real estate market in India over the next five years

highly sustainable. This strong potential demand is expected to result in an exponential

growth in development plans of real estate companies. According to Negandhi (2007),

development is expected to reach 16 billion square feet across all segments of the real

estate market by 2010 The plan ahead seems sustainable; however it would be unwise to

forget the experience of the 1985-93 boom/bust in real estate that has left industry players

nervous about when it might happen again. A paper by Kaiser (1997) examines the

possible causes and the periodicity of such major real estate cycles. The evidence

suggests that both periods of negative returns, (early 1930’s and early 1990’s) were

caused by excessive levels of new construction which caused an inflation spike in the

general level of prices, suggesting a 50- 60 year real estate bust cycle. The paper safely

concludes that India is not likely to witness another bust period for real estate in the

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next four decades.

The conclusions of Kaiser can be witnessed with the bullishness underlying in the

development proposed by the cumulative strength of the Indian developers. Historically,

Indian real estate companies have undertaken development of 1million- 3million square

feet of real estate annually. With strong growth in demand expected across segments of

real estate over the next few years, Desai & Rane (2006) estimate development plans of

real estate companies to rise to 20million- 30million square feet annually. To sustain

these growth levels, the flow of capital into the sector will be carried out through REITs.

REITs is the future of the Indian real estate market. It is expected to lend the much

needed liquidity to developers and allow them to take out their capital value off

ompleted projects for deployment in newer projects. REITs also serve as an effective

vehicle for broader participation by investors in the market.

However, without demand and latent capital adequacy, none of these plans will

materialize effectively for the players in this segment and a good chunk of their demand

and capital is expected in the form of Foreign Direct Investments. The paper by Henley

(2004) compares the performance of India and China in attracting foreign direct

investment (FDI). FDI statistics suggest that India's performance has been significantly

understated but India still falls behind for several reasons such as high tariff structure,

poor physical infrastructure, a regulatory system that is too often not business friendly

etc. Nonetheless, India has displaced USA as the second-most favored destination for

FDI in the world. ASSOCHAM’s (The Associated Chambers of Commerce and Industry

of India) study on Future of Real Estate Investment in India forecasts that of estimated

US$ 60 billion future market size of real estate business in India, the share of foreign

investments will be within the range of US$ 25-28 billion by 2010. The overseas

investments will also be finding larger space in Indian SEZs and increasing number of

shopping malls that will naturally fatten their share in real estate market. Indian real

estate sector is on boom and this is the right time to invest in property in India to reap the

highest rewards.

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In the research paper on Real estate investment trust by KASB securities limited in

Dec 2005 it came to light that since REIT allows indirect investment in real estate for

small investors who otherwise could have not had this opportunity. And that it is one of

the vehicles that have single taxation and it also offer low volatility and ease of

liquidity.it was suggested that REITs listed under NBFC should be allowed to invest in

real estate development and acquisition. Exposure limits needed redefinition with respect

to a REIT, REITs should be allowed to borrow.

Regarding Modifications to Income Tax Ordinance it was suggested that

· Gains from sale proceeds of land and or building to a REIT should be tax free;

· REITs should be granted a status of investment scheme formed under NBFC Rules as a

result of which it would be tax exempted.

Changes in Voluntary Pension Rules suggested that Under Voluntary Pension Rules,

pension funds should be allowed to invest in REITs.

Various other recommendations included

The Land Record System should be computerized

Tenancy Laws should be strengthened and should be classified as criminal law for

settlement of disputes efficiently for property formed under REIT structure

Transaction costs should be reduced

Buyers of property from REITs should not be asked source of income;

Though the above recommendations were made however, it was concluded that the

markets will not function smoothly unless the rental yields improve, tenancy laws are

strengthened, official and unofficial pricing issue is settled, paghri system is abolished,

and the time consumed in legal proceedings is reduced.

The ups and down of Real Estate Markets

Dirk Brounen in Dec 2008 said that the Real estate markets around the world have

earned a complicated reputation. On the one hand, real estate markets offer investors a

wide spectrum of profitable investments opportunities, investments that nowadays can be

executed by simply buying shares of stock listed by real estate investment companies. In

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the first half of this inaugural address, the boom of these real estate stocks is discussed. In

less than three decades, the listed real estate market developed into a sector with almost

400 listed firms worldwide, representing a sum aggregate market capitalization of around

one trillion dollars by the end of 2007. Three relevant lessons regarding these

international real estate stocks are discussed in the first fifteen pages of this booklet,

lessons offered by real estate research from the Rotterdam School of Management. On

the other hand, real estate markets are notorious for attracting entrepreneurs with bad

intentions, seeking for opportunities to circumvent the strong arm of the law. These

activities have yielded many headlines in the daily press and have given real estate a

gloomy reputation. The dynamics of foreclosure auction of homes is an example of a

source of negative headlines, stressing that the suboptimal organization of these auctions

prohibits distressed sellers from earning a fair price for their home. In the second part of

this address, I focus on an empirical test of the matter. By analyzing over 700 auctioned

homes the dynamics of the auction system is discussed objectively. This offers a fair

view on the problems at hand and searches for way to improve the system in the near

future.

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COMPANY PROFILE

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GOOD LIVING CONSULATNTS PVT LTD.

GOOD LIVING CONSULTANTS Pvt. Ltd is a real estate Building and consulting

company formed in 1994.Its registered office is in south extension Part-II .It started

business with few small contracts in different regions of Delhi & ncr .In the later years

the company started working at larger scale and took up the work of building and

development of Group Housing Projects.

Cosmos Group Housing CGHS was an initiative of Good Living Consultants Pvt Ltd. It

was the was the very first residential project in dwarka. It gave Good Living the first

movers advantage. The company benefited a lot from this project. It build 175 flats under

this project. All 2bhk apartment with all modern facilities.

The flats were completed and allotted was made to the members in the year 1999.

It was one of the most successful project undertaken by the company till date.

After the completion of Cosmos the company undertook another project in the same area

i.e. dwarka by the name of Manglik CGHS.

This project had 112 flats in the category of 2bhk and 3bhk.

The project was completed in the year 2003.

Apart from the residential projects that Good Living was making in various regions of

Delhi and NCR it was also investing in Commercial Properties. It bought a commercial

complex in Rajnagar extension; Ghaziabad. Where the company constructed 20 shops

including halls and office space.

In the later years the company made another investment yet again in the Dwarka region

where it build 238 flats including 2bhk, 3bhk,4bhk apartments in the name of Naval

Technical Officers CGHS.

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With over a decade of experience in real estate construction & development, the company

has built over 10 Housing projects. The Company is behind the development of numerous

group housing projects in the dwarka.

Apart from working in Delhi and Ncr the company has now taken up project in

Rajasthan. It’s currently working on a housing project in shahjahanpur in Alwar district

Rajasthan. The project is build under a land area of 3375 sq. m It has 54 Apartments with

a flat area of 1077 sq ft.

The company bought this land in an auction in 2005 which was conducted by RIICO. The

land was sold by the government at subsidized rates. In the same auction Good Living

bought a commercial property with a Plot size 4789sq. m. near to 1 acre. It is planning to

build a Hotel.

SWOT of Good Living Consultants Pvt Ltd.

Strength

Dynamic leadership of the Chairman Mr. Shri Chand Chauhan.

Mr.Chauhan is the pillar of the organization, under his guidance the company has

reached from a level of builder to a developer in the industry. It’s his hard work

and guidance which has brought the company to the position where it stand today.

The company will go a long way with such a dedicated and passionate person.

Good Living has large number of assets in the form of Residential properties

and commercial properties in Delhi and NCR.

The company has bought various projects in and around Delhi and is working

towards developing them. It has expanded its base from Delhi and NCR to

Rajasthan. The company is taking various initiatives in the field.

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It has Goodwill in the industry

Good Living Consultant has Goodwill in the industry. Being an initiator of

investment in dwarka region it has created its image in the industry among the

competitors.

Weakness

Liquidity Problem

The company is facing liquidity problem as it has invested in Shahjahanpur where

it is incurring losses currently as it has not been able to book any flats till date.

This is creating liquidity problem in the company

Website

The company does not have a proper website in place. If it has a website it would

be able to explore more opportunities. It will be able to show its presence even

online.

Lack of good Policies

The company does not have good policies relating to marketing strategies. It

should also have a research department in place. The company has incurred losses

due to lack of research like one such major problem was faced while investing in

Shahjahanpur.

Opportunities

DMIC

The biggest opportunity that the company has is for it shahjahanpur project. The

area has come under the proposed area for development under Delhi Mumbai

Industrial corridor. It can earn huge profits from this project and benefit in the

long run.

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Expanding Base

The company has an opportunity as it can explore new areas where it has not yet

reached out. The company is currently working in Delhi, Ncr and Rajasthan. It

can reach out to other states and increase its current base.

Diversification

The company can diversify its business. It can work in other areas like retail and

expand its business. It can also enter into its related fields.

Threats

Threat from the competitor

The company has threat from its competitors who have brand name in the

industry. Good Living is not yet a brand and so it faces problems from the top

shots of the industry.

Recession

The world faced lot of problems due to recession where the main problem was

actually the real estate industry, though India did well at that time but still if

recession could hit the country in such a bad way it could also affect Indian real

estate industry.

25

INDUSTRY PROFILE

26

Top Players of Real estate industry

o DLF: DLF’s chief business is to develop housing, marketable and retail

properties. Currently it has undertaken the development of 70 million sq ft of

housing projects which it intends to finish in the next three years. DLF has

joined hands with Delhi Development Authority to develop townships in

Amritsar, Pune, Gurgaon, Mumbai, Chennai and Goa. DLF has been the

construction company behind different malls in the major cities in India. The

company is also developing 50-75 hotels along with Hilton Hotels and

infrastructure and SEZ in India in collaboration with Laing O’Rourke

(UK).The current market cap is around Rs.51,832.22 crore.

o Tata Projects: Tata Projects registered an annual turnover of Rs 2,300 crore

on July 1, 2007. With more than 1,500 professionals the company has

emerged as one of the chief player in EPC projects. Over the last four years,

it has attained a CAGR of 50 per cent which quadrupled its annual turnover

of 2006-07. Tata Projects functions in concentrated divisions like broadcast

and distribution, steel, power production, oil, gas and hydrocarbons and

industrial infrastructure.

o Omaxe : Omaxe has successfully executed more than one hundred and

twenty industrial, institutional, commercial and residential projects for a

number of prestigious Indian private, public sector and Multinational's

clients such as Amity University, LG, Pepsi, Samsung, Wave Cinemas,

National Brain Research Centre, P.G.I. M.E.R, Apollo Hospitals and Delhi

High Court.

o Shapoorji Pallonji & Co: The Company has more than 3,500 professionals

working for it and is largely driven by its loyalty to consumer satisfaction.

Some of the major projects undertaken by Shapoorji Pallonji & Co are World

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Trade Centre, Mumbai; TELCO industrial complex, Pune; Bhabha Atomic

Research Centre, Kalpakkam; HSBC Bank, Mumbai; Hotel Taj

Intercontinental, Mumbai; Bank of India, Mumbai; Indira Gandhi

International Airport, New Delhi, etc. the company has created magnum

opus of construction and has been a consistent executer of challenging

projects.

o Unitech: Recently Ramesh Chandra, Unitech’s Chairman has declared the

investment of $ 720 million by his company in the coming four years to

develop 28 hotels along with Marriott International. The market

capitalisation of the company is Rs.16,867.40 crore.Its chief activities

include construction, expansion of real-estate, consultancy in associated

sectors, hotels, electrical broadcast and information technology.

o India Bulls Real Estate: One of India’s largest listed developers developing

residential and commercial real estate. Being a focused regional player, more

than 90% of IBREL’s portfolio by value is in the three major markets of

Mumbai, NCR and Chennai. Established in 2000, the company has grown

into one of the leading Indian business houses with its companies being

listed on Indian and overseas financial markets having a combined net worth

in excess of Rs. 18,000 crores. the current market cap being Rs.6,545.17

crore.

o HDIL: Ranked as India’s fastest growing real estate company by

Construction World-NICMAR in October 2007 & with a current market cap

of Rs.8,567.76 crore, Housing Development & Infrastructure Limited has

established itself as one of India’s premier real estate development

companies, with significant operations in the Mumbai Metropolitan Region.

HDIL is a public listed real estate company in India with shares traded on the

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BSE & NSE Stock Exchanges. With operations spanning every aspect of the

real estate business, from residential apartment complexes to towers &

townships, commercial premium office spaces and retail projects like world-

class shopping malls. it is India’s largest slum rehabilitation company, & was

given the Mumbai International Airport Slum Rehabilitation project in

October 2007,one of the largest urban rehabilitation projects in India.

.

o Emaarr-MGF: One of the world’s leading real estate developers company

in India and Development of properties in the residential flats, Commercial

Properties, premium apartments etc. The ‘Commonwealth Games Village

builder’ is still trying to get listed on NSE. Currently not listed.

Factors determining the value of real estate

Demand

Demand refers to people’s willingness and ability to buy or rent a given property. In part

demand stems from a market area’s base. In most real estate markets, the source of

buying power comes from jobs. Property values follow an upward path when

employment is increasing. The real estate market in India has seen remarkable changes in

the past few years. The rapid expansions of information technology, especially BPOs,

spurt in the middle class income and 8% growth in GDP are the potential key factors for

the growth.

India is the 4th largest economy in the world, and has the 2nd highest GDP among the

Developing countries based on purchasing power parity. IT and IT enable services sector

in India is still in its growing stage due to increasing demand for business processing

units in India and is estimated to grow by 107% to $583 million in revenue. This could

29

lead to a space requirement of 20-25 million sq. ft. per annum, according to a Merrill

Lynch report. Taking this factor into consideration, the Total value of real estate created

by the IT and ITES sector in the next three years will be Rs.132000.

Supply Analysis

Supply analysis means sizing up the competition. Nobody wants to pay more for a

property than the price they can pay for competing property. An integral part of value

analysis requires identifying sources of potential competition and then inventorying them

by price and features. An analysis of supply should not limit potential competitors to

geographically and physically similar properties. In some markets, for example, low

priced single family houses might compete with condominium units, manufactured

homes and even with rental apartments.

The Property

In real estate the property itself is also a key ingredient. The price that people will pay is

governed by their needs and the relative prices of the properties available to meet those

needs. To try to develop a property’s competitive edge, an investor should consider five

things:

1. Restrictions on use

2. Location

3. Site characteristics

4. Improvements

5. Property management

Rental Trends in India

Recent trends of rental properties in India are conspicuous by the immense potential that

is being realized today. Rental values in cities like Delhi and outskirts are witnessing an

30

increase of 20-25%. Real estate agents are devoting themselves to negotiations for rented

homes than ever. Though the interest rates on home loans, continued tax exemptions on

such prompts people to buy property, those with the ability to buy a flat among the

middle-class are thinking twice.

In residential segment, the capital value or cost of flats has almost doubled in cities like

Gurgaon where prices went up to Rs. 45 lakh from Rs. 15 lakh a couple of years back.

The demand for more capital appreciation in the wake of rising prices coupled with home

loan rate hike has dampened the buying spirit. This has in ways propelled demand for

rental property in India. Increased demand for independent houses or paying guests

occurs mainly in the metros like Delhi, Gurgaon, and Mumbai etc. where the corporate

sectors rent independent houses for their senior executives. A paying guest or PG

accommodation in India is a convenient arrangement. Even PG hostels and working

Women’s hostels are considered safe and can be availed of on an individual or sharing

basis mean big business.

The real estate rental trends in commercial sector are momentous as the key tendency

among the investors is to rent a commercial space instead of buying. It will facilitate low

risk and less worry on maintenance. Commercial rentals including corporate office space,

BPO spaces, mall space, shops and showrooms are an integral part of the commercial

rentals in India. Buying good space in high quality development and leasing it to a good

brand is a wise investment decision. Usually, commercial lease agreements specify a 15%

escalation in the real estate rental in every three years which is a good enough yield. For

those considering regular rental returns rather than capital appreciation, mall space has

the distinction to be an excellent option. It gives returns higher than that received with

office space and much higher than the rental returns from residential space.

31

Major Areas of Investment in Real estate

Real estate Stocks and REIT

The passive investor would likely want to place investment funds into the stock market in

the form of equities of major national homebuilders. Or they might invest in a Real Estate

Investment Trust. This is a fund set up and managed to invest in stocks, bonds and

mortgage instruments in the real estate area. People find it a convenient and safe mode of

investment as small investors who do not have large funds to invest directly in real estate

property are able to benefit from the schemes as large number of small investors come

together and pool in their funds and invest them through people who have specialized

skills of investment. This option not just give small investors the benefit of enjoying the

income of real estate sector but also provide them with less risk as the risk gets distributes

among large number of investors and the amount is managed by fund managers. REIT

are such ways of investing

Mortgage Instruments

Discounted notes are another investment strategy. Sellers many times accept a mortgage

from a buyer, and after payments have been made for a while, they want to convert to

cash. They sell the note to an investor at a discount and the investor then gets payments

from the buyer.

32

Appreciation of the Market Value of Properties

This is the most widely known way of profiting in real estate. A property is purchased

and held. Over time, the value of the property appreciates, sometimes even faster than the

overall market. Certain areas of the country have experienced significant appreciation in

home values over the last ten years.

Rental Income from residential Property

This type of income is at a rise these days .As it gives an ease of earning regular income.

A person can invest in a property and purchase it and then can lend it on rent to tenants,

paying guest and earn handsome rent every month. It is becoming a trend in the

metropolitan cities as more and more people are coming to metropolitan cities in search

for work and when these people come to different cities to make a career and settle down

they live on rented accommodations, due to such reasons this has become a huge business

these days.

Investment in commercial properties

In today’s time commercial property are very expensive. The price is really high due to

increase in trade. Commercial properties are in demand and so investors find it as a

lucrative investment option. Be it a small investor who invest in a commercial property

like a small shop or big investors who invest in malls, technology parks etc. Every

investor can invest in these properties based on this level of investment. There is scope

for all types of investors.

33

Vacant Land

People purchase vacant land, few keep it as it is and sell it off when the prices increase.

Big developers purchase vacant land at discounted prices in auctions and then construct

huge apartments, villas, cities .and then sell these flats individually and earn large profits.

Some others build up amazement parks and earn from it. There are various ways in which

a person can earn from vacant land by converting it into different alternatives.

34

Major reasons for success of Real estate sector

Expansion and Development of the IT sector

Liberalization and Globalization has opened various avenues for investment. Number of

MNC’s have set up their base in India and have given way to the growth in the real-estate

sector especially in the commercial property sector. This has also provided better

employment opportunities to the people of India and thus helping in the overall growth of

the Indian economy and subsequently in the growth of the real estate. There are large

number of BPO’s and KPO’s that have set their base in India. These companies require

better infrastructure to match up with their work and so came up the concept of

Technology Park. This has not only benefited the real estate industry but other interlinked

industries as well effecting the India’s overall economic growth. We can see that as these

companies are increasing their presence so is the value of real estate .In the current time

they are one of the major contributors in the upliftment of the real estate sector.

Liberalized FDI Policy

The decision of the Indian Government to liberalize the FDI policy has bought a relief to

the foreign investors who can now invest up to 100 % in construction and housing

development. This has made investment in Indian real estate more lucrative. Since the

policies are being liberalized and restrictions are being removed India is becoming a

favored destination for investment purpose for the foreign investors. They prefer India as

it is a developing Nation, that too a one with one of the largest economies, these factors

when added to the relaxation of policy brings about more funds from outside India.

Thereby increasing not just the worth of the real estate sector but also contributing in the

growth of the economy.  Some of the world’s famous builders are taking keen interest in

investing in the Indian real-estate market. Investment of foreign builders’ promises better

35

prospects in the Indian real estate industry in terms of regulatory policy, efficient

management, and the use of more advanced technology. This ensures that the Indian real

estate has a brighter future. . The minimum land area for development by foreign

investors is lowered from the earlier floor of 100 acres to 25 acres which has further

made the real estate sector lucrative in the eyes of the foreign investors.

Convenience in obtaining Bank Loan.

There are number of banks in India. Due to the presence of large number of both

nationalized and private banks competition has also increased. Competition is not just

between the Private Banks but even amongst the nationalized banks. To compete each

other these banks try and facilitate the customer to get the best of products and services.

In the recent years banks have been offering hassle free loans to the customer which has

increased the capacity of the investor to purchase real estate. So, buying a property is not

difficult even for those belonging to middle-class. Thus, it has enabled the overall growth

of the Indian real estate.

Growth of the Indian economy

The Indian economy is one of the fastest growing economies in the World. This has a

direct effect on the real estate sector as it is one of the largest sectors in the Indian

economy.  Some of the major areas which have been greatly affected by the growth in

Indian economy are Delhi NCR, Mumbai, Hyderabad, Chennai, Bangalore, Pune and

Kolkata. This growth is observed in all forms of property such as commercial, residential

and industrial.

36

Trends in Real Estate

Janta Flats

Until few years people use to live in Flats which were distinguished as LIG, MIG and

HIG. The Low income Group Housed which was 1 bhk house, Middle income group flats

use to have 2 bhk house and High Income Group Houses were 3bhk houses. This trend

stayed for quite a long time and even today in few areas we can see LIG, MIG and HIG

Janta Flats made by the government.

Builder Flats

Then came a time when Builder made Flats became a range among people. People

preferred them as they were well furnished homes as compared to the previous Janta

Flats. Builders use to purchase vacant land or some existing old house deconstruct the old

building and reconstruct new flats with latest designs. These flats were build keeping in

mind the owners choice and preferences unlike those of Janta flats. Even today builder

Flats are being constructed majorly trying to develop the under developed regions.

Apartments

They were like Builder flats but had better facilities as compared to them. Apartments

had large number of flats in the building.

Co-operative Societies

This was a corporation wherein the corporation owned two or more residential building.

Each member of the cooperative housing society was given a house each. The member

needs to take the approval of the society before selling off the property to the third

person.

Penthouses

37

These are huge houses which cater to the needs of the upper class people. As space in

metropolitans are reducing because of increase in number of migrants the space required

for living and constructing individual houses has reduced drastically. So penthouses were

built which are really huge apartments.

Villas

They are individual houses build in a locality, they look like cottage type.

Cities

Big Builders are not just providing houses to live in but they are building up small cities

within few acres of land. The Cities are build in such a way that it consist of residential

flats, schools, hospitals, multiplex, malls, clubs all around the residential flats to bring the

life’s of people at ease. This is the latest trend in the real estate sector. Every Big builder/

developer are building their own cities as it not just provides them with onetime payment

but with regular income by way f various facilities being offered by them.

Green Houses

This is another new concept which is doing great business.As people have

become more conscious about going green, about saving our resources so as to

benefit from the in the future ,Customers are willing to pay more than the normal

market price if they are getting environment friendly alternatives . Solar panels

are used and all possible steps are taken to save our natural resources like

Efficiently using energy, water, and other resources, Protecting occupant health

and improving employee productivity, Reducing waste, pollution

and environmental degradation.

38

Factors effecting decision of investing in Real Estate

Price

The prevailing price of the real estate is a major factor that influences the investment

decision of the investor. Every buyer has his own capacity to purchase a property at

different prices. The prices of property may rise due to different factors. Some people

purchase property even when the prices are rising as they expect that the prices may

rise even further and then may have to regret. whereas some people avoid purchasing

when the prices rise as they wait for the prices to fall and purchase at lower prices.

Bank Rate

Bank rate is another important factor that determines the decision of the investor. The

investor would assess whether the investment that he is making is worth the interest

that he would be paying to take a loan for purchasing the property. He would assess it

based on the amount that he is expecting to earn from his investment. The Banks rate

fluctuate based on different policies that the government makes.

Location

The investor looks into the factors like the location of the property before investing

any money in the property. It is not just a deciding factor as to whether he should

purchase it or not but also helps in deciding how much is the investor willing to spend

on the property based on the location of the property. If a person is getting a Property

in some prime location he might not mind paying more than the market price but if

the location is not as per his satisfaction he will bargain to get the prices reduced.

Location preference is different for each investor as per his requirements and personal

choice.

Economies Condition

The situation prevailing in a country is another important factor. If the country is

going through a bad phase the investor would not invest at that time. A stable

economy is always a favored destination among the investors.

39

Government Policies

Government policies are one of the major factors that affect the decision of the

investors. Government policies relate to taxation policy, stamp duties and various

other things like FDI involvement etc.

This is an important factor while deciding. If the government policies keep changing

then people will be reluctant to invest in such an economy.

Disposable Income

The disposable income of a person is a major factor that determines his investment

decision. If a person has high disposable income he can invest in huge real estate

properties whereas if the disposable income is less then the investor might not be able

to invest in real estate directly and he may invest in REIT, equities of real estate

companies.

40

DATA

COLLECTION

41

Data Collection

Primary Data

Questionnaire

Face to face interview

Telephonic Interview

Secondary Data

Internet

Journals

Books

Magazines

42

FINDINGS

AND

ANALYSIS

43

Findings and Analysis

The findings and analysis are based on the survey done on prospective buyers. The

survey was conducted through the use of questionnaire. The following are the findings

and analysis of the survey.

1. Age group of Investors

8%

23%

42%

27%

Age Group of Investors 20 -25 years 26 - 35 years 36- 45 years 45 and above

The respondent of the survey were mostly in the age group of 36-

45 years i.e. 42%. Followed by the people in the age group of 45

years and above- 27%. 23% in age group of 26 to 35 years and the

least were people in the age group of 20 to 25 years. This shows

the type of sample that we are analyzing

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2. Income Level

2 - 3.5 lakh 3.5 - 6 lakh 6- 10 lakh 10 lakh and above

0

5

10

15

20

25

30

35

40

45

Income Level

Series1

The above analysis shows that the people covered under the survey

mostly included people from the income group of 6-10 lakhs i.e.

39% , followed by people with income above 10 lakh- 33% and the

remaining were in the category of 3.5 to lakh and 2- 3.5 lakh

consisting of 22% and 6% respectively.

45

3. Preferred Investment Option

36%

34%

12%

18%

Preferred Investment OptionReal estate Equity Mutual Funds Gold

The above findings show that Real estate is a favored investment

option among the respondent by 36% followed by equity, gold and

mutual funds by 34%, 18 % and 12 % respectively. This infers the

trust and the interest of the investors in Real estate sector. People

are willing to invest in real estate be it a large investor or small all

of them try to invest in real estate sector in the ways convenient to

them.

46

4. Preferred investment in real estate

38%

24%13%

25%

Preferred Real estate Investment Op-tion

Residential CommercialREIT equity of real estate

The above analysis shows that investors preferred investment

option is residential property by 38% .The next best option being

equity shares of real estate companies by 25% followed closely by

commercial property with 24% and the least investment is in REIT

with only 13 % respondents investing in it. This analysis clearly

shows that residential property is the most favored investment

option amongst the investors. The above analysis also shows that

people are not investing in REIT’s when asked the reason most the

people were not even aware about it.

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5. Factors effecting real estate investment decisions

22%

18%

17%

3%

12%

28%

Factors effecting InvestmentPrice Bank Rate LocationEconomies Condition Government Policies Disposable Income

The major factor that effects the investment decision is the

Disposable Income of the investor .which constitutes 28% of the

respondents. The prevailing price of the properties is another

important factor it constitutes 22% of the respondents if the price is

too high people avoid purchasing the property and vice versa. Price

is the major determinant factor followed by Bank rate at 18 % as it

is very important for people who are opting for loans from the

banks ,as they need to assess whether the investment is worth

paying the interest on the loan or not. Then comes location at 17%

followed closely by Government policies holding 12% of the

respondents.These policies are regarding taxes, subsidies, stamp

duties , FDI and the like. Economies condition also effect around

3% respondents.

48

6. Perception about effect of recession

8%

31%

22%

19%

20%

Perception of BuyersCost Decreased Projects Delayed Stop PurchasingGood time to purchase No difference

To see the effect of recession on the minds of people I asked them

about what according to them was the effect of recession in the real

estate sector in india.31% respondents said that the projects were

delayed .22% said that people would have stopped purchasing as

the recession was effected mainly due to real estate sector and that

it has become a risky option to invest.20% people said that as

recession did not affect the Indian economy at large so it does not

affect their investment decision.19% felt that it was a good time to

purchase real estate properties.8% people felt that the cost should

have reduced .

49

7. Preferred time duration of investment

15%

28%

34%

23%

Time Duration1- 3 years 3-5 years5-10 years more than 10 years

Around 34% people invested for a time period of 5-10 years ,

followed by 28% investing for a duration of 3-5 years.23% for

long term i.e. for more than 10 years and 15% invested for a time

duration of 1- 3 years. This analysis shows that people invest in

real estate for long term which is around 5-10 years.

50

8. Better Future of Real estate

69%

20%

11%

Better Future of Real estateYes No Neutral

69% respondent feels that the Indian real estate industry has a

bright future and will increase in the coming days. Whereas 20 %

of the respondents feel the other way round. 11% respondents were

neutral about the issue and said that the situation will remain same

without any change.

Majority of the respondents are positive about the future of the real

estate industry.

51

Conclusion

As we are aware that India is one of the fastest growing economy in the world and the

real estate sector of India is one of the major contributor to the growth of the economy. It

is the second largest sector for employment opportunities after agriculture sector. . 5 % of

the country’s GDP is contributed by the housing sector.

From the above study we can infer that the main reason for the success of the Real estate

sector is the Growth of the economy as a whole. When the disposable income of the

investors increases they invest more in the real estate sector as they find it a lucrative

investment opportunity. Real estate is a favored investment option due to various efforts

that are being made by the government.

Government Policies are another major reason for the increase of investment in the real

estate sector. One of the most recent and effective policy change of government which

has bought an increase in the investment of real estate sector is the liberalized policy of

the government in relation to FDI in the real estate sector. As the government has allowed

100% FDI in the construction sector there are large numbers of foreign investors who are

investing in the Indian real estate industry. The governments rule where it has reduced

the minimum land area for development by foreign investors from the earlier floor of 100

acres to 25 acres which has further made the real estate sector lucrative in the eyes of the

foreign investors.

Foreign investors play a major role in the development of the real estate sector, whether

directly or indirectly. Direct FDI is an example, the other way is by the increase in the

number of MNC’s , there is requirement of better infrastructure facilities so when the

demand increases it benefits the industry.

The rental trend has also increased many folds in the recent years. People not just invest

in real estate for property appreciation but they also invest to earn regular income by way

52

of rent from the properties. Rental trend is on a rise people rent commercial and

residential properties. Paying Guest, hostels are also very common these days due to

large demand.

Real estate investment trust (REIT) is a good option available for small investors , who

can pool in their funds and invest in the real estate sector and also benefit from the skilled

knowledge of the fund managers who analyze the various pros and cons and then make

the investment decision for the investors in different funds of real estate market. After

speaking to the investors’ one of the conclusion that I came across was that though REIT

is a very good option for investing in the real estate sector but most of the people are not

able to utilize it as they are not aware about it. Government should take up steps to bring

awareness amongst the people about REIT.

Bank Loans are another important factor effecting the investors’ investment decision. The

govt should build such policies which make obtaining a loan for investment in real estate

a hassle free process; also to increase the investment in real estate the government should

keep the Bank rate low as it is one of the major drivers of investment in real estate sector.

The investor always assess whether the investment that he is making is worth the interest

that he will be paying to obtain a loan for such an investment.

The final conclusion that I can give from the above study is that there is great scope of

the real estate sector. It will grow in the near future and will be one of the major reason

for the growth for the Indian economy.

53

Recommendations

The government should liberalize its policies regarding investment in real estate.

As we have seen in the above study that because of the governments initiative of

liberalizing the FDI policy relating to investment in Real estate sector there has

been huge investments being made by the foreign investors. So the government

should take such steps.

The government should create awareness amongst the general public about REIT

as most of the people are not investing in it due to lack of awareness .It is a good

investment option but people are not benefiting from it as they are not aware

about it.

The government should lower the interest rate as it is one of the major factors that

determine the investment decision of the investor. If the govt want to increase the

investment in the real estate sector then it will have to reduce the bank rates so

that it increases the money in the hands of people and they invest in real estate.

Investors have high hopes from the real estate industry, even though they are

aware about the delays in the projects due to recession, Still they are positive

about the future prospect of the real estate industry.

54

Bibliography

www.makaan.com

www.magicbricks.com

www.ansalspropertiesltd.com

www.eros-group.com

www.eldecogroup.com

www.omaxe.com

www.parsvnath.com

www.ashianahousing.com

www.gurgaonproperties.net

www.realestatencr.com

www.gurgaonrealestate.com

www.estatedeveloper.com

www.bank bazaar.com

www. noradarealestate.com

55

QUESSIONNAIRE

1. Name :

2. Age :

3. Gender :

4. Income Level :

2 lakh – 3.5 lakh

3.5 to 6 lakh

6 to 10 lakh

10 lakh and above

5. What is your preferred investment option :

Real estate

Equity

Mutual Funds

Gold

6. Which option do you prefer while investing in Real estate :

Residential Property

Commercial Property

Real estate investment trust

Equity of real estate companies

7. Which is the most important factor that effect your real estate investment decision

Price

Bank Rate

Location

Economies Condition

Govt Policies

8. What is your perception about the effect of recession in the real estate market in

India:

56

Cost Decreased

Projects Delayed

Stop Purchasing

Good time to purchase

No Difference

9. What is your preferred time duration of Investment :

1-3 years

3-5 years

5-10 years

More than 10 years

9 Do you think India’s real estate market will Improve in future :

Yes

No

Neutral

57

CASE STUDY

58

CASE STUDY

I have made this case study on the investment decision of Good Living Consultant Pvt

Ltd. Shahjahanpur Project in the Alwar district of Rajasthan.

In the year 2005 RIICO (Rajasthan State Industrial and Investment Corp) auctioned plots

in Shahjahanpur, near Neemrana, Alwar district Rajasthan. Good Living Consultants saw

that the area was under development and being close to Neemrana which was then being

developed as a favored tourist spot decided to invest in the area. There were many

reasons for Good Living to invest in the area.

Some of them are as follows:

Development of the area

The government was taking various initiatives to develop the area. Good Living found it

beneficial to invest at such a growing stage so that it would be able to reap profits in the

long run. They thought of purchasing the land at subsidized rates that were being offered

by the Govt as they knew that in the near future after the development process is

completed the company would earn huge profits from this investment.

Location

Being close to Neemrana fort which was becoming a favored tourist spot the company

thought that it would be a good option as the location will only improve in the future

when the development process is completed. As it was a tourist Spot in the nearby area of

Delhi and NCR and the value of the property would only increase. Moreover the location

being on national Highway 8 was always a favored location for investment purpose.

59

Subsidized Rate

The government was auctioning plots in the area at a subsidized rate. This was a

wonderful opportunity for the company to invest at this stage as the value of the property

would increase with the passage of time. The opportunity was such that one could not

resist investing in such an area .

First Movers Advantage

First mover’s advantage is the advantage that is gained by a company by initiating and

being the first one to occupy the market in a particular segment.

Good Living Consultants is a growing company; It is not always easy for a growing

company to face competition from the top shots of the industry. In the shahjahanpur

region Good Living saw the option of gaining the first movers advantage as no other

developer had yet set its base. Good Living wanted to gain the first movers advantage

from the Project and so they invested in the project. It was a great opportunity for Good

Living to create its Name in the industry by taking this first movers advantage and no

company at a growing stage would lose this opportunity. Good Living could also not

resist such a lucrative investment option. They had earlier benefited from such a situation

when they invested in dwarka region of Delhi.

Considering all the factors that were in favor of investment in shahjahanpur, Alwar

district, Rajasthan Good Living consultant bought a piece of Land from RIICO in the

auction for the purpose of making Residential Flats in the area. Land area 3375 sq.m

Flat area 1077 sq ft.

Good Living Consultants decided to make residential flats, 2bhk apartment’s .They saw

that there were not many flats in the area rather there was no such society in the nearby

are which had apartment style of Living. Good Living thought of gaining this advantage

60

and started the construction work expecting to close the booking in the initial phase of

construction.

Shahjahanpur Project

The proposed project had 54 Flats .All in the category of 2 Bhk. The company thought

that it would bring a revolution in the area as no such apartments were available in the

locality. The company aimed at making the project very successful by giving the best of

facilities

The features of the Project were:

Structure:

Superior RCC frame earth quake resistant.

Wall and Ceiling Finish :

POP in Ceiling in Drawing Rooms with dry distemper Finish

Flooring :

Drawing room and bed room with designer vitrified tiles, and balcony and toilets

with antiskid tiles. Master Bedroom with wooden flooring.

Doors and Windows :

Flush doors in all rooms, superior wooden frame for door and windows with

wardrobe in bedrooms.

Kitchen :

Granite top with stainless steel sink and modular kitchen woodwork.

Bathrooms :

CP fittings and one Indian and one EWC

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Electrical:

Modular switches with T.v and Telephone outlets in the rooms

Staircase and common area :

With Kota stone and white marble or suitable floor tiles on the passage.

Elevators in each block with power back up

Round the clock security and intercom

Fire fightning arrangements

500 Watt power back up in each Block

Good Living Planned to give the best of features in the Project as these features

were very new for the local people.

A Rude Shock

The construction work had begun in the site but the company got a rude shock when even

after advertising about the project in the nearby area not even a single booking for the flat

was done. The construction work was in full force but unexpected things happened and

people did not show any interest in the project.

The company was offering the Flats initially at a price of 19 lakh but after seeing no

response it reduced the rice to around 16 lakh but all to no avail.

The company then took an initiative an offered financing option to the investors but still

all was to no avail.

The company had to then slow down the construction work as there were no bookings

and if the construction got completed without any booking then apart from the loss that

the company was incurring it will also start incurring the wear and tear cost.

The company ran into huge loss due to this project. The expected First Movers advantage

turned out to be a disadvantage. It gave the company a rude shock.

62

Analysis

The company then took an initiative and we visited the site to speak to the local residents

of the locality. After conducting the survey in the area we got to know that the major

reason for failure of the project was that the company saw all the benefits that it was

gaining out of the project but forgot to do the most important work which was research in

the area about the preference of the local people.

Resistant to change

From our finding we got to know that people in the nearby locality still prefer to live in

plotted houses rather than flats.

They are resistant to change. They are not comfortable with the flats style of living.They

do not prefer living in apartments.

Image of Builder Flats

Another important finding that we came across was that people had a misconception that

builder flats are not well constructed. People had this perception as they had not

experienced such style of living and believed what they heard from people around them.

They have a perception that builders do not use good quality products. They felt that they

would e cheated. They did not have any trust on such apartments

Recommendation and Suggestion

After analyzing the scenario in the area we concluded that

The company should have conducted a thorough research in the area

before investing such a huge amount.

They should have spoken to the residents so that would have made the

company aware about the thinking of the people.

They should have also made people aware about the apartment style of

living , so that those people could have related to them

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The company should have been in touch with the localities , they should

have conducted some sessions were they went and meet the people so as

to win the trust of people.

They should have taken the involvement of the people living around by

hiring people from the nearby localities so that people could have build

their trust.

Real estate never a Loss

In the midst of all these problems came a ray of hope. The government has come up with

a project called as the DELHI MUMBAI INDUSTRIAL CORRIDOR. The project is

passing through shahjahanpur area which is bringing in development at a rapid speed.

The government is investing huge amounts in the area to develop it. This will benefit

Good Living Projects.

Delhi-Mumbai Industrial Corridor is a mega infra-structure project of USD 90 billion

with the financial & technical aids from Japan, covering an overall length of 1483 KMs

between the political capital and the business capital of India, i.e. Delhi and Mumbai.

Government of India has announced establishing of the Multi-modal High Axle Load

Dedicated Freight Corridor (DFC) between Delhi and Mumbai, covering an overall

length of 1483 km and passing through the six States - U.P, NCR of Delhi, Haryana,

Rajasthan, Gujarat and Maharashtra, with end terminals at Dadri in the National Capital

Region of Delhi and Jawaharlal Nehru Port near Mumbai. Distribution of length of the

corridor indicates that Rajasthan (39%) and Gujarat (38%) together constitute 77% of the

total length of the alignment of freight corridor, followed by Haryana and Maharashtra

10% each and Uttar Pradesh and National Capital Region of Delhi 1.5 % of total length

each. This Dedicated Freight Corridor envisages a high-speed connectivity for High Axle

Load Wagons (25 Tonne) of Double Stacked Container Trains supported by high power

locomotives. The Delhi - Mumbai leg of the Golden Quadrilateral National Highway also

runs almost parallel to the Freight Corridor. This corridor will be equipped with an array

of infrastructure facilities such as power facilities, rail connectivity to ports en route etc.

Approximately 180 million people, 14 percent of the population, will be affected by the

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corridor’s development.

This project incorporates Nine Mega Industrial zones of about 200-250 sq. km., high

speed freight line, three ports, and six air ports; a six-lane intersection-free expressway

connecting the country’s political and financial capitals and a 4000 MW power plant.

Several industrial estates and clusters, industrial hubs, with top-of-the-line infrastructure

would be developed along this corridor to attract more foreign investment. Funds for the

projects would come from the Indian government, Japanese loans, and investment by

Japanese firms and through Japan depository receipts issued by the Indian companies. 

This high-speed connectivity between Delhi and Mumbai offers immense opportunities

for development of an Industrial corridor along the alignment of the connecting

infrastructure. A band of 150 km (Influence region) has been chosen on both sides of the

Freight corridor to be developed as the Delhi-Mumbai Industrial Corridor. The vision for

DMIC is to create strong economic base in this band with globally competitive

environment and state-of-the-art infrastructure to activate local commerce, enhance

foreign investments, real-estate investments and attain sustainable development. In

addition to the influence region, 

In Rajasthan, the alignment of DFC passes through Phulera-Ajmer-Marwar and over 58%

area of the state falls within the influence area of DMIC. The state of Rajasthan has rich

agricultural and mineral base. Key industrial sectors in the state include Cement, Building

Stones, Gypsum, Gems & Jewels, Chemical, Food processing and Textiles. The emerging

sectors include IT/ITES, Auto Component and Knowledge Hubs. Based on the strengths

of specific regions across the state, five development nodes are identified in the influence

area of DMIC. It includes two investment regions and three industrial areas. Preliminary

discussions with the State Government agencies also indicate that adequate land is

available for the envisaged developments. 

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The proposed plan passes through the shahjahnapur area. This will directly benefit Good

Livings Investment in the region. It falls under Node No.7: Khushkhera-Bhiwadi-

Neemrana Investment Region.

The map of the Proposed plan is as follows:

Advantages

Proximity to the Golden Quadrilateral, NH-8 and the Dedicated

Freight Corridor would provide added value to the investors in the

region.

State Government has already identified and designated the land

for developing the region as Global City.

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As it is said that investing in real estate in never a loss, it can be short term loss but in the

long run the investment always pays off. So it was proved in the case of God living

consultants’ shahjahanpur Project.

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Synopsis

GOOD LIVING CONSULTANTS PVT LTD.

“ Investors Perception in Real estate”

Ritika Honey Lal

Industry Guide: Mr.Satender Chauhan

Faculty Guide: Prof.( Dr.) Ajit Mittal

ObjectiveThe project undertaken by me was

based on perception of the investors in

the real estate industry. I studied the

various factors that effect the growth of

the industry and also the factors that

effect the decision of the investor to

invest in various options that are

available.The main finding was that the

government plays major role in the

growth of the real estate sector and also

that disposable income is another

important player that determines the

investment decision.

I studied a sample of 75 people to infer

the results of the research.During the

study I used primary data in the form of

questionnaire by way of personal

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interview and secondary data was

collected from internet , journals and

magazines.

Perception about the Industry Guide :

My industry guide has been very helpful throughout the project.

He has a very flexible approach toward work

.

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