Real Estate

Published on February 2017 | Categories: Documents | Downloads: 34 | Comments: 0 | Views: 729
of 8
Download PDF   Embed   Report

Comments

Content

Analysis of the Indian Real Estate Sector.
(Submitted by: Viswanathan. B) GNIMS

Introduction:
The size of the real estate industry in India is estimated to be around US$ 12 billion. As per studies, this figure is growing at a pace of 30% for the last few years. Majority of the real estate developed in India (almost 80%) is residential space and the rest comprise office, shopping malls, hotels and hospitals. This incredible growth is mainly attributed to the off shoring business, including high-end technology consulting, call centres and software programming houses. Evidently, this is the ideal time to invest in the country, even as the policy makers have begun to emphasize on developing adequate infrastructure for the country. After agriculture, the real estate sector is the second largest employment generator in India. The persistent demand from the Information Technology (IT) sector has also impacted the urban landscape in India. As per estimates, there is demand for 66 million square feet of IT space over the next five years. Several multinational companies continue to move their operations to India to make the most of lower costs of skilled manpower and logistics. Human resources being the key element in the IT industry, the hiring and housing of people, both at their work place and home, has assumed great significance. As such, there is a persistent need to create space for people to work and live, which in turn sets off the growth of other allied infrastructure. Though the real estate sector in India is asserted to be the most promising sector today, it is still hugely plagued by market uncertainties and traditional inhibitions. The real estate market in India mostly continues to remain unorganized, fairly fragmented, mostly characterized by small players with local presence. With around 1.1 billion people, India is the second most populous country after China and it is expected to overtake it by 2030. Its econom ic transformation over the past decade has pushed up real GDP growth to an average of 6 per cent per annum since 1992. India is emerging as an important business location, particularly in the services sector. Its favourable demographics and strong economic growth make the country an attractive place for property investors, given that demand for property is determined chiefly by business development and demographic trends.

Historically, the real estate sector in India was unorganised and characterized by various factors that impeded organised dealing, such as the absence of a centralized title registry providing title guarantee, lack of uniformity in local laws and their application, non availability of bank financing, high interest rates and transfer taxes, and the lack of transparency in transaction values. In recent years however, the real estate sector in India has exhibited a trend towards greater organisation and transparency, accompanied by various regulatory reforms. These reforms include: y Government of India support to the repeal of the Urban Land Ceiling Act, with nin e state governments having already repealed the Act; y Modifications in the Rent Control Act to provide greater protection to homeowners wishing to rent out their properties; y y Rationalization of property taxes in a number of states; and The proposed computerization of land records

The trend towards greater organisation and transparency has contributed to the development of reliable indicators of value and the organised investment in the real estate sector by domestic and international financial institutions, and has also resulted in the greater availability of financing for real estate developers. Regulatory changes permitting foreign investment are expected to further increase investment in the Indian real estate sector. The nature of demand is also changing, with heightened consumer expectations that are influenced by higher disposable incomes, increased globalization and the introduction of new real estate products and services.

SWOT Analysis:
Strengths: y y y y y y Huge demand Growing population Availability of home loans India, the next global business destination Huge margins Cheap labour

Weakness: y y Huge investments Highly sensitive to economic condition of the country

Opportunities: y y y y Availability of FDIs Increased income of the average Indian citizen Emergence of more nuclear families Emerging markets and expansion abroad

Threats: y y y Price war Lots of competition Economic slowdown

Some major Real Estate Companies
Name Year of Establishment Company Profile The Ansal Group 1965

The Ansal Group is a conglomerate of 35 companies, with Ansal Properties and Industries Ltd, (Ansal API); Ansal Housing and Construction Limited, (AHCL) and Ansal Buildwell Ltd. (ABL) at the core of the Group. All three are public limited companies, and engaged in the entire gamut of civil construction and real estate development activity in India and abroad. Employing 5000 people nationwide, with over 1000 of these in supervisory and managerial positions, all three companies have acquired the ISO 9001-2000 certificate. Sales/Revenues/Turnover The Group s turnover is around Rs. 3.5 billion and th e projects in process cross Rs. 32 billion. Future Prospects The company intends to shift its focus to value-added development, or constructed property. Ansal s thrust areas would be expansion into hospitality, and a focus on premium locations in Tier II cities of North India.

Name Year of Establishment Company Profile

Future Prospects

The DLF Group 1946 The DLF group is a leading real estate developer based in New Delhi, India. The group has over 220 million sq. ft. of existing development and 574 million sq. ft. Of planned projects. DLF is committed to quality, trust and customer sensitivity, and deliver on promises with agility and financial prudence. In September 2006 DLF was the only real estate firm amongst the 60 businesses named Super brands of India under the real estate category. The core business traditionally has been made up of 3 prime divisions; residential, commercial and retail. To these DLF has added 3 further divisions; hotels, infrastructure and SEZs. - Increase land reserves in strategic locations - Expand core business verticals nationally - Diversify into SEZ development - Diversify into hotel development - Enhance execution capabilities - DLF also plans to develop around 100,000 acres of land over

the next couple of years, nationally.

Name Year of Establishment Company Profile

Unitech Limited 1972 The Group's principal activities are the construction, real estate development, consultancy in related areas, hotels, electrical transmission and information technology. The activities of the Construction segment include highway projects, industrial projects and overseas projects. Real estate development includes the development of commercial as well as residential properties. The Group operates in India and exports engineered construction products to the Middle East.

Future Prospects

Achieve high growth by establishing a pan India presence major economic centres. - Focus on profitable projects that maximize returns.

focus on

- Undertake large mixed-use projects like integrated townships in the suburbs of main cities. - Unitech is eyeing the southern real estate market & has begun a brand building exercise in Chennai.

Name Year of Establishment Compnay Profile

Emaar MGF 2005 between Emaar Properties PJSC ( Emaar ) of Dubai and MGF Development Limited( MGF ) of India. MGF has over the last 10years established itself as one of the key players in retail real estate development in Northern India. Their primary business is the development of properties in the residential, commercial ,retail and hospitality sectors. In addition, they have also identified healthcare, education and infrastructure as business lines for future growth. Their operations span across

various aspects of real estate development, such as land identification and acquisition, project planning, designing,

marketing and execution. Future Prospects Emaar MGF will construct 4 luxury hotels in 3 years, with an investment of$400 million. It will include 3 JW Marriott hotels each in Delhi, Hyderabad and Kolkata and one business hotel under the Courtyard brand in Amritsar. The company is also looking at a tie-up with Global Hyatt corporation for about20 hotels. They are basically looking at a long-term commitment through integrated master plan communities. So shopping along with entertainment and a luxury stay is on the offering.

Future of the Real Estate Sector:

According to the Investment Gurus and real estate experts 'there is a definite boom in the real estate market in India and that's why many people are going for investment in the real estate in India. According to market experts, Indian real estate market has got a tremendous potential and it will surely be riding high in the coming years. Favorable property market and real estate boom has made property investment in India look safe. This is also proved by the fact that Indian Government has liberalized its foreign direct policy to attract higher foreign investment. It's not that the property prices in India have suddenly seen a rise. Prices of property whether it be residential, commercial or industrial have been rising in India over the last few years. Taking an example of some of the better developed cities like Noida and Gurgaon, property prices have increased by up to 5 times within a few years. It's not that only these cities are experiencing an appreciation in the real estate prices, property prices have been steadily rising across all parts and sectors of India, may be the appreciation in the prices of property in other parts of India would not be that much. A recent survey has revealed that, India stands on the fourth position among the top four Asian destinations for foreign direct investment. India being the largest democracy with excellent democratic governance and transparent property laws attracts more people for making the investment in the property and real estate market than any other country in the region. Looking at the above factors we can say that as far as property market in India is concerned it is going only in one direction that's upward. And this current trend will see more and more people investing in the property market in India.

Sponsor Documents

Or use your account on DocShare.tips

Hide

Forgot your password?

Or register your new account on DocShare.tips

Hide

Lost your password? Please enter your email address. You will receive a link to create a new password.

Back to log-in

Close