Summer Training

Project Report

On

‘PERCEPTIONS OF CONSUMER ABOUT LUXURY FLATS

AND DESIGNER APARTMENTS’

Submitted to

FORTUNE (INDIA) CONSTRUCTION LTD.

In partial fulfillment of the requirements

For the degree of

Master of Business Administration

(2009-2011)

Of

Punjab Technical University

Submitted by

DEEPAK BANGA

CENTRE FOR MANAGEMENT TRAINING & RESEARCH

KHARAR – 140301, DISTT. MOHALI (PB.)

ACKNOWLEDGEMENT

Today with humility and folded hands I am thanking Almighty from the depth of

my heart for these blissful moments and for giving me such situations and

atmosphere which is helping me in my mental growth and is a way towards

success.

So, I must preface my report by expressing sincere and deep gratitude to those

who made it possible for me to complete my thesis work.

This is my privilege to thank Mr. V.K. Deewan, Director CMTR Kharar, for his

concern and encouragement.

I owe a deep sense of gratitude to my guide Mr. Arun Kumar Sharma, CMTR for

the inspiration, valuable suggestion and guidance which made this report

possible. I am obliged of this focused guidance. His total cooperation and

excellent directions have made me indebted to him for lifetime.

I owe my thanks to Board of directors (HR deptt.)Ind Swift MR. R.S.Dhaliwal for

allowing me to do my project in their company.

I want to express my thanks to my Company guide of Ind-Swift Mr. Prassandeep

(Assistant Manager) who gave his valuable time and thought us many valuable

things which will help me in the long career ahead of me and Mr. Mohit Sharma

( Marketing Executive) for cooperating me in my training.

I would like to thank Mr. Dharamvir insan (Accounts Department - Ind-Swift).

Who gave me the opportunity to complete my SIP in Ind-Swift Company.

I love to acknowledge, CMTR, Kharar, for providing me an opportunity to perform

the research activities and an environment for my all- rounded growth.

Executive Summary

TABLE OF CONTENTS

CONTENTS PAGE No. Chapter 1 INTRODUCTION 6-25

1.1 Introduction Of The Company

1.2 Company’s Milestones

1.3 Operations Of Company

1.4 Manufacturing Locations

Chapter 2 INDUSTRY PROFILE 26-35

2.1 Industry Profile

2.2 Macro-Economic Overview

2.3 Real Estate Scenario In India

2.4 Technological Environment

2.5 Issues Concerning In Real Estate

2.6 Political Environment

2.7 Government Initiatives

2.8 New Projects

________________________________________________________________

________

Chapter 3 RESEARCH METHODOLOGY 36-48

3.1 Objective Of The Study

3.2 Scope Of The Study

3.3 Research Design

3.4 Data Collection Method

________________________________________________________________

________

Chapter 4 DATA ANALYSIS AND ITERPRETATION

4.1 Respondents Profile

________________________________________________________________

________

Chapter 5 CONCLUSION AND RECOMMENDATIONS

5.1 Conclusion

5.2 Limitations

5.3 Recommendations

________________________________________________________________

________

BIBLIOGRAPHY

ANNEXTURE

COMPANY PROFILE

BRIEF PROFILE OF IND SWIFT GROUP

Ind Swift Group, a legendary forename in the world Class Pharmaceutical

Industry who has broaden its horizons by plucking profound & sparkling footprints

on multifarious diversified fronts, whilst going steadily and surely, scripting a

success story filled with enviable milestones and pioneering breakthroughs and

has subsequently emergent as a group with an annual turn over of 1000 Crore.

COMPANY HISTORY - IND-SWIFT

Ind-Swift Laboratories is a part of the Ind-swift Group and is based at

Chandigarh, India. It has been promoted by Ind-Swift Limited in joint venture with

the Punjab State Industrial Development Corporation Limited (PSIDC). The

group has established a strong reputation as innovators in the Indian

pharmaceutical industry.

Ind-Swift Laboratories Ltd. went public in 1997 and concentrated on the

manufacturing of Active Pharmaceutical Ingredients (API). Its strength in organic

synthetic chemistry resulted in the company emerging as the pioneer for a

number of products both in the National and International markets. As the

company built up vast skills in the area of research and development, quality

systems as well as matters relating to regulatory compliance, it began

establishing a presence in the highly regulated markets of the world.

Over a short period of time, Ind-Swift Laboratories Ltd. has emerged as a

respectable and dependable supplier of Bulk-Actives in more than 40 countries.

Not only are the company's plants built as per USFDA, the company employs

current Good Manufacturing Practices (cGMP) also, which are recognized and

accepted in the stringent regulated markets. This includes a responsible

commitment to the environment.

To leverage its quality commitment, the Company has drawn out a long term

strategy of emerging as a powerful force in the regulated markets as drugs worth

over US$ 80 billion goes off patent during this decade. Ind-Swift Laboratories Ltd.

reported a turnover of Rs. 1605.20 million and a profit after tax of Rs. 76.92

million in 2003-2004. The company's shares are listed on the Mumbai, National,

Ludhiana and Delhi stock exchanges. Ind-Swift Laboratories limited (ISLL) is

based at Chandigarh and is a part of Ind-Swift group.

Ind-Swift Ltd. is an existing profit making, dividend paying company engaged in

formulation of injectables and opthalmic products at Panchkula, Dist. Ambala

(Haryana). It was incorporated as a limited company on 06.06.1986 and was

granted certificate of commencement of business on 15.12.1986. In July'89 the

Company got its project for manufacture of injectables and trading of

pharmaceutical products appraised from Haryana Financial Corporation (HFC)

which was implemented in December'90 for a total cost of 49.77 lakhs. The

company has been promoted by Shri Anil Kumar Jain, Shri Sanjiv Rai Mehta, Dr.

Gopal Munjal & Associates. The company is expanding its activities by setting up

facilities for manufacture of formulation (tablets and capsules).

Ind-Swift Laboratories Ltd. has informed that their Company has been awarded

the achievement award for the Best Performing Company in Category E by the

Express Pharma Pulse for the year 2004 Ind Swift Ltd has informed that the

Company has launches a new Marketing Division under the name 'Resurgence'

for Anesthesiology, Oncology and Surgery Segment

ORGANISATIONAL STRUCTURE-IND SWIFT GROUP

Ind Swift group, as pharmaceutical business model is one of India's largest

manufacturer of high growth multi segment pharmaceutical finished dosage

forms and API's (Active Pharmaceutical Ingredients).

Manufacturing of Pharmaceutical finished dosage are carried out at 7 state-of-the

art manufacturing facilities which are second to the none are duly certified and

approved by WHO GMP, spread over an area of 12, 00, 000 sq. ft. with

manufacturing capacities confirming to stringent TGA/MHRA approvals;

possessing an installed capacities of 3 billion units comprising tablets, capsules,

Ointments, Injectable, Liquids & Dry Syrup (all latest formulations with a

marketing network.

Company’s API section has spread over an area of 7 Lac sq. ft, carried out at 3

different state-of-th-art units approved by USFDA and E.U regulatory authorities

with a marketing network spread over in 40 countries viz. Europe/USA/Middle

East possessing 2 patented molecules with 11 molecules in offing It possesses

50% exports percentage. Ind Swift entered into bulk drugs with its own Research

and Development facility and laboratories at Derabassi. Later on, those units got

USFDA approval and got the process patents for Clarithromycin for US and allied

markets and further five more patent drugs await clearance for the moment. A

joint venture with Iran has also been signed for the manufacturing of

Clarithormycin with construction underway and will start operations by the end

2008. The company has offices and supplies pharma drugs not only in India but

overseas as well.

R & D (Research & Development)

Ind Swift is known for it's reverse engineering ability with highly focused R & D

capabilities (duly approved by Department of Science & Technology, Govt. of

India) and is equipped with state-of-the-art equipment, facilities and talented pool

of scientists and Researchers.

A well accepted expertise in NDDS, in India and the world over.

A US patent for Claire OD, with a market size of US$ 300 million.

Another patent for Fexofenadine ODT with a market size of US$ 2.5

billion.

Development of 10 new molecules with a market size of US$ 6 billion.

Ind Swift's efforts and achievements in taste masking of macro ides was India's

first......... and remains the only feat of its kind in the country. The R &D

department is also involved in creating international opportunities and alliances

for CRAMS business, contributing significantly to the Company's profitability. It

also offers complete support to international partners for preparing and filing

dossiers for finished dosages. By taking giant strides on roads less traveled, Ind-

Swift has become one of India's fastest growing pharmaceutical companies.

Company’s R & D's Achievement

Its pioneering R & D efforts have led to the creation and introduction of

blockbuster drugs like:

Atrovastatin – One of the most effective cholesterol lowering drugs with an

estimated market size of US$ 12 billion.

Nitazoxanide – a wonder, one of its kind anti-diarroheal with a market of

US$ 6 billion.

Pioglitazone – an anti-diabetic drug ranked among the first five in its

Therapeutic segment.

Arthrill – an herbal wonder for the treatment of Arthritis.

Anaproct – an ayurvedic product providing relief from piles within 24 hours

with no allopathic cometitor.

Ind-Swift has strategic R&D and manufacturing alliances with companies in the

United Kingdom, Turkey and Iran.

In formulations front, Ind Swift proud of its multifarious achievements viz.

Neurophen forte, a composition of Ibuprofen & Acetaminophen. Ind Swift is the

company to give this composition to the country for the first time. Another

formulation i.e. Suprox SR, a composition of Isoprene Hel, sustained release

tablets was first time launched in India in tablet form. Mouth dissolving tablets

technology was introduced for the first time in India by Ind Swift. The company

today stands second in the north in pharmaceutical sector.

It is an honour to add here that Company is among the top 500 fortune

companies of India and have been ranked at No. 35 by IMS/ORG in

Pharmaceutical industry & possess a portfolio of 650 products with presence in

high growth therapeutic segments of Cardiology, Diabetology, Anti depressant,

anti-allergic, Anti- infective, Neurology & Oncology with a nation wide distribution

network comprising 1200 marketing professional working with 12 marketing

divisions, 50 offices in India, 3000 super stockists and stockists.

Company’s sparkling footsteps on diversification front are as

under mentioned:-

Infrastructures: Ind Swift has radianced up in infrastructures business in the

name and style of “Ind Swift Infrastructures and developers Ltd, and has come

up with a multi crore project named “Regalia Towers”, of course a society with 2

bedroom /3 bedroom flats and penthouses owing a mystique which is exemplary

in itself which not only reflects a diversified transformative spell to infrastructures

front but a unique state of art with the best of specifications also. In

infrastructures, Ind Swift plans to be emergent with motels & Resorts project in

the upcoming phases.

Publishing & Packaging’s: Ind Swift by virtue of its strong business

acumen has also put a step in the field of publications also in the name and style

of Mansa Print & Publishers Ltd's which has hovered over the industry within a

very short span by coming up with Aluminum Division in 2007 wherein the

manufacturing & printing of various type of packaging material viz. Aluminium

collapsible tubes, mono cartons etc is undertaken and now will add a new feather

in ISL's cap by launching a separate unit for PE, Lami tubes and PET bottles. Not

only this it further proposes to come up with a stationary unit for which the

building has already been constructed. The total plan will increase Mansa's sale

by 200%.

Another project for Injunction moulding has also been proposed. Both these

plants have a total layout plan out of Rs. 40 crore.

Media & Publication: Ind Swift has focused up in media & publication sector

under the name “Ind Swift Communications Pvt. Ltd” with its illustrious and

infomercial journals as “Pharmabuzz”, “Trendz”, ADI (Drug Index), Agrovet and

further proposes to come up with General magazines and tabloids.

Software Development: Ind Swift has also entered into IT & software with

their initial projects of developing web portals, search engines optimizations,

website development, software & ERP systems development. Its initial portals

which are already on air are OTC mart.com, buysweethome.com, painting

&photographs.com, doctorsonline.com & ayurvedaherbs.com.

Company’s sparkling footsteps on diversification in Education

front are under-mentioned:-

Swift Institute: Company’s Swift Institute is exclusively diverse from the

plenteous private educational institutions cropping up in North India, having world

class infrastructure, faculty, laboratories and other facilities. To initiate with,

Company has instituted six months Industrial Training Courses in Pharmaceutical

Sciences, for Operator Level Training which has enabled the 10th or 10+2

students to start a career in the booming Pharma industry & until now company

has already trained and placed more than 400 students at Ind Swift which

Company feel contributes a lot to the skilled manpower starving industry.

Swift Fundamental Research Education: SFRE (Swift Fundamental

Research Education ) is a society made under the banner of Ind Swift which has

recently laid an another step on the diversification spree and has forayed up with

a Pharmacy college at Rajpura with the name & style of “Swift School of

Pharmacy”, and is a unique state of art with the best of specifications also. With

this new venture of IND SWIFT, Company has been ranked as the pioneers in

this part of the country having a solid pharmaceutical industrial background to

come up with company’s own Pharmacy & Nursing institute. The institute will be

operational from current session year 2008-2009 with an intake of 60 students in

the field of Pharmacy and Nursing each, in the first year by virtue of its high

resourcefulness and know-how and will provide quality education to one and all,

aspiring careers in the field of Pharmacy.

Company’s manifest to be imminent with Engineering, Architecture,

Management, Hotel Management, General Management, Schools of Dentistry,

Ayurveda Physiotherapy and Medical Technology and finally a Medical College

with its functioning operational by 2010-11 under the budget of Rs. 250 Crore

with a specific target on Medical Tourism.

Domestic Marketing: The company's new division “diagnosis” dealing in

medical equipments & devices thereby focusing personal health care was

launched in December 2007 and has reflected promising performance & is

growing leaps and bounds from the first month of its launch which has given

utmost confidence to the company to get the aggrandized sales and contribution

not in the current year but in the forthcoming years as well. Not only this, the

division projects to achieve a business objective of 10 crores with impressive

contribution to ISL and possesses a strategy of adding up few other specialty

products in the existing range of personal health care & Academic Body model

series.

Another division launched by company is “Animal Health Care” which is an

absolutely new concept with outsourced marketing and has proved out to be an

individual profit center.

Apart from struggling uphill for the current range of products company’s Ethical

marketing have introduced those products during the year which are monopolistic

in nature viz. Cirrholiv which has proved out to be a remedy in Hepatitis and

other liver disorders. Other brands introduced by company during the year are

Topclav 625, Emtee 25 and Timcol Eye Drops.

In Generics, Company emerged as the 2nd rank Pharma Generic company and

has attained the fame of featuring its few brands (Amyclox, Swimox, Oxo, Swiflox

and Cafzone (already achieving the sales growth over 25 crore) as the top

brands in Generics. Company's brand Swimox has been enlisted among leading

brands in ORG IMS and Amyclox leads the que among top 300 brands of the

industry.

Annual growth for the company during the year is 36.73%.

ACHIEVEMENTS OF COMPANY

In 2000 company set up a unique R&D centre having facilities for bio-

equivalence studies, clinical trials for Ist, IInd and IIIrd phase, and toxicologial

studies.

In 2001 the Company has launched two new divisions, Super Speciality Division

and Healthcare Division. These divisions have launched 20 products in the

fastest growing segments viz. Diabetology, Neurology, Cardiology, Anti-AIDS,

Anti-Viral, etc.

In 2002 Company has informed that it has restructured its Board by inducting

three professional Directors on its Board. The three new Directors are Dr R S

Bedi, Dr J K Kakkar & Mr K M S Nambiar. The Company's Board is gradually

shifting from a closely held Board to professionally held Board.

In 2003 High Court approves the scheme of amalgamation of Swift Formulation

Pvt Ltd and Mukur Pharmaceutical Company Pvt. Ltd with Ind Swift Ltd.

Allottement of 1227375 equity shares to Promoters & other Bodies

corporates upon the conversion of their preference shares into equity

shares.

Out come of board meeting Issuance of GDRs aggregating up to US $ 20

million Preferential issue of up to 1.6 million equity shares at a premium of

Rs 80 per share to the promoters as well as other investors Issuance of

350000 zero coupon fully convertible warrants to the promoters Increase

in Authorised share capital of the company from Rs 100 million to Rs 150

million Delisting of equity shares from Ahmedabad, Delhi & Jaipur Stock

Exchanges.

In 2004 Company Allotted 3,50,000 zero coupon warrants to the promoters of the

company convertible into equity shares on or before March 31, 2004.

Allotment of 12,50,000 zero coupon warrants to the bodies corporate

convertible into equity shares on or before March 31, 2004.

Allotment of 3,50,000 zero coupon warrants to the promoters of the

company convertible into equity shares at any time within 18 months but

not before April 1, 2004.

Ind Swift Ltd ties up with Lupin Ltd for a Co-marketing pact to launch

Nitazoxanide, an anti-diarrhoeal / anti-helmintic drug for the first time in

India under the brand name Netazox and Nizonide respectively

Ind-Swift Laboratories Ltd. has informed that their Company has been

awarded the achievement award for the Best Performing Company in

Category E by the Express Pharma Pulse for the year 2004

Ind Swift Ltd has informed that the Company has launches a new

Marketing Division under the name 'Resurgence' for Anesthesiology,

Oncology and Surgery Segment.

RESEARCH & DEVELOPMENT

Looking at the current scenario where the pharmaceutical majors are engaged in

the advancement of R & D, Company has been competent enough to work out

on non infringing processes, Novel Drug Delivery Systems, dossiers, stability

data profiling, conceptualization of new molecules (and therefore a nmber of

product combination have been developed and are ready to be launched by

company’s marketing divisions). Company's R&D is involved in creating

international opportunities and alliances for CRAMS (specially contract

Research) to make it contribute 30% of profits. Till date two major contracts were

signed an have been delivered. Company is hopeful to attain more contracts on

product development and stability data profiling. Apart from this, Company is

applying invincible efforts to get approvals for a Bio-equivalence centre which will

further strengthen the basket of R&D. To strengthen the CRAMS business to the

exquisite level, company is tying up with various academic institutes.

By virtue of the hard endeavors of R&D all through the year, unique

combinations/NDDS of single molecule are around the corner and awaiting

launch by this year. Apart from this, R&D is emphasizing on a major area which

is cost Reduction. More than 5% of total revenues have been planned to spend

on the company's R&D and the same will be continued in the forthcoming years

as well.

NEW MANUFACTURING FACILITIES:

Apart from its existing plants in tax exempted zone of J&K and Baddi, duly

certified and approved by WHO GMP, company has successfully commissioned

another Manufacturing facility at the same tax exempted zone and green plains

of Baddi during the year. This new manufacturing facility inaugurated in August

2007, is for soft Gelatin Encapsulation with an annual capacity of 36 Crore and

will not only make us almost self sufficient in soft gelatin manufacturing but will

unquestionably dedicated a bit of spare capacities for contract manufacturing as

well.

Company's manufacturing unit at Parwanoo has also been upgrades as per

WHO Standerds. Company's Global Business Unit (GBU) at Derabassi has got

MHRA & TGA approval.

These new facilities will augment the company's efforts to tap the regulated

markets and strengthen the company's growing CRAMS business which is

expected to accounts for 30-40% of its bottom line over the next four years.

Company has been certified for ISO 9000:2001 also during the year.

Excellence in Manufacturing

A unique and unmatched excellence in pharmaceuticals manufacturing with

highest reliance of product quality attributes is our corporate strength. Ind swift's

multipurpose, multilocation manufacturing set-ups are spread across the lush-

green plains of northern Indian states viz Himachal Pradesh, Haryana and

Jammu and Kashmir. The locations are environmental pollution free and together

offer approx. 5,00,000 sq. ft of newly constructed plants with state of the art

facilities for manufacturing all types of dosage forms.

The facilities are built according to current guidelines of USFDA, MHRA, EU, and

WHO, and accreditations with ISO 14000 series standard.

INDUSTRY PROFILE

Real Estate Industry in India:

The size of the real estate industry in India is estimated by FICCI, to be around

US$ 12 billion. This figure is growing at a pace of 30% for the last few years.

Almost 80 % of real estate developed in India, is residential space and the rest

comprise office, shopping malls, hotels and hospitals. This double-digit growth is

mainly attributed to the off shoring business, including high-end technology

consulting, call centres and software programming houses which in 2003-04, is

estimated to have accounted for more than 10 million square feet of real estate

development. This is the ideal time to invest in the country as policy makers have

begun to emphasize on developing adequate infrastructure for the country. Real

estate companies would also do well to maximize their own performance and

operational efficiency.

The future of the real estate sector in India is going to be guided by two important

factors, namely suitable amendments in the Foreign Direct Investment (FDI)

guidelines in townships, housing, built-up infrastructure and construction –

development projects as well as abolition of Service Tax on the construction

industry especially the housing sector. Conversely, if the abolition per se is not

possible then drastic modifications in the existing Service Tax norms is the need

of the hour. This Sector is already overburdened with taxes; any further

imposition of taxes in any form would adversely affect the growth of this sector of

the economy.

The importance of the Real Estate sector, as an engine of the nation’s growth,

can be gauged from the fact that it is the second largest employer next only to

agriculture and its size is close to US $ 12 billion and grows at about 30% per

annum. Five per cent 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 and over 250 associated industries.

One Rupee invested in this sector results in 78 paise being added to the GDP of

the State. A unit increase in expenditure in this sector has a multiplier effect and

the capacity to generate income as high as five times. If the economy grows at

the rate of 10% the housing sector has the capacity to grow at 14% and generate

3.2 million new jobs over a decade.

Furthermore, this sector has witnessed a spurt in demand not just in residential

property but also in commercial property. A fast growing area is the I.T. and I.T.-

enabled services along with the BPO boom. Estimates worked out show that 42

million sq. ft. of space will be required every year till 2008, only in I.T. and I.T. -

enabled services especially in the cities like Bangalore, Chennai, Hyderabad and

Pune, which is also now gradually shifting to North India.

The drop in interest rates from 11.5% to 9.25% combined with a reduction of

15% in real estate rates has resulted in an increase in purchasing power of 33%.

The same EMI would, at a lower interest rate provide for a higher loan. The

higher loan used to purchase a home at a lower price would enable the customer

to purchase more square feet.

Real estate involves then 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 encompass the housing and construction

sectors also.

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 industrial sector grew at the rate of 10.8 percent in

2006-07 out of which a growth of 11.8 percent was seen by the manufacturing

sector.

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.

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 has 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 millionaire in urban areas alone. This

translates into very high opportunities for investors in the residential sector.

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 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 lakhs from Rs. 15 lakhs 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 246 International Research Journal of Finance and

Economics - Issue 24 (2009) 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.

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. Scope Of Real Estate

And Retail In Ahmedabad 16 Globsyn Business School – Ahmedabad.

The Indian retail market, which is the fifth largest retail destination globally, was

ranked second after Vietnam as the most attractive emerging market destination

for investment in the retail sector. Organised retail segment would see an

investment of USD 70 billion by 2010. By 2015, the retail sector is projected to

overtake the USD 650 billion mark, and organised retail will cross the USD 130

billion mark. The consumer spending in India has increased by an impressive 75

per cent in the last four years and will quadruple in the next 20 years. Of the 12

million retail outlets present in the country, nearly five million sell food and related

products. Mall space, from a meagre one million square feet in 2002, is expected

to touch an estimated 35 million square feet by end 2008 in the top seven cities

in India. At a time when the Indian consumer space is undergoing a

metamorphosis, with increasing spending power and changing purchase habits,

consumer space is getting slowly but surely better defined.

Hospitality Real Estate

For India, Hospitality Real Estate is very important in terms for revenue

generated from it. India has always been a tourist place for foreigners and they

have visited India for its rich and diverse culture.

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, and 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.

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 Scope Of Real Estate And Retail In

Ahmedabad 17 Globsyn Business School - Ahmedabad setting up an SEZ at

Mundra, covering 30,000-35,000 acres, and it proposes to invest Rs 7,300 core

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 Infrastructure (hi-tech engineering products and services near

Coimbatore in Tamil Nadu, Udupi in Karnataka and Vadodara in Gujarat),

Hindalco (aluminium SEZ at 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 is

also a number of real estate developers, including DLF, Ansals, Omaxe,

Parsvnath, Shipra Estate and Sunny Vista Realtors.

ECONOMIC

ENVIRONMENTCurrent Scenario

The real estate sector in the country is one of great importance. According to the

report of the Technical Group on Estimation of Housing Shortage, an estimated

shortage of 26.53 million houses during the Eleventh Five Year Plan (2007-12)

provides a big investment opportunity.

India leads the pack of top real estate investment markets in Asia for 2010,

according to a study by PricewaterhouseCoopers (PwC) and Urban Land

Institute, a global non-profit education and research institute, released in

December 2009. The report, which provides an outlook on Asia-Pacific real

estate investment and development trends, points out that India, in particular

Mumbai and Delhi, are good real estate investment destinations. Residential

properties are viewed as more promising than other sectors. While, Mumbai,

Delhi and Bangalore top the pack in the hotel 'buy' prospects as well.

The study is based on the opinions of over 270 international real estate

professionals, including investors, developers, property company

representatives, lenders, brokers and consultants.

According to the data released by the Department of Industrial Policy and

Promotion (DIPP), housing and real estate sector including cineplex, multiplex,

integrated townships and commercial complexes etc, attracted a cumulative

foreign direct investment (FDI) worth US$ 8.4 billion from April 2000 to March

2010 wherein the real estate and the housing sector witnessed FDI amounting

US$ 2.8 billion in the fiscal year 2009-10.

Since the sales of residential properties are diminishing gradually these days, it is

expected that the real estate companies will experience decline in the first

quarter of financial year 2010-11. However, it cannot be ignored that the office

market is picking up with the economy.

As per the data collected by leading stock brokerages show, it is expected that in

the June quarter, the realty companies will undergo around a 20% growth in the

net profit and a growth of 38-40% in net sales. As per the data of last year, there

had been a net profit of over 80% which certainly brings the conclusion that

market has experienced a decline in sales and profit.

A stock analyst with a Mumbai-based brokerage said that as compared to the

June quarter of financial year 2010, the numbers look somewhat flat in this

financial year.

For instance, the gross margins of DLF were 49% and had a growth of only 4%.

Similarly, Unitech’s net profits had a growth of just 1%.

Future Scenario

Indian real estate companies have picked up really fast in the last few years. As

per recent Indian Real Estate research, the average growth rate returns is 30%,

which tells the tale of this booming industry. Latest Real estate research India

has estimated a revenue increase to $102 billion from $14 billion in the next

decade. As per real estate studies India, there has been an increase in the mass

consumption, the trends are changing the consumption pattern of luxury goods

and corporate houses with great purchasing power are also entering into the

retail field of real estate.

The real estate market in India is yet in a nascent 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 going in great guns and this entails a huge demand for commercial

buildings and urban housing besides improvement in infrastructure.

The organised retail market in India is also accelerating with players like

WalMart, Bharti, Reliance etc. looking forward to make a foray thus stepping up

the demand for real estate.

According to former Planning Commission Advisor Tarun Das, a price index for

the housing market to track price movement must be incorporated. The

government must ensure that there is no shortage of funds. Sebi's (Securities

Exchange Board of India) recent harbinger of permitting real estate mutual funds

in both private and public sector will go a long way in attracting funds from small

investors who emphasize on certain return. Another impediment that can be

eased on the discretion of government is the existing tax laws and other complex

regulations relating to multidimensional real estates such as industrial parks and

SEZs (Special Economic Zone). RITES (Real Estate Investment Trusts) of the

type introduced in U.S.,U.K. and Germany should be imitated and explored.

New Projects

Shristi Infrastructure Development Corporation will invest US$ 444.7

million over the next three years in seven small cities in West Bengal,

Tripura and Rajasthan. The money would be used to build integrated

townships, healthcare facilities, hospitality and sports facilities, retail malls,

logistics hubs and commercial and residential complexes.

Realty major Ansal Properties & Infrastructure Ltd plans to invest about

US$ 330.8 million over the next three years on expansion of its existing

integrated townships and to develop a group housing project in Haryana

Integrated property development and asset management company, Vision

India Real Estate Pvt Ltd, is planning to develop logistics parks in

Bengaluru and Chennai, with an outlay of US$ 110 million

Tata Housing is planning to launch about 10 new residential projects in

both affordable and luxury segments in 2010-11, with an investment of

about US$ 268.9 million along with its partners

Vision India Real Estate, a closely-held business group in the US, is

investing US$ 5 million in Gem Group’s upcoming residential project in

Chennai. This will be the first joint development project for the US

Company that is proposing to invest US$ 100 to US$ 200 million over the

next three years on projects, especially in the logistics arena.

Real estate firm Supertech will invest US$ 880.5 million for developing 15

realty projects across North India in the next three years.

Conservative Real Estate Sector in a Growth Economy

With signs of economic stabilization and moderate global economic growth

forecasted for 2009-10 and beyond, property markets in India have exhibited

signs of revival from the second quarter of 2009. Attracted by correcting values,

investors and end-users alike have begun to reconsider the market, accelerating

activity in the Indian realty sector. With return of liquidity in recent months via

FDI, QIP’s, non-core asset sales and banks reconsidering lending to the realty

sector, cash flows of realty players have also improved. Most banks have gone

for aggressive interest rates to capture the market share. However, players are

still cautious in their approach and rightly so. Although overall demand for real

estate saw a decline in 2009, an improving economy backed by strong

fundamentals, suggests that the sector is likely to see a demand growth in the

long-term.

By Q3 of FY 2009, the housing industry has seen an increase in demand due to

the continuing effect of the stimulus package unveiled by the government in the

latter half of 2008-2009. The current growth of real estate can be attributed to

comfortable interest rates and launch of many projects in the affordable segment

coupled with positive buyer sentiments. The price correction has been good for

the industry, and organizations are expected to manage tightly and efficiently.

There are ample signs to signify a more positive outcome for 2010. Experts

believe that real estate in India is one sector that is backed by so much internal

demand; it is not possible for it to slump entirely. The strategies adopted and

executed by real estate players would differentiate who would survive and

flourish.

REAL ESTATE IN CHANDIGARH

The residential real estate market is witnessing a shift in buyer preferences

The dawn of 2010 was wrapped in the bright

hues of optimism and revival for the real

estate sector in the country. The ominous

clouds of slowdown of the past 18 months

were surely revealing their silver lining for this

sector. After the first quarter the residential market seems to be recovering fast

and there is a flurry of activity in metros as well as in Tier II and III cities all over

the country among the buyers as well as developers. Several new housing

projects have been launched keeping the steep demand in mind. Chandigarh has

been amongst the first few planned cities of India and it is also the state capital of

both Punjab and Haryana. This has made this city a vital area for expatriates,

diplomats along with becoming a nucleus of NRI's. Since Chandigarh had been a

well planned city, all the constructions here had been at par with environmental

norms. Apart from this pollution and unhygienic living conditions are not

entertained and all the builders here had to adhere to these factors.

Chandigarh properties have been witnessing tremendous growth and this

happened in spite of restrictions on the construction here. Chandigarh real estate

is witnessing testing times. On one hand, there are more investments pouring in

the segment and on the other side property buyers and sellers are not very

enthusiastic about property transactions.

The overall, economic recession has caused stagnation in the country's real

estate segment. Chandigarh's property segment, too, is witnessing a similar

trend. Property brokers in Chandigarh say that real estate values have

stagnated. Property prices for plots in suburban areas like Baltana and Kharar

have stooped down to as much as Rs 100 - 200 per sq yard. This is almost 20%

decline in prices when compared to corresponding quarter last year.

Property sellers in Chandigarh see this as a temporary phase and are holding on

to their land assets. They hope that real estate prices will increase in next six

months and this is when they will make profits. Property buyers, however, say

that Chandigarh Property Prices are nominal still. They have few choices as

there are not many sellers in the markets as of now.

Recent developments in Chandigarh properties segment are worth noticing.

Delhi-based developer Parsvnath has bought 38% stake in Sabeer Bhatia's Nano

City Project. Nano City is a commercial and residential project in Chandigarh and

will be completed by 2010. Market sources say that Bhatia is already scouting IT

clients to open offices in his Nano City. This will bring more employment, and

thus many more property users and home seekers to Chandigarh.

The booming real estate sector here has provided for benefits for both potential

buyers and also for the property developers. The Chandigarh real estate market

is expected to grow with the rise of demands in the northern sector. Chandigarh

has also been the hub to some IT sectors and this industry is also expected to

grow here. The property rates for the commercial sectors are expected to grow, if

more multinational companies set up their bases here. Expansion of the city to

districts and other areas, have given more scope for expansion of the real estate

sector and more options for buyers.

Chandigarh's planned development has always been hailed as a model for

other north-Indian cities. Like any other city, Chandigarh too is faced with the

constant expansion of the city limits. However, this expansion doesn't come at

the cost of present infrastructure. Hence the real estate prospects of the city

have never been affected by these developments. Now, the Union Territory is

bracing up its infrastructure to keep pace with the changing times.

The city has witnessed some promising projects from leading real estate

developers like DLF, Parsvnath, Omaxe, Ansals API and Emaar MGF. The

consumer base for most of the private builders is the urban-rich population or the

NRIs. However, this situation is changing now. The Chandigarh Housing Board

(CHB), the chief civic authority responsible for all the housing related activities in

the region, is concentrating on mass housing projects. This is in consortium with

the new housing policy which lays emphasis on providing affordable housing,

considering the middle-income group as the potential user base. The Board

recently announced the construction of around 13,000 new housing units under

different categories in the city. The CHB has started construction of 160

houses in Sector-26 East (Bapu Dham) for low-income households. About

8,000 houses will be built in Dhanas and Maloya-I for the middle income group.

Another 2,260 houses have been planned on 42 acres in Sector 63 under a

general housing scheme. Besides this, 4,700 houses have been announced on

90 acres of land in Sectors 53, 54 and 55.

Along with this, the government agencies are also promoting small time local

property developers to institute projects in the region. The Amarisis, Venus

group, Kwality buildtech are prominent among these players. Most of the

projects by such group are in affordable category. All in all, it seems that

Chandigarh will soon become a dream destination for the middle-income group.

The city promises affordable accommodation and a good quality of life to its

citizens. Withstanding to its reputation of India's first planned urban development;

the city of Chandigarh is popular as a sophisticated property market of the

northern India. This capital city of Punjab, a state which enjoys one of the highest

per capita incomes in the country, also holds the distinction of achieving a year-

on-year growth rate of 7.91 per cent since year 2000. The city has been

positioned at number four among the fastest growing cities in India, in the recent

report released by the International Institute for Environment and Development.

Definitely, the flourishing local economy of Chandigarh augurs well for nearly all

the segments of real estate i.e. residential, retail, and commercial, are witnessing

positive trends. Industry veterans also claim that Chandigarh real estate is largely

an investor driven market, and the segment is far more active than the end-user

segment. Decent connectivity, low operational costs, and sufficient availability of

land are some of the factors that make Chandigarh properties an attractive

Investment instrument.

Growth Engines:

Lately, Chandigarh real estate caught the attention of IT and ITeS

companies with the development of 375 acre Chandigarh Technology Park

(CTP) at Manimajra, north-east part of Chandigarh, and IT Park in Mohali. The

projects brought state-of-the-art infrastructure and facilities equivalent to those

available in the cyber cities of Bangalore and Hyderabad. Furthermore, DLF has

set up its Infocity within the CTP zone, in view of extending world-class facilities

to these techno-giants. Meanwhile, the capital values and rentals in the

commercial property segment have been consistently rising in the past 3-years,

though a bit of slowdown is noticed in the residential real estate, due to

oversupply.

Property Values and Rentals:

With the foray of IT and ITeS majors in Chandigarh, commercial properties

offering Grade A office space to the clients are in demand. At present, rentals

at Sector 19 are floating at Rs 90 per sq. ft a month, while the same hovers

from Rs 20 to Rs 35 at Sector no. 17 and 22. The capital values at Sector 17

and 19 are recorded at Rs 10-11,000 per sq. ft. the same, however, are quite

moderate at Rs 6-7 per sq. ft, at Sector 22.

Rental & Capital Values

Knight Frank reports that the prime residential locations in Chandigarh, which

include sectors 4 to 10, command the highest values, ranging between Rs.5,000-

7,750/sq.ft. Other sectors command a price of Rs.3,300-4,400/sq.ft. With

developments on a fast growth trajectory, the demand for housing is expected to

rise in the region. Currently, Zirakpur has a price range of Rs.2,200 -2,750/sq.ft.

for plots and Rs.2,300-2,700/sq.ft. for flats while residential developments in

Dera Bassi have capital values of Rs.1,300-2,000 /sq.ft.

Retail space supply in Chandigarh is restricted due to strict building bye-laws.

Quoted lease rentals are around Rs.120-180/sq.ft. per month for the ground floor

and Rs.25-40/sq.ft. per month for first floor. Within Chandigarh, two new projects

are under construction currently; a mall-cum-multiplex in Sector-17 and another

with a built up area of around 150,000 sq.ft. in the industrial area. Grade-A

developments comprising malls are coming up in Zirakpur, Dera Bassi and

Mohali, under mega projects scheme. These projects offer retail space at a rate

of Rs.90-180/sq.ft. per month. However, with changing trends, a number of

hotels in mall developments are also in the pipeline.

On the commercial front, all the sectors in Chandigarh have common SCO

format commanding a capital value of around Rs.6,500-10,000/sq.ft. And with

lease rentals of Rs.25-35/sq.ft. per month. The only exception is Sector-9, the

centre for banking, financial and telecom services. The rentals here average to

about Rs.90/sq.ft. per month while the capital values are approximately

Rs.9,750/sq.ft.

In the last six months, there has been a correction in the residential property

market in Chandigarh. With correction in the market, stabilization is envisaged

which will encourage transaction rate.

MAJOR PLAYERSDLF

The DLF Group was founded in 1946. We developed some of the first residential

colonies in Delhi such as Krishna Nagar in East Delhi, which was completed in

1949. It has a 62-year track record of sustained growth. Since then we have

been responsible for the development of many of Delhi’s other well known urban

colonies, including South Extension, Greater Kailash, Kailash Colony and Hauz

Khas. The first and foremost project of DLF was the late 1940s project of the

development of 21 urban colonies in and around Delhi.

DLF City is spread over 3,000 acres in Gurgaon. The company has

approximately 238 msf of completed development and 423 msf of planned

projects, and has pan India presence across 30 cities. DLF has 216 msf of

developed area under homes and residential plots. The development business at

present has 391 msf of development potential with 25 msf of projects under

construction. The company has land resource of 92 msf for office and retail

development, with 17 msf of projects under construction. it has a development 

potential of 12 msf for its hotel business.

Other business

Wind Power Projects by DLF

DLF group is the largest owner of wind power plants in India with an installed

capacity of 228.7 MW. DLF has initiated its wind power portfolio in March 2008.

Currently the group owns wind farms in the states of Gujarat (150 MW),

Rajasthan (34.5 MW), Tamil nadu (33MW), and Karnataka (11.2 MW). These

projects reduce about 4.7 tonne of CO2 emissions on annual basis. The wind

power projects in the states of Gujarat and Karnataka are already registered for

carbon credits at UNFCCC and generating over 3 Lakh CERs (Certified Emission

Reductions) annually.

Project Locations

1. 150 MW wind power project in Kutch, Gujarat.

2. 11.2 MW wind power project in Gadag, Karnataka.

3. 33 MW wind power project in Osisan and Ratan Ka Baas, Rajasthan.

4. 34.5 MW wind power project in Elavanthi and Panapatti, Tamilnadu.

K. RAHEJAEstablished in 1956, the Mumbai-based K. Raheja Corp. has made a successful

transition from a real estate company to a business corporation, with a diverse

product portfolio. C. L. Raheja is the Chairperson of K. Raheja Corp.

K. Raheja Constructions and K. Raheja Hospitality are part of G.L. Raheja's

conglomerate. The group has been in its core business of construction and

property development for over 5 decades now. K.Raheja Constructions has

successfully completed about 2000 projects within India of Residential, Industrial

and Commercial kind. Over its 40 plus years of experience in this fields, the

group has also pioneered the concept of self-sufficient, self contained 'township

development'. Amongst all its activities, the Group has never left the society out

of focus, to which it belongs. It has shouldered the responsibility to provide

education and improve health standards of members of the society through

Educational Institutes and Hospitals.

The Group has also joined hands with APIIC, to develop an IT Park at

Cyberabad, Hyderabad. The upcoming facility with built up area of 4.5 million sq.

ft. will house the IT and ITES industry.

K.Raheja Corp a leading real estate developer in the country has chosen to be at

the forefront of being environmentally responsible albeit volantarily, thereby

paving a way for others to follow. The company has decided to have their

projects as LEED [Leadership in Energy and Environmental Design ] certified

GREEN BUILDINGS. This in turn would bring down the annual energy

consumption of any building by 15-20%.

Parsvnath

Parsvnath Developers Limited is one of the leading real estate companies in

India. Parsvnath Developers Limited is also the first real estate developer to be

certified to Integrated Management Systems (IMS) comprising of ISO 9001:2000,

ISO 14001:2004 and OHSAS 18001:1999 certification by the Italy-based, Global

Certification Organization, RINA group.

Business Areas

Currently, Parsvnath Developers has marked its presence in 50 cities and 17

states in India. It boasts of being one of the most widespread real estate

developers in India.

Major Projects

At present, Parsvnath Developer's ongoing 100 projects include integrated

townships, group housing, shopping malls, it parks, commercial complexes,

hotels and SEZ projects across all industry verticals in India. The projects are

estimated to cover over 200 million square feet across all real estate verticals of

India.

Omaxe

Established in 1987 as Omaxe Builders to undertake civil construction and

contracting business.

Business Areas

Omaxe's ventures in the real estate business include developing integrated

townships, group housing, shopping malls, multiplexes, hotels, resorts, IT parks,

biotech parks and SEZs. Some of Omaxe Group's major commercial ventures

include Omaxe Plaza, wedding mall and House 2 Home (Gurgaon), wedding mall

(Patiala), Omaxe Plaza (Ludhiana), Omaxe Arcade and NRI City Centre (Greater

Noida), Park Plaza

(Indirapuram), wedding mall (Agra), and Citadel and Pearls Omaxe (Delhi).

Major Projects

Omaxe Limited has so far completed and delivered 10 projects, consisting of 8

residential and 2 commercial, covering approximately 4.2 million square feet of

area, valued at Rs.360 Crore, with all on time deliveries. At present, the company

has over 100 million square feet of area under development, with projects

spreading across 30 towns in nine states of India.

TECHNOLOGICAL

ENVIRONMENTIssues Concerning to the Real Estate Sector

With the rapid growth in real estate, some challenges may emerge in the way of

taking India to the higher growth trajectory.

Regional reach of existing players

Most of the real estate developers in India have regional focus where the

conditions are most suitable to them. There are very few players in the country

having a pan-India presence. The challenge for real estate developers is to move

ahead in the value chain and expand in other areas of the country as the boom in

the real estate encompasses almost the entire country.

Mushrooming of smaller players

The recent real estate boom has seen players without track record and

credibility. In the absence of regulatory framework, these new comers are

mushrooming and affecting the credibility and reliability of the system. In

expectations of higher profits in short run, most of the developers are coming

forth with significant expansion plans irrespective of their historical performances

and size of the projects undertaken. Under the circumstances, the strengths of

the concerned company to manage the increased size and geographical spread,

their ability to execute projects within time and cost and ability to arrange capital

are the important issues which need to be addressed

Majority of market belonging to unorganised segment

The Indian real estate sector is highly fragmented with the unorganised segment

comprising of small builders and contractors accounting for a majority of the

housing units constructed. As a result, there is not a large degree of

transparency in sharing of data across the industry.

Soaring land prices

Soaring land prices and price resistance from buyers are narrowing investors’

margins significantly. The land prices have risen tremendously since the past two

years forcing many real estate developers to change their strategy of rapid

expansion to other geographies. For example, around two years back, land cost

as a percentage of total project cost was around 25-30% in tier I cities, which has

now increased to around 60-65% in recent times.

Increasing raw material prices

Construction activities are often funded by the client, which makes cash

advances at different stages of construction. In other words, the total amount of

revenue from a project is predetermined and the realisation of this revenue is

scattered across the period of construction. A significant challenge that real

estate developers face is dealing with adverse movements in costs. The real

estate sector is dependent on a number of raw materials, such as cement, steel,

bricks, wood, sand, gravel and paints. As the revenues from sale of units are

predetermined, adverse price changes in any of the raw materials directly affect

the bottom lines of developers.

Appreciating Rupee

Indian currency has appreciated by almost 12% on a year-on-year basis. Rising

rupee severely hurts exporters and IT companies. Further appreciation of rupee

from the current levels will see topline as well as bottomline of IT companies

nosedive sharply. These might force IT companies to put on hold their expansion

plans thus putting pressure on demand for commercial as well as residential

space.

Interest rates

One of the main drivers of the growth in demand for housing units is the

availability of financing at low rates. Interest rates however have shown signs of

increasing in recent months and most of the leading financial institutions have

recently raised interest rates on housing loans. This trend of rising interest rates

could dampen growth in demand for housing units. Rising interest rates have

impacted the installment to income ratio in a big way especially the advances

which were floated about a year back. After the recent hikes in home loan rates,

financing institutions are devising ways for smooth recoveries of passed-on

costs. This, inter alia, includes increasing the tenure of Equated Monthly

Installments for existing customers, acombination of prepayment and staggered

differential payments, etc. Though few banks have reduced their rates on

housing loans in the past one month the rates are still higher to have any

substantial positive impact on the real estate sector. The Government is working

on a plan to offer housing loan to urban poor at a subsidized rate of around 7%

per annum. The Government may offer subsidized rate for loans up to

Rs150,000 for 5-7 year period. The Government may consider an easy financing

scheme for the rural population as well at a later stage.

Regulatory opaqueness

Real estate demand in India is good however several regulatory hurdles exist.

For example the Land Ceiling Act in various states lead to problems in

consolidation of land banks and this in turn leads to routing of numerous

transactions through shell companies. Significant Stamp Duty, Registration

Charges and Capital Gain Taxes lead to high incidence of cash transactions.

Similarly, there are ownership issues because of too little computerization of land

titles. This has lead to transparency and disclosures related issues as also

corporate governance issues by the real estate companies as well as the

financers. Improvement in regulatory framework is required with respect to

modifications in antiquated land laws, duty rationalization, single window

clearance and computerization of land records, setting up of minimum quality

standards of registration of builders, setting up of reliable industry wide database,

adoption of uniform valuation practices and improvement in accounting quality.

All these issues will go a long way in building mutual trusts amongst the real

estate community. The concerns continue to run high about the regulatory

opaqueness for real estate ventures, bureaucratic red tape and the absence of

title insurance, in addition to a host of other issues. All of these factors are

tempering investors’ appetites for Indian real estate.

POLITICAL

ENVIRONMENTGovernment Initiatives

The government has introduced many progressive measures to unlock the

potential of the sector and also to meet the increasing demand levels.

100 per cent FDI allowed in townships, housing, built-up infrastructure and

construction development projects through the automatic route, subject to

guidelines as prescribed by DIPP

100 per cent FDI is allowed under the automatic route in development of

Special Economic Zones (SEZ), subject to the provisions of Special

Economic Zones Act 2005 and the SEZ Policy of the Department of

Commerce

FDI is not allowed in Real Estate Business

In the Union Budget 2010-11, the Finance Minister made the following

announcements with regard to the real estate sector:

Allocation for urban development were increased by more than 75 per

cent from US$ 660.3 million to US$ 1.17 billion in 2010-11

Allocation for housing and urban poverty alleviation were raised from US$

183.4 million to US$ 215.8 million in 2010-11

Scheme of 1 per cent interest subvention on housing loan up to US$

21,576 where the cost of the house does not exceed US$ 43,153

announced in the last Budget has been extended up to March 31, 2011

and US$ 151 million has been earmarked for this scheme for 2010-11

US$ 274 million has been allocated for Rajiv Awas Yojna, as compared to

US$ 32.4 million last year

Road Ahead

According to the Confederation of Real Estate Developers' Associations of India

(CREDAI), the affordable housing segment is set to play an important role in

India's real estate sector in 2010 on the back of substantial demand.

"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," Confederation of Real Estate Developers'

Associations of India (CREDAI) Chairman Kumar Gera said in January 2010.

Moreover, 2010 is expected to be a positive year for the real estate sector. The

revival is expected to be driven by infrastructure growth, which in turn, can

accelerate real estate activities both in the residential as well as commercial

spaces.

India Budget 2010-11, a mixed bag for real estate sector: NIREM

IDS National Institute of Real Estate Management (IDS NIREM) believes that

contrary to the popular demand of and expectation for huge impetus to the

housing and real estate sector, the India budget 2010-11 has brought a mixed

bag for this sector.

IDS National Institute of Real Estate Management (IDS NIREM)   believes that

contrary to the popular demand of and expectation for huge impetus to the

housing and real estate sector, the India budget 2010-11 has brought a mixed

bag for this sector. Though, some benefits have been extended to housing and

real estate sector, the burden imposed will definitely undermine the benefits. The

burdens and benefits for the real estate sector are as follows:

The burden:

o Widening of Service Tax net:

Real Estate Developers will have to pay service tax on transactions where

consideration is collected from prospective buyers prior to completion of

construction. However, it seems service tax will not be applicable if the full

payment is made after completion of the construction.

In addition, other services provided by the builders to prospective buyers such as

providing preferential location or external or internal development charges

(excluding vehicle-parking space) etc. shall also be covered.

Renting of immovable properties is also under service tax net and the definition

of 'renting of immovable property service' has been clarified as well as widened

to cover rent of vacant land under contract for undertaking construction of

buildings or structures for business purposes. This may have negative effect on

to the properties bought or to be bought solely for investment purpose.

Excise Duty on Cement:

Excise duty ion cement has been increased which will increase the cost of

construction and it is expected that per unit cost for prospective buyers will also

increase.

The benefits:

Some emphasis has been given to promote housing in general such as:

o Extension of Interest subvention scheme upto March 31, 2011,

o Extension of deadline for completion of pending housing projects by one

year without losing tax holiday u/s 80-IB. However, MAT may affect the

companies executing such projects.

o Extension of 1% interest subsidy on housing loans upto Rs. 10 lakhs

and where the cost of the property is under Rs. 20 Lakhs. This along with

along with increase in the tax slab rates for individuals should provide the

necessary demand boost for low-cost housing.

o Relaxation in norms for built-up area of shops and other commercial

establishments in such eligible housing projects and

o Increased budgetary allocations for urban development and housing

schemes.

o extension of investment linked deduction benefit to convention centres

located in the NCR of Delhi extended from the present 31st March, 2010 to

31st July, 2010 (for purposes of deduction u/s Section 80-ID of the Income-

tax Act).

Overall, this budget will have mixed affect on the Indian real estate sector.

However, looking at the overall economic scenario, we also need to consider that

the budget was presented against mutually conflicting objectives, where-in it is

not possible to meet the demands of each individual sector. Another important

aspect is that very clearly the Finance Minister took pragmatic approach instead

of populist measures, which is a good sign of a growth orientated government.

Real Estate market in India has developed remarkably in the past few years. The

potential of the Indian property is proved by the growth of the major real estate

companies of India.

Infrastructure development, commercial real estate, residential complex, retail

space development market is continuously booming with various activities. In the

India real estate sector,the Indian government has approved a FDI of 100%

which has given a boost to the Real Estate Companies. People from all parts of

the globe are interested in buying the Indian property. The list below provides the

name of the best Real estate Companies in India.

Role of Government in India Real Estate Investment:

CREDAI was established in 1999, the Confederation of Real Estate Developer's

Associations of India (CREDAI) is the umbrella organization for the organized

real estate developers/builders in India. CREDAI's member roster comprises 20

state/city level associations spread over across 18 states of India, representing

over 60% of the organized private state/cities in the country. The states included

in the CREDAI membership are Andhra Pradesh, Chattisgarh, Delhi-NCR, Goa,

Gujrat, Himachal Pradesh, Jharkhand, Karnataka, Kerala, Madhya Pradesh,

Maharastra, Orissa, Punjab, Rajasthan, Tamilnadu, Uttar Pradesh and West

Bengal.

Moreover, on behalf of developers/builders across India, CREDAI lobbies with

the government authorities in order to ensure formulation of constructive policies,

some of which are:

Abolishment of the ULC Act.

The organization solicited income tax concession to the property

purchasers, seeking the housing finance/home loans, and to the

builders/developers, undertaking the residential housing projects.

Encouraged the adoption of fast track mechanism by the local government

authorities.

Initiated proactive policies for the IT and IT based services, in the form of

property tax concessions, etc.

Opened the FDI market in the real estate sector, enabling slum

rehabilitation and low income/low cost housing.

Introduced URIF ULIF funds to persuade the state government and cities

to draw out effective reforms in the real estate infrastructure.

The Indian government has been playing a proactive role in the India Real Estate

Investment and thereby promoting investors to invest in Indian real estate

market. The different laws governing real estate are -

1. Indian Transfer of Property Act

2. Indian Registration Act, 1908

3. Indian Urban Land (Ceiling And Regulation) Act, 1976

4. Stamp Duty

5. Rent Control Acts

6. Property Tax

7. Foreign Exchange Regulation Act, 1973

• Foreign Role in India Real Estate Investment:

The liberal government policies have facilitated the expansion of the foreign

involvement in the India Real Estate Investment sector. At present, the non-

resident Indians have played a very important role in transforming the Indian real

estate market. Some of the important foreign investors in the Indian real estate

market are like-

• Emmar Properties

• Laing O'Rourke (LOR)

• Morgan-Stanley Real Estate

• Vancouver-based Royal Indian Raj International Corporation (RIRIC)

• Indonesia-based Siputra Selim group

• US-based Warburg Pincus

• Blackstone Group

• Broadstreet

• Columbia Endowment Fund

• California Public Employees' Retirement System (CalPERS)

RESEARCH METHODOLOGY