Real Estate

INTRODUCTION OF REAL ESTATE SECTOR
India has experienced near-double-digit growth in the last several years and stories of the Indian economic juggernaut fill newspapers and bookstores. The commercial real estate market is no exception. The IT boom has created a huge demand for quality office space that was nonexistent a few short years ago. Several prominent Indian developers have emerged, and more and more international investors and developers are plunging into the country. As with any local or regional market, there are many idiosyncrasies that colour the business environment, and India is no exception. Below is an introduction into the current conditions within the Indian real estate market and what the future may hold as India quickly becomes a global superpower.  The term ‘real estate’ is defined as land, including the air above it and the ground below it, and any buildings or structures on it. It is also referred to as realty.  It covers residential housing, commercial offices, trading spaces such as theatres, hotels and restaurants, retail outlets, industrial buildings such as factories and government buildings.  Real estate involves the purchase, sale, and development of land, residential and non-residential buildings.
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MACRO- ECONOMIC OVERVIEW
The Indian economy currently stands among the world's fourth largest growing economy in terms of purchasing power parity and holds the distinction of being a key contributor to Asia's balance of payment surplus. India's GDP is estimated to be the third largest in the world by 2020. India is also considered the second most attractive country in the world for Foreign Direct Investment (FDI). Forex Reserves (excluding gold and SDRs) stood at US$157.25 billion at the end of July 2006. India now holds the fifth largest stock of reserves among the emerging market economies and the sixth largest in the world.

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The performance of the country has been consistent and steady over the past three years with an average annual growth rate of 8%. The growth trend is being led by positive movements across sectors in agriculture, manufacturing and services.

In recent years, the broad based growth in services sector has been a principle driver of the GDP growth. Business services (including Information Technology (IT) and IT Enabled Services), communication services, financial services, hotels and restaurants and trade (distribution) services are among the fastest growing service sectors. India’s share in the world market for IT software and services (including BPO) increased from around 1.7% in 2003-04 to 2.3% in 2004-05 and an estimated 2.8% in 2005-06.

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The proportion of manufacturing in the GDP has remained stable at around 25%, however, the growth rate of manufacturing has increased over years, from 2.7% in 2001 to 9.0% in 2006 against the growth rate of 2.3 % and 9.8% in agriculture and services respectively. Manufacturing Industries like textiles, automobiles, cement, steel, petrochemicals, Infrastructure (civil aviation, roads, and ports), electronics, beverages and tobacco products have been the prime drivers in India’s Industrial growth.

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INDIAN ECONOMY OVERVIEW
• Accelerated yet stable reforms process • Broad consensus on importance of reforms • Reforms momentum continued despite changing leadership especially in areas of FDI & infrastructure • Robust economic fundamentals • Fourth largest economy in the world in terms of PPP • GDP growth rate of 9.4 per cent • Forex reserves at US$ 204 billion • Services sector accounts for more than 50 per cent of GDP, while manufacturing sector average growth is at six per cent, • Fast improving socio-economic profile • Per capita GDP has increased by 66 per cent in the past five years • Favorable demographics with more than 60 per cent of population estimated to years) till 2050 • Growing lifestyle spending with increased expenditure on consumer durables, eating out and communications. • Increased foreign investment be in the working age (15-60

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• India’s 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. • FDI inflows estimated to be US$ 19.5 billion in FY 2007 and US$ 7.5 billion in the first five months of FY 2008 • 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

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REAL ESTATE SCENARIO IN INDIA
The size of the Indian real estate market is estimated at USD 12 billion and it is currently growing at rate of about 30% annually. Real estate lending by banks has increased by 3.78 times in the last two years, forming 18% of the total bank credit. Strong and improved economic growth, proactive policy initiatives like relaxation of FDI in construction and availability of finance (institutional and retail) has driven the demand for real estate across all sectors - Commercial, Residential, Retail and Hospitality. Also, there is an increased focus towards development of Special Economic Zones (SEZ) in India.

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The last few years have seen Indian market mature through regulatory reforms (rationalization of stamp duties, reform of urban land ceilings), improving products in terms of quality and technology, changing tenant profile (MNCs, and respect for tenancy laws), and improving management and maintenance models (enhanced product life-cycles and sustained project / real estate yields). Although the initial real estate boom was concentrated in places like Bangalore and the National Capital Region of Delhi (including Gurgaon), more recently the geographical spread has widened. There has been a significant shift in real estate market from metros to its
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suburbs and to tier II and tier III cities. Lease rentals and occupancies have been picking up steadily and there is an increasing demand for quality infrastructure across various segments of the real estate sector.

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COMMERCIAL REAL - ESTATE
The demand for new office space in India has grown from an estimated 3.9 million sq. ft in 1998 to over 16 million sq. ft in 2004-05. 70% of the demand for office space in India is driven by over 7,000 Indian IT and ITES firms and 15% by financial service providers and the pharmaceutical sector. Cumulative demand for office space in India over the next two years (2006-08) is estimated to be in excess of 45 million sq. ft. The Indian IT-ITES Industry, estimated at USD 36.3 billion in 2006 has grown at a CAGR of 36% over the last decade and by 2008, is expected to account for over 7% of India’s GDP and 30% of foreign exchange inflows. In 2005 alone, IT/ITES sector absorbed a total of approx 30 million sq. ft and is estimated to generate a demand of 150 million sq. ft. of space across major cities by 2010. South Indian cities like Bangalore, Chennai and Hyderabad along with NCR (National Capital Region) continue to attract the major share of IT/ITES and business investment. However, secondary cities, like Pune, Chandigarh, Indore, Kochi and Kolkata are now emerging as the new preferred destinations for these companies due to their cost and infrastructure advantages.

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RESIDENTIAL REAL - ESTATE
The residential property market in India constitutes almost 75% of the real estate market in terms of value. Low per capita housing stock, rising disposable income coupled with easy availability of finance from the housing finance companies and banks are driving demand in this sector. Also, Average age of housing loan borrowers have decreased to 30- 35 years from 40- 45 years a few years ago, indicating a younger buying threshold. The housing sector is currently growing at 30-35% per annum. A proportion of demand is also being driven from investors who view housing as an attractive investment option as compared to mutual funds and stocks. The demand for housing is geographically widespread with townships being built in both the metros and the tier II and III cities. In India, there is a housing shortage of 19.4 million units out of which 6.7 million are in urban areas alone. This translates into very high opportunities for investors in the residential sector.

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RETAIL REAL ESTATE
The Retail industry in India continues to be dominated by individual small format stores with floor space of less than 500 sq.ft. Total number of retail outlets is estimated to be around 12 -15 million, indicating a retail density of 12-14 outlets per 1,000 people, which is one of the highest in the world. The retail sector in India is currently estimated at USD 230 billion. The current size of the organized retail activity is USD 7 billion, which is a mere 3% of the total retail market. The retail sector is witnessing a growth of 5-7% per annum; however the organized retail is poised to grow at a rate of 25% - 30% per annum and is expected to be worth over USD 30 billion by the year 2010, thereby increasing the share of organized retail activity from the current level of 3% to 15% in the coming decade.

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HOSPITALITY REAL ESTATE
Hospitality industry in India is growing at an annual rate of over 8%. The number of foreign tourists’ arrivals (a major driver of hospitality industry) in the country increased to approx. 4 million in 2005. Over 55% of the total demand for hotels in the country is generated by foreign leisure tourists and business travellers (domestic and foreign). A large proportion of lodging demand in commercial cities such as Bangalore, Mumbai, Delhi etc. comes from business travellers. This category also accounts for the major proportion of demand for five star or five star deluxe hotels. However, against the total current supply of 96,000 rooms, five star category accounts for just a quarter of the supply. With the expected growth in demand for rooms at 18%, another 65,000 – 80,000 hotel rooms will be needed till 2010. This demand – supply gap is expected to result in high level of activity in construction of hotels. The established brands in this sector such as Asian Hotels, Indian Hotels, ITC, Le Meridian etc are in expansion mode with many new players such as Accor Group, Marriot, Choice, IHG Group keen to establish their footprint.

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SPECIAL ECONOMIC ZONES
The upcoming realty trend in India after multiplexes and mega housing projects are the Special Economic Zones (SEZ). Currently, 28 SEZs are operational in the country, including those converted from Export Processing Zones (EPZ) to SEZ. Approx. 189 proposals have already been granted approval since the SEZ Act, 2005 came into force. These include SEZs in various segments such as multi-product, Information Technology, Bio-technology, Gems and Jewellery, Textiles and technology intensive industries. Both developers and corporate have shown tremendous interest in developing SEZs in the country. Reliance Industries, for instance, is planning a 25,000 acre SEZ in Gurgaon and is also the main partner in twin SEZs coming up at Navi Mumbai and Maha Mumbai, with a combined size of 35,000 acres. The Adani group is also setting up an SEZ at Mundra, covering 30,000-35,000 acres, and it proposes to invest Rs 7,300 crore on infrastructure. Other corporate who are in process of setting up SEZs include TCG Refineries of the Chatterjee Group (SEZ refinery at Haldia in West Bengal), Suzlon and Infrastructure in (hi-tech engineering products SEZ and at services near Coimbatore in Tamil Nadu, Udupi in Karnataka Vadodara Gujarat), Hindalco (aluminium Sambalpur in Orissa), Genpact (IT SEZ at Bhubaneshwar in Orissa, Jaipur in Rajasthan and Bhopal in Madhya Pradesh), Vedanta Alumina (aluminium SEZ at Orissa). Seeking the permission for SEZs are also a number of real estate
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developers, including DLF, Ansals, Omaxe, Parsvnath, Shipra Estate and Sunny Vista Realtors.

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FDI IN REAL ESTATE
With the opening of the sector for 100% FDI under automatic route, the real estate sector is estimated to capture about 1820% of the total FDI coming to India in 2005-06. The FDI in Real Estate is expected to have a favourable multiplier effect on the economy. As an indicator, for every rupee spent on construction, an estimated 75-80% gets added to the GDP. The spill-over effect of this initiative can also be witnessed in important sectors like the cement and construction industries, where the key players are expanding capacity to meet the soaring demand. With the relaxation of the FDI limit, the country saw an influx of global real estate developers like Dubai-based Emaar Properties (the largest listed real estate developer in the world) – which enetered India in a joint venture with Delhi based MGF Developments.

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Growth and leverage to higher India growth The real estate sector is developing rapidly in India. The demand side has robust and sustainable macro drivers across all segments. Residential: Accounting for more than 70% of the sector in terms of space, residential segment growth is driven by urbanization and the migration of households up the income curve. According to the National Council of Applied Economic Research estimates, the number of urban households earning more than INR 500,000 (about US$12,000) should more than double to 7.6m in 200610. Commercial: Rapid growth in IT/ITES services (manpower in the sector has doubled in the past three years to 1.6m) is the main driver of Grade A commercial office space demand. Jones Lang LaSalle, a property consultancy, estimates that the absorption of office space in the top seven cities in India was 31.1m square feet in 2006. Retail:

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According to CRIS INFAC, the penetration of organized retail into the overall market will increase from 3.5% in 2005 to 8% in 2010, thereby driving the demand for mall space.

Hospitality: According to CRISIL, the number of 5-star rooms is expected to grow by 60% in the next four years with foreign tourist arrivals growing at 10% CAGR.

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STRUCTURE OF REAL ESTATE
The real estate industry has historically been fragmented and opaque, but this is changing: Penetration of mortgage finance: Mortgage disbursals grew by 38% in FY2001-06 and have become an integral part of the buying process. This has helped reduce the unaccounted “cash component” of transactions. Entry of foreign capital: Regulations governing foreign capital in the sector have been relaxed, motivating developers to become transparent and improve corporate governance. Change in legislation: In many states, strict laws like the Urban Land Ceiling Act (which defines ceiling of land holdings in urban areas) have been repealed or modified. Consumer preferences: Consumers are now willing to pay premium prices for better amenities and a good brand. In response, most of the bigger developers are scaling up geographically, which necessitates rigorous systems and processes.

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MUMBAI REAL ESTATE
Mumbai is no way behind when it comes to a talk on property. The Mumbai real estate is in its growth orbit and attracts investors from major multinationals in the recent times. Such is the potential of the city's infrastructure that it is known to be spearheading most cities as far as property market is concerned. With Mumbai serving as the entertainment city, even the organized retail sector here is fast flourishing. Purchasing real estate in Mumbai requires a significant investment, and each piece of land in the city has unique features, so the property market in Mumbai has evolved into several different fields. Having the potential to leverage high returns, a large number of real estate projects are financed everyday in Mumbai. NRIs can shop for property in the city with the expectation of attaining an investment good, or with the purpose of utilizing it as a consumption good, or both. Mumbai is also the fashion capital of India, so it is one of the foremost cities to be hit by the retail buzz. With the opening up of the retail market, there has been a growing demand for retail properties in Mumbai. This has created a viable market for mall space and other retail stores and showrooms. These retail stores and malls are either owned by a business group or leased for hefty prices as the demand is high.

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The property prices as well as the increase in rental values in Mumbai owe much of its credit to the large scale investments in the commercial sector. Mumbai has always been the hot favorite for most of the corporate sector to have their headquarters in the city. And with increasing investments by MNCs in the IT, ITES and the BPO sector, there has been a growing demand for office space; which have consequently created an imbalance in demand and supply for residential properties. The rental values in Mumbai have also in high corresponding to that in other metros.

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NAVI – MUMBAI EMERGING COMMERCIAL HUB
Even India’s leading conglomerates have taken up commercial space here. The state administration has already shifted wholesale commodity markets to Navi Mumbai. So, you have endorsements from different segments that Navi Mumbai’s commercial real estate is much sought after,” he says. Suresh Haware, MD, Haware Builders concurs. “Even at the ‘nano’ end of the commercial real estate spectrum, demand is high,” he says. It is the small offices and shops’ segment that have witnessed the highest demand at Haware Builders’ commercial projects in Navi Mumbai, he reveals. Today, industrial units in Navi Mumbai are relocating to locations in Raigadh district and commercial is the latest buzzword in Navi Mumbai’s real estate scenario, says Vijay Gajra of the Gajra Group. “Commercial options in Navi Mumbai span a huge price band. Growth of the residential segment in Navi Mumbai, prior to that of the commercial segment, actually works out in favour of the end-user today, as manpower resources are easily available,” he points out. “Commercial real estate in Navi Mumbai comes at competitive prices vis-à-vis other options in the Mumbai metropolitan region (MMR), with the added advantage of being located in a well-planned city,” adds Gajra.

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IT/ ITeS SEZs and businesses that have anything to do with rail/road transport and logistics or shipping, are proving to be the next big segment in Navi Mumbai’s commercial spectrum, shares Mayur Shah, honorary secretary, MCHI. Ramneek Bakshi, principal of global property consultants, LJ Hooker, points out that MNCs view India within the parameters of the ‘Brazil, Russia, India, China’ (BRIC) equation. “When they look at India as a business entity, Mumbai takes prime position. When they start looking out for space, Navi Mumbai, which forms the third level of real estate pricing, is attractive for MNCs looking to set up shop in the Mumbai region,” he explains. At the Norwegian consulate in Mumbai, George Mathew, honorary consul general, concurs, “If you look at real estate pricing trends in the MMR, Navi Mumbai fits the bill on many counts. However, the clincher is the price efficiency and developed infrastructure that Navi Mumbai provides,” he concludes.

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APPRECIATIONS
The hike in demand as well as supply and appreciation in capital values are attracting good attention from overseas investors. The Mumbai real estate has become a reflective of the high growth in Indian property market. There has been an increase in real estate value across micro markets in Mumbai as well. Mumbai is looked upon as one of the most organized and transparent property market in India. With cash components and transactions shooting up in the last two years, the city has gained much popularity among the investors, both domestic and international. The investment market has been thriving with excellent returns going high over the past few years. The real estate boom and an upsurge in development activities in major parts of Mumbai have led to a rise in investment prospects in commercial and residential sector. Known locations like Bandra-Kurla Complex (BKC) and Lower Parle have seen appreciations in commercial spaces falling under the category of Grade A. The occupancy levels in other preferable locations like Andheri West and Nirman Point also increased in the current year and are believed to have marked the rise by 90-95%. Another mark appreciation is in regard to commercial properties in Mumbai, and is prevailing in the city's micro markets barring a few exceptions.

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NRI REAL ESTATE TRENDS
Major property developers in Mumbai, underpinned by the vastness, scope, success and scale of progress in the city are now transforming developing properties into strong retail bases. Then of course, the government permitting foreign direct investment (FDI) up to 51% in retail trade has also brought about major moves in retail industry. The demand for property whether commercial or

residential, is very high in Mumbai. There has been steady demand for consecutive years and has resulted in an increase in the yield rate. New real estate projects in Mumbai are always in queue to be launched by private as well as by government. This encouraged overseas investors especially Non resident Indians (NRIs) to make significant investments in Mumbai properties. With an excellent accessibility across the globe, the city of dreams, Mumbai has emerged as an ultimate destination for most people. As per property surveys, one can sell any property and get a price which is fairly good. Within the real estate industry, it is believed that such periods come in cycles and bring an apt time to cash upon. What makes real estate in Mumbai so exciting are an ongoing demand and the proposed projects that are to be executed in approaching years. Builders always have special offers and attractive schemes in store for end consumers. Capital Values of quality apartments, in well-maintained old
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buildings and upcoming projects, in South and South Central Mumbai, have gone through the roof

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AGENCY
Agency is that branch of the real estate business which engages the attention of the greatest number of persons who are concerned with the business, and in that respect it is of prime importance. It is divided into two parts, brokerage and management. A broker is a person who for compensation, usually proportioned to the value of the subject-matter, brings about transactions between principals. Brokerage has two divisions according to the kinds of business which usually engage the attention of the broker. The sales broker is a broker who devotes his time and attention to the bringing about of the sale or exchange of real property. A loan broker is one who gives his attention to the obtaining of loans upon the security of real property. One man may practice both branches of the business, or a specialist may devote himself to either of these branches. Management, the second branch of agency, is the operation of deriving income and caring physically for real estate structures. It concerns itself not only with the deriving of income, but with the keeping down of expenses and the care in making expenditures. It is popularly known as "Agency."

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DEMAND DRIVERS
These trends have benefited from the substantial recent growth in the Indian economy, which has stimulated demand for land and developed real estate across the real estate industry. Demand for residential, commercial and retail real estate is rising throughout India, accompanied by increased demand for hotel accommodation and improved infrastructure. Additionally, the tax and other benefits applicable to Seas are expected to result in a new source of real estate demand.

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THE IMPACT OF MACRO ECONOMIC FACTORS ON DEMAND AND SUPPLY OF REAL ESTATE
Economic Growth -Broad based GDP growth rate of 8-9 % per annumforecast - Demand driven by the growth in services sector - Growth expected to fuel demand across all the asset classes -Has significant role in supply-demand of real estate - Continues to remain a major concern - Inflation is at its lowest since last year -Growth is higher than RBI estimates - Liquidity is key to inflation and over-heating - Restricted availability to reduce options for builders/ developers -Higher rates lead to higher cost of borrowing - Developers seeking other options, consumers are re-evaluating options - Investors are revaluing returns fromthe sector -Easy availability of capital has led to growth in valuations - Concern over exposure of Banks towards the sector - Restrictions have increased the cost leading to alternate sources like PE/ VC -Liberalization of FDI has led to an interest fromnew players - Valuation standards and greater transparency - Service tax on commercial rental to affect retail space

Inflation

Money Supply

Interest Rates

Credit Take-off

Government Policies

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MAJOR COMPANIES
NORTH REGION  DLF Ltd Headed by: Dr Kushal Pal Singh, Chairman About: With a track record of 64 years, DLF is India’s largest real estate company in terms of revenues, earnings, market capitalization and developable area. It currently has pan India presence across 30 cities with approximately 238 million sq ft of completed development and 413 million sq ft of planned projects, of which 56 million sq ft of projects are under construction during FY10. Project Spectrum: Residential, townships, commercial

complexes, IT Parks, hotels, multiplexes, etc. Quick fact: Only listed real estate Company included in the BSE Sensex, NSE Nifty, MSCI India Index and MSCI Emerging Markets Asia Index. Latest: Will take its luxury mall DLF Emporio (already

operational in New Delhi) to other big cities such as Hyderabad and Chennai.

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 UNITECH Headed by: Ramesh Chandra, Executive Chairman About: Established in 1972, Unitech is today India’s leading real estate developer in India. It is the first developer to have been certified ISO 9001:2000 in North India. Project Spectrum: Unitech offers diversified projects across residential, commercial/IT parks, retail, hotels, amusement parks and SEZs segments. Unitech was the first real estate company to be part of the National Stock Exchange’s NIFTY 50 Index. The company has over 600,000 shareholders. Unitech and Norway based Telenor Group came together to build Uninor - a telecommunication services company providing GSM services across India. Latest: Has ventured into the infrastructure business by launching Unitech Infra.

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WEST REGION  K RAHEJA CORP Headed by: Chandru L Raheja, Chairman About: Incorporated in 1956, this Mumbai based real estate giant has been engaged in real estate development for more than four decades. K Raheja Corp has built residences, commercial buildings and hotels throughout India. The Group also diversified in the hospitality sector in 1981and in the retail sector in 1991. The company has several landmark projects to its credits across cities. Quick fact: K Raheja Corp has given a firm commitment to have all of its future projects undertaken anywhere in India to be Leed Certified Green Building Projects.

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• OBEROI REALTY LTD Headed by: Vikas Oberoi, CMD About: Founded in 1998, the company was recently in limelight for its IPO. The Company’s consolidated total income and consolidated net profit after tax and prior period items as restated were Rs8,054.95 million and Rs4,576.20 million for the year ended March 31, 2010 and Rs 1658.27 million and Rs797.96 million for the three months ended June 30, 2010. The company has presence in Mumbai and Pune. Project Spectrum: Oberoi Realty focuses on premium, single space and mixed used development across residential, office space, retail, hospitality and social infrastructure segments.

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EAST REGION  AMBUJA REALTY Headed by: Harshavardhan Neotia, CMD About: Ambuja Realty has been providing housing in West Bengal, in a pioneering joint venture with West Bengal Housing Board for the past 15 years under the name Bengal Ambuja. The first real estate company in Eastern India to get ISO: 9002 Certification, in 1999, Bengal Ambuja has also earned them the highest developer rating in India - DRI from ICRA, in 2003. Project Spectrum: The Group has a diversified presence across segments like residential, retail, commercial and hospitality. The company is also planning an aggressive panIndia growth strategy to deliver an unprecedented number of high-quality projects. Currently, it is building more malls, hospitals, IT Parks, luxury resorts, business hotels and are even aspiring to build a University.

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Latest: To invest around Rs500 crore in developing three shopping malls under the ‘City Centre’ brand in Raipur, Haldia and Patna.  HILAND GROUP Headed by: Nayan Basu, CEO Credited with more than 50 multi-storeyed landmark

developments adorning the skyline of Kolkata, the Hiland Group has today emerged as one of the most prominent developers in Kolkata. Latest: The Group has also entered into a 50:50 joint venture with West Bengal Housing Board to form Bengal United Credit Belani Housing Ltd. Hiland Woods is the key project of this joint venture. It is a residential development catering to a mix of demographic profiles across LIG, MIG and HIG. SOUTH REGION  SOBHA DEVELOPERS LTD Headed by: PNC Menon, Chairman About: The Company was founded in 1995 by PNC Menon after he returned home from the Middle East where he was acclaimed for quality interiors and construction since 1977. Today, this Rs10 billion plus company is one of the largest and only backward integrated company in the construction arena. Its IPO in 2006 was oversubscribed by 126 times that created history, being the first event of its kind in Indian capital markets.
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Till date, Sobha has completed 47 residential projects, 13 commercial projects and 166 contractual projects covering about 36 million sq ft area in 18 cities across India (as of 31 March 2010). The company currently has 21 ongoing residential projects aggregating to 8.5 million sq ft, while 4.24 million sq ft of contractual projects are under various stages of construction.

 NITESH ESTATES Headed by: Nitesh Shetty, MD About: Founded in 2004, Nitesh Estates is an integrated property development company headquartered in Bangalore. Project Spectrum: In just six years, the Company has brought more than nine million sq ft of space under development across housing, hotels, office buildings and shopping malls. The company is growing even faster with plans to expand its operations in other cities like Goa, Chennai, Hyderabad and
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Kochi. Nitesh Estates has to its credit a series of firsts: the first to win India’s largest corporate housing project (ITC Limited), one among the first few to attract FDI in real estate (Och Ziff and Citigroup) and has the distinction of bringing to India it’s very first Ritz Carlton. It has 27 ongoing and forthcoming projects in and around Bangalore and Goa. It has land bank of 19 million sq ft, which will be developed in the next 4-5 years.

CAUSES OF RECESSION ON REAL ESTATE
 Retail and IT sector had created a very fast pace of demand in Indian real estate sector which have gain a very high impact image of investing in India.  Till October 2008 the real estate sector was a very booming sector in India.
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The impact of recession in US economy has badly hit Indian real estate market along with sectors like retail, steel, cement, hospitality and logistics.
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 Because of lack of uniformity of land laws, slowdown and approval delays, the developers missed to complete their projects within the boom period.  The banking sector had not reduced interest rates sufficiently. Banks rates were 10% to 12%.
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Increase in the price of cement, steel, sand, labor has effected the real estate sector .

 Many companies has given pink slips to their employees. This has forced the employees to cancel their bookings and forego whatever deposit made by them to the builders.  Banks and foreign investor had starts withdrawing their money from the market.  Investment in real estate sector became stagnant.

EFFECT OF RECESSION ON REAL ESTATE
 The market rates in India were dropped by 10 to 30% in most of prominent as well as upcoming cities.  Real estate slowdown affect revenue generation in

country.  Progress of ongoing project was very slow and the future project has been postpone.

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 Owner want to sell their properties in any cost as a result bargaining power of costumers increased.

SWOT ANALYSIS

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KEY OPPURTUNITIES
Missing asset classes and formats
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Logistics & Warehousing

• Booming trade, both International and Domestic • Number of MNCs establishing Indian operations’ • Agricultural logistics requiring creation of cold chain infrastructure • Logistics required for large infrastructure and engineering projects • Consolidation of warehousing if uniform tax regime is applied • Healthcare Infrastructure • Healthcare industry expected to grow at a CAGR of 11.6 per cent over the next five years • Healthcare BPO is growing at steady pace • Medical infrastructure expanding with one million beds to be added by 2012
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Medical tourism growth driven by low cost and high quality services.

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Education Infrastructure • Huge market with untapped potential and low competition • Lack of enough world class educational institutions • Driven by Knowledge based industries, large demand for qualified Engineers • Research Laboratories adding value to Global outsourcing trend • Growing interest of leading global educational institutions in setting up institutions in India Low Cost Housing • 72 per cent of the total population is still rural areas • Current housing shortage of 22 million units at an estimated cost of US$ 88 billion • Increasing shift from rented to owned house • Easy access to financing • Nuclear families increasing the demand for housing

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COMPANY PROFILE

MANGALAM BUILDERS & REAL ESTATES LTD.

Administrative Office: 601-603, Apex Mall, 5th Floor, Lalkothi Jaipur, Rajasthan 302015 0141 2742758 VISION “Benchmarking our services in terms of People, Pace & Passion to be the best in the Industry.”

MISSION “To provide creative solutions, by customizing our services to suit the requirements of our clients. To encourage & facilitate our team to reach its optimal potential combining its diverse strengths to provide total customer satisfaction.”

Background
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They started as a journey by a single individual with a desire to excel has now become an organization which is serving the needs of the real estate industry in the country today. Mangalam today has the best talent on its board of directors who are professionals in real estate, finance, accounting and taxation striving to render the best of services to its clients. Mangalam today has given shape to and has structured some of the most complex and landmark transactions for reputed clients. They add value to your properties through their

experience and expertise, with their wide network of clients and contacts all over India and global arena. They assist everyone in identifying opportunities and the right partners to compliment their capabilities.

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BUSINESS SEGMENTS

Real Estate

Management consultancy

BUSINESS SEGMENTS

Financing

Franchising Approach

Our services help clients to achieve value addition by turning assets into dynamic assets and realize the best potential of each asset and try to optimize by putting each asset to its best possible use.

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Projects HandledLittle World Mall: They had sole mandate to lease the mall which started in October 2007 in Kharghar. Complete project was completed by them with good anchors and brands as listed below: Aditya Birla more, Archies, Levis, Levis Signature, Max Lifestyle, Adlabs, The Raymond Shop, Reid & Taylor, Welspun,Thomas Scott , Connexions, Koutons, Planet M, The

Mobile Store, Homes & Apparels, Lilliput, Carmicheal House, Kittens, Thomas Scott, Gini & Jony, La Diamond, Nice Looks, Dosa Plaza, China Land, Chopking, Indian Tadka, Moti Mahal, Café Energise, Café Bollywood, Kwality Swirls Juice Zone, Namrata Cup Corn.Curries and Parathas.etc

City Center Mall: They have leased Operational Mall on Palm Beach Road, Vashi. The list of brands which we introduced to this mall are: Levis, Roop Sangam, Kittens, Gini& Jony, La Diamond, And Design, Adora, M&B Shoes,Black berry, Weekender, Infancy,Timex, GKB Opticals, Black Berry, ITC John Player, Unistyle, Addidas, Nike, Spykar, Lee Cooper, Ruff Kids, L effect, Live In, Lovable, Dominoes, Nice Looks, Top Corn, Café Coffee Day, Ameoba Game Zone, Stone age Restaurant.

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Other Individual Projects Handled : Brokerage deals: • Crystal Mall- Bandra & Mumbai Times Café • Reliance & Maithili Signet at Vashi. • Kstar Mall –Chembur Aditya Birla More • Fantasia Mall-Inox (Multiplex) Bank Finance: • Arrangement for Akshar Developers from Axis Bank • Arrangement for Wellwisher Constructions from Axis Bank • FDI investment for Little World Mall.

Quality Objectives • Continuous improvement in the quality of services. • Prompt response to customer complaints • Strong property data bank. • Aggressive follow up & due diligence. • Panel of associates for legal, finance, market research, investments and other allied subjects.
•

Handling properties in all metros and all other cities across the country.

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AN OVERVIEW
Alliance activities: 1. Real estate –Sale and lease. 2. Lease of retail outlets in malls and High street. 3. Joint ventures with developers. 4. Leasing and sale of entire properties with High Value clients. /Builders/Investors/Private equity /Venture capital /Foreign Direct Investors. 5. Franchising in retail and other spheres. 6. Arranging attractive investment proposals/ideas for investors. 7. Holding real estate/franchising /retailing /financing expositions and exhibitions in all towns and cities. 8. Finding investors for local developers and Builders. 9. Underwriting entire projects for marketing ,investments and execution. Property Services is professionally managed company having presence in Mumbai, India in the following

CORPORATE REAL ESTATE SERVICES
Transactions for all kinds of properties across the country including:
           

Residential Office Commercial Retail & Shopping Malls IT Park BPO/ Call centre Hotel & Resorts Leisure & Entertainments Hospitals Multiplexes Industrial Institutional.

Advisory Services:
 Investment Advisory Services  Third Party Due Diligence & Service Management  Feasibility Analysis  Lease & Utility Audits  Relocation Studies  Property Valuation & Tax Consulting  Site Selection Modeling Analysis & Strategic Planning  Merger and Acquisitions  Joint Venture, Collaborations, Franchise

 Foreign Direct Investment (FDI)

Allied Services:
 Valuation and Land Appraisal  Tenant / Purchaser Representation  Research & Feasibility Studies  Project Management  Bank Finance: Preparing project and feasibility report,

Bank Turnkey Financing Solutions Value added Services 1. Turn Key Projects : Lessoning for Approval a) b) c) 2. 3. 4. 5. 6. 7. Central Govt. of India State Govt. of India Local Govt. and Municipal Corporations

Joint Venture with Best Indian Realtors for Multinational Companies. Office Buildings and Houses for Company Management. Project Management Consultancy Services. Design, Architect, Marketing, etc. Local Assistance for Site Development / Construction. Global Partnership with leading realtors overseas for Indian Realtors.

PROJECTS HANDLED IN MUMBAI

CENTURION COMMERCIAL & SHOPPING COMPLEX Plot No 88-91, Sector: 19A, Nerul (East), Navi Mumbai.

HAWARE’S FANTASIA BUSINESS PARK Plot no.47, Sector-30A, Vashi, Navi Mumbai.

HAWARE’S VASHI INFOTECH PARK Plot No. 16, Sector – 30A, Vashi, Navi Mumbai.

LOAN DEPARTMENT

As centurion shopping complex is a vast project, it consists of more than 500 shops and offices. The customers come for the investment as well as to start up their own business. The customers are basically heterogeneous in nature. Out of which few of the customers were willing to give the total cost of the shop/office as their 100% own contribution within the specified time period. But when analyzed that the customers were not financially stable after going through their documents, they were given the option of commercial bank loan according to their requirements. Marketing executives were appointed to approach

different banks and were asked to give the detailed view of our shopping complex. Every week a meeting would be held between the trio to discuss the various factors and schemes regarding the particular bank. As to know what are the different rates of interest been levied , and many other factors. Most of the banks do not support the commercial loan as it involves very high risks and suspicions. Whereas there are banks with whom we had tie-ups. They are:•

Mahanagar Co-Operative Bank

• HDFC Bank • ICICI Bank
• • •

Saraswat Co-Operative Bank Deutsche Bank Abhyudaya Bank, etc….

We as the intermediary would collect the required document from the customer. The bank then verified the documents and declared whether the customer is liable to repay the loan taken by them. Within this period we had to follow up with the bank and customer for paying 40% of their agreement value. Customer should pay their 40% and complete with registration before bank proceed. Banks are able to provide up to 60%-70% loan according to customer profile. At the time of registrations we are required to provide instruction to customers regarding registration. Following instruction were to be provided by us :
1.

Customer have to bring Rs.3500 with them at the time of registration for printing and stamp duty chargers.

2.

Customers current 2passport size photocopy with pan card Xerox.

3. It Requires 2 witnesses also from the client’s side. 4. 5% stamp duty 1%registration paid by customer on Agreement or Market value whichever is higher.
5.

The agreement is to be done on agreement or market value whichever is higher. Market value is to be calculated by following formula: Build up Area = Carpet Area + 20% Market Value =

Square Feet

BuildX Area up

Rate Per

COLLECTION DEPARTMENT

The collection department is the main hub in this business unit, wherein the money is collected from the customer after the booking is done. The customer can officially book the shop only after paying the token amount. The token amount varies with respect to place and project. The customer details are jot down in the booking advice. This is done in order to ensure that the follow up of the particular customer is done and also to keep a check i.e., that customer should pay the latter half of the remaing amount within the time limit. The follow up mainly helps in maintaining essential records which is in Microsoft Excel format. It is made sure that the database is up to date at any given point of time so as to maintain the flow of the various activity related financial transaction. If the customer fails to repay the amount on time, as a penalty he/she liable to pay the interest on the remaining amount. We are there to keep keen observation on every individual account. We had to report to Mr.Haware about the full weeks detailed data in order to give him the current scenario of his project.

Example: Mr. A came to the site for seeing the shop and buying it to start his own business. We gave him a fair view of all the shops available with us, the cost and size of the shop varied differently. The cost of the shop was dependent upon floor wise also. We had G+3 floors. Among which ground floor was the most expensive one. After going through our shops Mr .A decided to purchase shop at first floor. Then we took out our booking advice which had to be filled by us which carried all the information pertaining the client which was of our great use. After filling the booking advice we took the token amount which had to be more than Rs.11000/-. Suppose Mr.A purchases shop in Centurion project, Nerul on first floor. First process is to fill booking advice. Booking advice includes: Name of customer : Address: Date of booking: Mobile number: Office Number: Residential Number:

Sq Ft.:

After filling booking advice, booking advice

will go to

Haware head office,Vashi for confirmation. When that booking goes to head office at that time shop is confirm for that customer till registration. After registration legally that shop will transfer to Mr.A’s name. At the time preparing booking advice Mr.A decided to pay their 50% amount within 15days as per their requirement and their condition, for remaining they required bank loan. So we have to keep contact with Mr.A and remind every time about payment, recorded all payment detail in excel sheet wherever payment is made by Mr.A . Within 15 day Mr.A paid their 50% amount. Mr.A Purchased on 9 May2009, 212 sq. Ft., on first floor as per demand at that time per square rate was Rs.6,000. Therefore total cost for Mr.A’s shop is Rs.12, 61,000/-. While booking, Mr.A gave Rs.11000/- as a token money in cheque. Following is the excel sheet which is prepared and maintained daily if any customer paid any amount that will added into total received column every time. There is one more sheet was their is which PDC(Post Dated Cheque) is to be maintained. If Mr.A gave PDC of Rs.1,00,000 for 12th may 2009 then it will recorded in PDC sheet, and on 12th May when

cheque will clear we have to added that Rs.1,00,000 into Mr.A account after conformation.

Mr.A completes their 50% payment within 15days. If it could not possible from Mr.A then they are eligible to pay interest on their remaining amount. Mr.A required loan on remaining 50%. So within 15days when Mr.A was paying their part of payment we contact with our bank and fulfil all requirement of bank. Firstly bank required following document from customer’s side :


If business man then 3 years Income tax returned filed,if service men then form no.16 from years salary slips. and 3

 Last 1 years updated bank pass book copy.  Residential proof :- Electricity bill, Pan card Xerox,


2 photograph

 Agreement and register document.  Estimated 5 years projected balance sheet some bank required

Every bank has different criteria for different customer. Co-operative bank like Mahanagar Co-Operative Bank, Abhyudaya Bank, Saraswat Co-Operative Bank provided loan only to businessmen not for servicemen and not NRI person. Only businessmen are eligible for their requirement. And bank’s like ICICI, HDFC etc. provide loan to businessmen as well as NRI and

Servicemen. Servicemen should have net salary more than Rs.30000.

Rate of Interest is also differing from bank’s to banks. Co-operative bank have less interest compare to nationalised bank. Rate of Interest for commercial loan is between 12.5% to 14.0 %. Bank’s also charger processing fees and charger for pre-payment. Processing fees also differ from bank to bank between 0.5% to 1.0%. It took 15days to provided loan to Mr.A after providing every document which is required.

SELLING & MARKETING DEPARTMENT
The ultimate aim of the Real Estate Marketing is to increase the demand for a particular type of property and to increase the price so that the seller of the property owns the highest amount of profit for himself. The Real Estate marketing is needful also to make the Real Estate project work and make it familiar among the public as much as possible. Most of the Real Estate sellers keep an amount intact just for their Real Estate Marketing and on that basis they choose certain Real Estate Marketing Agents and give them the responsibility to sell their property off with as much profit as possible. If the seller’s budget is big enough then he can go for renowned Real Estate Marketing agency and for those with small budgets the smaller agencies are also available. Most of the big Real Estate owners who want to sell their properties prefer to go for big marketing agencies as they have better ways to promote one's properties and have able agents who can find the right kind of agents working for them who have better contacts and have better ways to popularize the real estate property.

A good Real Estate Marketing Agency always puts special emphasis on the right kind of information that one needs before starting Real estate Marketing and for that the agency normally conducts some kind of survey to gather the right kind of information. Later the Real estate marketing Agency

depending on that report develops their ways of marketing.

Nowadays a lot of Real estate marketing is done through the help of the Internet. One can have various websites that do marketing for different real estate properties for a certain amount of money. One also needs to make the website precise and filled with to the point information. The Real estate Internet Marketing is a very simple process and is cheaper in nature as well. Although one needs to keep the demands and the reasonable amount of price in mind. I was functioning under operational projects of Alliance Property Services for Haware’s Commercial Projects namely  Centurion Commercial & Shopping Complex, Nerul  Vashi Infotech Park, Vashi  Haware Infotech Park, Vashi  Fantasia Mall, Vashi

In marketing, Promotional strategies were used namely   

News paper advertisements, Visual media ads in local cable channels Direct Marketing(door-to-door) in commercial complexes and



Through www.iproperty.com.

Business cards can either by a waste of paper or an effective bridge between a prospect and their potential as a long-term client. So, follow-ups of all the business cards that were dropped in at the site office were done on a daily basis. Brokers & agents were also approached to get their clients for the deals. Telephone & Email follow-ups also formed a part of my job. There was face-to-face interaction with the customers for the sale of shops/offices by convincing them to buy. Customer Database was also maintained considering various heads like- Date of purchase, Shop/Office no., Name of the customer, Area of the shop/office in sq.ft., Total value of Shop/office in Rupees, Total Received(cash/cheque) and Balance amount.

ADVANTAGE FOR REAL ESTATE AGENT :
10-Year Tax Holiday The finance Ministry has announced a 10-year tax holiday for developers of Industrial parks set up from April 1, 2006 to March 31, 2009. According to the Industrial Park Scheme 2008 notified by the Central Board of Direct Taxed (CBDT), the industrial park developers will be eligible for 100% tax deduction which is to be provided for 10 consecutive assessment years out of 15 years after the commencement of operations of such units. The developers will be free to choose the 10 consecutive years for the purpose of availing themselves of the tax holiday. Price Variations in India There are unbelievable variations in the prices of real estate sector in the past. Which mainly affect to the sale of business. Mainly there are two causes for the same:  Per Capita Income  GDP at Market Price

Per Capita Income As depicted by fig. 2 per capita income is increasing in India, which has increased the purchasing power of the people. Due to this over the last year (2006-07) houses prices have raised by 10-90% and commercial property prices by 10-30% in different area of India. Correlation .996 is found between PCI and real estate prices. Thus there is a positive correlation between per capita income and real estate prices. GDP at Market Price GDP, the indicator of the national growth, from the past 2-3 years is increasing by 6.5% to7.5%. Every rupee spend on the construction add to nearly 60% of GDP. As shown by the figure the GDP has increased from the 2463324 crore to 3529240 crore from 2002-03 to 2005-06, so it indicates that how the spending on the construction sector helps the real estate prices to increase.

Price Variations in Different cities: Price variations in Mumbai

Price variations in Delhi

Price variations in Pune

Price variations in Kolkata

It is clear from the above tables that in real estate prices are touching heights. In some areas the prices are increased by 90100%. In Gurgaon and Noida prices has jumped by as much as 200%. The cheapest DLF apartment in Gurgaon costs Rs. 1 crore.

Clear Title 90% of the lands in India do not have clear title. The ownership is unclear, thereby creating a scarcity of land. This is due to poor record keeping and outdated complaint processes. All updated records must be computerized to increase transparency in land ownership. And special fast track courts must be set up to clear all legal land disputes in a short period of time. Stamp Duty & Registration The cost of transferring land titles must be reduced from rates of 10% stamp duties to reasonable levels of 3 to 5%; similar to prevailing rates in developed countries. This will encourage

sellers to pay stamp duties, instead of trying to cheat the government, thus increasing the revenue for the country. The high duties have also encouraged unaccounted money being used in most real estate transactions in India. The registration procedure should also be made transparent and simple so that corruption can be minimized. Building Codes, Standards & Permissions There are several building guidelines and standards in various cities and states, however they are neither followed by the developers nor implemented by the authorities.

Development and Planning In India development and planning concerned with real estate sector is not up to the mark. The city or state authorities must use professionals to plan and execute all development plans for cities and towns, with future development in mind. This must be done without political compulsions. This will allow proper zoning within cities and towns, green areas and other infrastructure systems to fall into place as the development plans unfold.

Present Scenario in India Up to the end of 2007 real estate sector in India was growing at a very high rate. There was a situation of boom in this sector. The home loans were easily available and RBI was following very liberal policies regarding the interest rates. But in 2008 the things are changing due to the high rate of inflation in the Indian economy. There is uncertainty in the market as share market is showing depression and the RBI is also increasing the Bank rate leading to the increase in the interest rates. So the buying power is reducing. The major reasons for this downfall are inflation and the low rate of GDP.

Findings • 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. • Real estate prices also increases with increase in the per capita income as there is high degree of positive correlation between these two also.

• The infrastructure of India is also growing day by day so it adds to the better facility to different sectors which affect the real estate prices. • 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. • The growth in the real estate sector is between 25-30% in a residential sector, 10-15% in commercial sector and agriculture sector. • Housing sector constitute 80% of real estate in terms of value and 20% by commercial sector. • 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.

• In 2008 the growth of real estate sector is going down due to high inflation and hike in home loan rates by the banks following the increase in bank rate and SLR by the RBI • The outsourcing and IT/ITES industry have contributed to the demand for quality office-space. The estimated demand from IT/ITES sector alone is expected to be 150mm sq. ft. of space across the major cities by 2010.

SUGGESTIONS

The following recommendations are made this paper• Due to high prices the lower income group is not able to purchase the shops, so company should take kept in mind to protect the lower income group. • The agriculture land covered into the commercial and residential purpose. But the population is also increasing day by day. So company should steps for the same. • The investors should analyze the type of project in which they are going to invest and the potential returns from it. • Privatization of Airports and ports needs to be speed up. • There is a lack of proper data and management of the real estate sector so company should take the corrective steps in this regard so that the proper estimation and management of the real estate can be made possible. • Commonwealth is scheduled for 2010. Hotels, sport stadiums and other infrastructure to have successful games need to be expedited. This is another great opportunity for foreign developers and investors to step in India. Thus more and more encouragement should be given to foreign investors. • Stamp duty is extremely high and must be rationalized and brought down to 2-3% as per global practice, which is now in India varies from 5-6%. • 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.

INDIAN REAL ESTATE ROAD AHEAD

The affordable housing segment is expected to play an important role in the growth of the real estate sector in India in 2011, on the back of increasing demand for such housing, according to the Confederation of Real Estate Developers' Associations of India (CREDAI). "Affordable housing will be a key factor in driving the sector and we have already started working on progressive solutions in this area for effective and customised implementation of such projects," CREDAI Chairman Kumar Gera said. Further, growth in the infrastructure sector is also expected to accelerate real estate activities, in commercial as well as residential segments, during this year.

CONCLUSION
After studying all the factors of the real estate it can be concluded that the Real Estate is a very wide concept and it is highly affected by the macro-economic factors like GDP, FDI, per capital income, Interest rates and employment in the nation. The most important factor in the case of Real Estate is location which affects the value and returns from the Real Estate. India needs a stronger capital market base for property financing. The debate on the potential introduction of REITs and real estate funds points in the right direction. The introduction of REIT s in 2007, will give international investors in particular a familiar investment vehicle. Private investors could also enter into indirect investment in real estate. Although interest in new projects is most likely to come primarily from institutional investors, the rising middle class is likely to seek new instruments aside from direct property investments in the medium term. So, in the end we can say that the investment in Real Estate in India is a very good investment opportunity. But one should be very careful while taking decision in this direction due to rising inflation and interest rates. Legal issues should also be kept in mind while choosing a property.

BIBLIOGRAPHY
WESBITES
• • • • •

http://www.manglamgroup.com www.IndianRealEstateForums.com www.RealtyTimes.com www.chicagotribune.com www.Moneycontrol.com