Project at HDFC Sales Ban Galore- Real Estate Dynamics

8/8/2019 Project at HDFC Sales Ban Galore- Real Estate Dynamics

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A REPORT

ONDYNAMICS OF REAL ESTATE IN BANGALORE

By

Anudeep.R

Enrollment no. 09BS0003023

At HDFC SALES


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A REPORT

ON

DYNAMICS OF REAL ESTATE IN BANGALORE

By

Anudeep.R 09BS0003023

HDFC Sales

A report submitted in partial fulfillment of the requirements of MBA Program of

ICFAI University, Dehradun

Company Guide Faculty GuideMr. Prashanth Barcha Prof.Santhanam Murali

Date of Submission: 17.05.2010


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DECLARATION

I declare that the project entitled DYNAMICS OF REAL ESTATE

IN BANGALORE Conducted at HDFC Sales is a record of independent live

project carried out by me during the academic year 2010-11 under the guidance ofmy Faculty Guide Prof. Santhanam Murali of ICFAI Business School, Bangalore

and my Company Guide, Mr. Prashanth Barcha. Branch Manager, HDFC Sales.

I also declare that this project is the result of my effort and has not been submitted

to any other University or Institution for the award of any degree, or personal favor

whatsoever. All the details and analysis provided in the report hold true to the best

of my knowledge.

Place: Bangalore Anudeep.R

Date: 17th May,2010 09BS0003023


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Acknowledgements

I whole heartedly thank and acknowledge,

Mr.Prashanth Barcha, Branch Manager, HDFC Sales, for providing me with this

golden opportunity to work for the organization. Mr.Prashanth laid the direction

and path for the project and in spite of his very busy schedule guided me through

the project.

Mr. Bhaskar, Assistant Sales Manager, HDFC Sales, for extending support and

help during the project.

Mr. Santhanam Murali Sir, Faculty, IBS Bangalore for continuously guiding me

through the project and evaluating the project.

Last but not the least my Alma-mater for blessings, my college IBS-Bangalore for

the support.

-Anudeep R


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Executive summary

I have completed the project on real estate dynamics in Bangalore by using

secondary data and primary survey. The objective of the project is to study the

changing market dynamics of real estate market, identification of developers, their

projects and banks which fund various projects. The primary research consisted of

a market survey where I interviewed the developers and builders of Bangalore. The

task has fetched insights about the builder mindset and HDFCs deliverance. I have

also tried to understand major drivers of real estate, the organization HDFCs

functions and its objectives, the competitors of home loan market (Real Estate

finance in a way)

The project also gives insights about economic impact of real estate sector. The

relevance of real estate to a developing country like India is indeed very important.

To provide shelter for teeming millions is very important. This job is smoothened

by home loan market. The real estate finance also finances the builders projects

and serves as a link to consumer and seller (builder here).

Infrastructure is raising needs and expectations day-to-day. All these combined

together have been successfully been done by these institutions. In process the

competition is very high. The need of hour is consistency, coverage and

courteousness. The organization I have worked is well known for its decent

business. It has always been a pioneer in this field. Not to forget the institution is

named and came up for home finance.


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TABLE OF CONTENTS

Page

Authorization 3

Acknowledgments 4

Executive summary 5

Introduction...8

Organization.... 8

HDFC and its wings....8

HDFC Sales..........................................................................12 Sector.20

Indian Real Estate Sector...20

Favorable demographics....28

Key Regulations in Real estate sector...42

Overview... ...44

Research Design44

Questionnaire. 45 Objective48

Purpose ofreport...48

Limitations.48

References and sources..49

Findings and Conclusions...51


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List of Diagrams

1. Organization wings- Flow chart (HDFC Ltd.)

2. Organization structure- Flow chart(HDFC sales)

3. Branch structure- Flow chart(HDFC sales)

4. Table of Interest Rates- Table

5. Process flow at HDFC Sales- Flow chart

6. Shortage of housing units- Map of India

7. Construction vs. GDP- Graph

8. Major Builders in India- Table

9. Growth of GDP and Indian Services Sector- Graph

10.Urban population of Countries- Graph

11.Rising disposable income- Graph

12.Growing urban population- Graph

13.Urban growth- Graph

14.Population Profile- Table

15.Urban rural growth rate- Graph16.Home loan as a percentage of GDP

17.Industry wise classification of SEZs- Table

18.Growth of IT/ITes vs. GDP- Graph

19.Growth of Indian Retail Industry- Graph

20.Retail growth- Graph

21.Upcoming Mall numbers- Table

22.Demand forecast- Table

23.Change in Rental value(Bangalore)- Graph

24.Change in capital value(Bangalore)- Graph

25.Expected Ratings Home Loan Institutions- Table


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26.Expected Ratings HDFC- Table

27.Expected Ratings SBI- Table

28.Expected Ratings Home Loan Institutions- Graph

29.Expected Ratings HDFC- Graph

30.Expected Ratings SBI- Graph

31.Comparison Ratings Home Loan Institutions, HDFC and SBI(Ease of

Process)- Graph

32.Comparison Ratings Home Loan Institutions, HDFC and SBI(Faster

processing)- Graph

33.Comparison Ratings Home Loan Institutions, HDFC and

SBI(Legal/Technical flexibility)- Graph

34.Comparison Ratings Home Loan Institutions, HDFC and SBI(Reputation of

the financier)- Graph

35.Comparison Ratings Home Loan Institutions, HDFC and SBI(Customer

preference)- Graph

36.Comparison Ratings Home Loan Institutions, HDFC and SBI(ROI)- Graph

37.Comparison Ratings Home Loan Institutions, HDFC and SBI(Existing

relationship)- Graph

38.Comparison Ratings Home Loan Institutions, HDFC and SBI(Funding

Value)- Graph


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Introduction

Organization

The organization HDFC Sales is a wholly owned subsidiary of HDFC Ltd. The company

was floated as the Distribution Arm of HDFC. The objective of HDFC Sales is to offer

superior, doorstep service to prospective clients of the HDFC group.

Housing development finance corporation (HDFC) was established in 17 th October 1977.

The head office is located at Mumbai. It is Pioneer in the Housing Finance sector in

India.

Key executives of HDFC are:

Chairman - Mr. Deepak Parekh

Vice Chairman & CEO - Mr. Keki Mistry

MD - Ms. Renu Sud Karnad

HDFC ltd. has various wings. They are:

HDFC BankThe Housing Development Finance Corporation Limited (HDFC) was amongst the first

to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up abank in the private sector, as part of the RBI's liberalization of the Indian BankingIndustry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank

Limited', with its registered office in Mumbai, India. HDFC Bank commenced operationsas a Scheduled Commercial Bank in January 1995.

HDFC Home LoansHelping Indians experience the joy of home ownership. The road to success is a toughand challenging journey in the dark where only obstacles light the path. However,success on a terrain like this is not without a solution. Today, nearly three millionsatisfied customers whose dream we helped realize, stand testimony to the success.Objective, from the beginning, has been to enhance residential housing stock and

promote home ownership. Offerings range from hassle-free home loans and depositproducts, to property related services and a training facility. Offers specialized financialservices to our customer base through partnerships with some of the best financial

institutions worldwide.

HDFC DepositsHDFC has instituted well-defined service standards for both depositors and depositagents. HDFC has been able to mobilize deposits from over 10 lac depositors.Outstanding deposits grew from Rs. 1,458 crores in March 1994 to 19,359 crores inMarch 2009. Much of this success can be attributed to its strong brand image, superiorservices, security and above all, the significant contribution made by HDFC's depositagents. HDFC has over 15,000 deposit agents and distributes all its retail savings


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(deposit) products primarily through this channel. HDFC has been awarded AAArating for its deposits from both CRISIL and ICRA for the FIFTEENTH consecutive

year, representing highest safety as regards timely payment of principal and interest.

HDFC Standard Life Insurance

HDFC Standard Life Insurance Company Limited. is one of India's leading privateinsurance companies, which offers a range of individual and group insurance solutions. Itis a joint venture between Housing Development Finance Corporation Limited (HDFCLimited), India's leading housing finance institution and a Group Company of theStandard Life Plc, UK. As on February 28, 2009 HDFC Ltd. holds 72.43% and StandardLife (Mauritius Holding) 2006, Ltd. holds 26.00% of equity in the joint venture, while therest is held by others.

HDFC Mutual Funds

HDFC Asset Management Company Ltd (AMC) was incorporated under the CompaniesAct, 1956, on December 10, 1999, and was approved to act as an Asset Management

Company for the HDFC Mutual Fund by SEBI vide its letter dated July 3, 2000.The registered office of the AMC is situated at Ramon House, 3rd Floor, H.T. ParekhMarg, 169, Backbay Reclamation, Churchgate, Mumbai - 400 020.In terms of the Investment Management Agreement, the Trustee has appointed the HDFCAsset Management Company Limited to manage the Mutual Fund. The paid up capital ofthe AMC is Rs. 25.161 crore.

HDFC ErgoHDFC ERGO General Insurance Company Limited is a 74:26 joint venturebetween HDFC Limited, Indias premier Housing Finance Institution & ERGO

International AG, the primary insurance entity of Munich Re Group.HDFC ERGO focuses on providing the Right Insurance Solution for all. We offer ourcustomers complete range of general insurance products ranging from Motor, Health,

Travel, Home and Personal Accident in the retail space and customized products likeProperty, Marine and Liability Insurance in the corporate space.HDFC ERGO has been expanding its presence across the country and is today present

across 71 cities with 78 branch offices with an employee base of over 950 professionals.The company has a right balance of distribution channel comprising of Dealerships,Brokers, Retail and Corporate Agents, Bancassurance and Direct Sales Team.

HDFC Centre of Housing FinanceA synonym for convenient and hassle-free service, HDFC's Training Centre, CHF

presents a unique focal point to hold training programmes.CHF is located in the sereneambience of Lonavala, 2000 feet above sea level, 120 km from Mumbai. The hills andvalleys and scenic landscape make your training a unique pleasurable experience, so

much so you may even prefer having your sessions out in the open lush green lawns.HDFCs Centre for Housing Finance (CHF) provides technical assistance to nationalgovernments and housing finance institutions in developing countries in the South Asian

and African regions, especially in the field of institutional development for effectiveshelter finance delivery.


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The second major area of activity of the CHF is managerial training for housing financeinstitutions. Besides effective housing finance operations, some established housing

finance institutions also seek training for systems development and improvement.

CIBIL

CIBILs aim is to fulfill the need of credit granting institutions for comp rehensive creditinformation by collecting, collating and disseminating credit information pertaining toboth commercial and consumer borrowers, to a closed user group of Members. Banks,Financial Institutions, Non Banking Financial Companies, Housing Finance Companiesand Credit Card Companies use CIBILs services. Data sharing is based on the Principleof Reciprocity, which means that only Members who have submitted all their credit data,may access Credit Information Reports from CIBIL. The relationship between CIBIL andits Members is that of close interdependence.

HDFC RealtyHDFC Realty is a wholly owned subsidiary of HDFC. We have assisted individuals in

acquiring homes valued at 5000 million rupees.HDFC is a pioneer housing finance institution in India and with over 30 years inoperations has provided finance to over a million families in India.It is a team of real estate professionals facilitating Buying, Selling or Leasing ofResidential / Commercial property.At HDFC Realty, we provide personalized attention to the individuals and corporates intheir process of identifying properties. From understanding the requirement to organizingthe site visits to completion of transaction, we make every effort to make the process ofacquiring a property, hassle free and convenient.Presently our services are available in Mumbai, Navi Mumbai, Pune, Bangalore, Delhi /

NCR, Kolkata, Kochi & Hyderabad.

HDFC Distribution Channels

Walk-ins

HDFC Sales*Distribution Arm of HDFC (Wholly Owned Subsidiary Co.)

HDFC Bank

DSAs


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HDFC SALES

HDFC Sales was incorporated on 23rd January, 2004. HDFC Sales offers FinancialManagement solutions encompassing Home Loans, Life Insurance, Mutual Funds, PropertySolutions and Education Loans. The company mirrors the philosophy and values of its parent,

HDFC.

Home Loans: HDFC Sales is present in over 200 locations across the country with 60+

offices and over 2000 employee.

Financial Services: HDFC Sales offers services in 17 cities and is continuouslyexpanding its reach.

HDFC Realty: HDFC Sales manages the HDFC Realty business and the Website(www.hdfcrealty.com) which offers property solutionsbuying, selling, leasing toIndividuals and Corporate. HDFC Realty is present in 12 cities across the country as well

as in Dubai.

Key executives of HDFC Sales are:Chairperson - Ms. Renu Sud KarnadCEO HDFC Sales - Mr.Gautam Bhagat

Organization StructureMortgages

Gautam Bhagat

CEO

Abhishek Deora

RegionalManager

SM / ASM

Rohan Charles

RegionalManager

SM / ASM

Subhorov Roy

RegionalManager

SM /ASM


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Branch Structure

Option 1

Option 2

Sales

Manager

Asst SalesManager

TeamLeader

Executives

CreditManager

Credit Co-Ordinator

Asst. Sales

Manager

Team Leader

Executives

Sales TeamManager

Executives

Credit

Co-Ordinators


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OBJECTIVES OF HDFC SALES

To understand HDFC Home Loan Products Calculate Eligibility Documentation

Understand commonly used Mortgages termsthis is the objective which is set for the employees of the HDFC sales.

"HDFC's finest investment is in its Human Resources. It draws its personnel from many

disciplines. They are the building blocks on which the company's performance &

productivity is based". H T Parekh, Founder - Chairman, HDFC

HDFC Sales values integrity, commitment, teamwork and excellence in customer service.

Our most valuable assets are our Human Resources. We are truly proud that today we

have a highly motivated team of sales persons and that we have the lowest employee

turnover rate in the Industry.

Basically products are of two types:1.Based on repayment mode2.Based on purpose.

Product can be of fixed and floating nature.

Based on the purpose, product can be of 8 types:

Home LoansPurchase /Construction Home Extension Loan Home Improvement Loan Home Equity Loan (LAP) Top up loan Non Residential Premises (NRP) Land Loans Balance transfer


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Here is a table that illustrates the interest rates

Product

LCR

% ROI Tenure

Salaried Self Employed Salaried Self Employed

Home Purchase Loan 85 8.75 9 15 15

Resale Purchase 85 8.75 9 15 15

Home Construction Loan 85 8.75 9 15 15

Home Extension Loan 85 8.75 9 15 15

Home improvement Loan 85 8.75 9 15 15

Top Up Loan 60 10.25 10.25 10 10

Balance Transfer 100 8.75 9 15 15

Non Residential Premise 80 12.25 12.25 15 15

Home Equity 50 12.25 12.25 15 15

Land Purchase 70 9.25 9.25 10 10

\


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Credit Appraisal

What does credit appraiser check ?

Ability to pay

Intention to pay

Property

Eligibility

How do we decide if A is eligible for a loan?

We talked about ability & intention and property

How do we decide on ability?

Eligibility Key Ratios

IIRInstallment to Income Ratio

FOIR- Fixed obligation to Income Ratio

LCR- Loan to Cost Ratio

LTV- Loan to Value Ratio

IIR= proposed home loan installment*100/ gross monthly income

FOIR is calculated to understand what % of Gross Monthly Income is going towards servicingof proposed HDFC Home Loan + All other existing EMI.

LCR is calculated to understand what % of the total value of the property is required as loan.

Formula for this HDFC loan account*100/ property cost.

LTV is calculated in the same manner as LCR but the only difference is the property cost iscalculated at market price. The acceptable ratio between LCR and LTV should be 85%.

Recommendations for IIR/FOIR exceeding 40% based on

Gross Salary Educational Qualifications Company where applicant is employed

Other sources of Income not considered while working out IIR If the applicant currently owns a property and plans to retain the same High savings

history


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How rate of interest is determined?

The Rate of Interest is based upon two factors1.The RPLR2.Spread

RPLRRetail Prime Lending Rate is the bench mark rate Spreadis the discount or markup on the RPLR given which gives us the effective rate

(ROI) RPLR +/- Spread = Effective ROI

EMIEquated Monthly Instalment

EMI has two componentsInterest & PrincipalPre EMIpaid from date of disbursement till last day of the month(In case of constructionlinked case customer pays PreEMI till possession)

EMI is due on the first of the next month and payable by the 5th of the next month

ECS: Check dates with your local branch PDC

Now how ROI changes?

Quarterly Reset Cycle (3 months after disbursal) Spread once given is fixed for the term of the loan

Documents:

KYC

ID & Residence proofs to be accepted from:

a) Applicant

b) Co-applicant/s

c) Power of Attorney (for HDFC purposes)

d) Guarantor/s e) Any person/s who is mortgaging his property/ cash securities as third party

mortgage or as additional security.


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Following documents can serve as Customer ID & residence proof :

Identity Proof

Passport

PAN CardVoter ID Card

Driving License

Employer ID Card

Residence Proof

Telephone Bill

Electricity Bill

Ration Card

Bank Statement (in original, dulyattested by the Banker)

Letter from employer

2. Documentation-Salaried

Salary Slips Last 3 months(6 in case of variable components)

Last 6 months updated bank statement salary a/c

ITR & Form 16

Photographs

ID proof

Address proof

Processing Fee Cheque

Employment letter in case of new job

Details of any existing obligations

Bank statement of spouse, in case spouse working +other a/cs.

3. DocumentationProperty Documents (Builder Case)

Sale Agreement - Original

Construction Agreement - Original

OCR - Original

Title Deed / Tripartite Agreement

NOC from Builder

Demand Letter


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4. DocumentationProperty Documents (Construction / Extension Case)

Title Document

Prior Title Document for 13 Years

Encumbrance Certificate for 13 Years

Land Tax Receipt - Original

Approved Plan*

Building Permit*

Estimate

Location Sketch

Process Flow at HDFC sales:

The above diagram illustrates the process flow at HDFC sales.

File Login

CreditAppraisal

Loan

Recommendation

DoubleChecking

Sanction

Legal Technical

Disbursement

(Full/ Part)

LoanRepayment


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REAL ESTATE IN INDIA

The Indian economy has transformed substantively over the last two decades, growing

consistently at an average of 8 per cent and is poised to take its place among the leadingeconomies in the years to come. Strong performance of the economy can be particularly

attributed to healthy growth in manufacturing and services sectors. The economic performance

of India has provided strong impetus to the real estate sector, which has been witnessing

heightened activity in the recent years. Substantial end-user and investor interest, large scale

investment in infrastructure and rapid urbanization have contributed to the growth trajectory of

Indian real estate. The real estate growth story is clearly visible in urban centers such as Delhi,

Mumbai and Bengaluru which have acquired global character and recognition.


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Indian Real Estate: Riding the growth wave

The strong fundamentals of the Indian economy are having a favorable impact on all asset

classes of Indian real estate viz. housing, commercialoffice space and retail and hospitality. In

recent years, the growth has spread out to tier-II and III cities as well. High growth in services as

well as manufacturing sector has resulted in high demand for commercial and industrial real

estate. Further the economic growth has trickled down to the large Indian middle class increasing

affordability and affluence. Improving living standards are driving the demand for better quality

housing and urban infrastructure. In fact, housing in India is today moving from being viewed as

a purely basic need to an aspirational purchase. Though high interest rates coupled with soaring

property prices have temporarily impacted affordability of home buyers the demand-supply

mismatch and low home loans to GDP ratio in India (a meager 5 per cent as against more than 50per cent in US, UK and Germany) are expected to fuel demand for housing in the medium long

run. The growth of the sector has been complemented by favorable policy changes like

liberalization of Foreign Direct Investment (FDI) guidelines and significant increase in

investment on physical infrastructure


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The Indian real estate sector plays a significant role in the country's economy. The real estate

sector is second only to agriculture in terms of employment generation and contributes heavily

towards the gross domestic product (GDP). Almost five per cent of the country's GDP is

contributed to by the housing sector. In the next five years, this contribution to the GDP is

expected to rise to 6 per cent.The real estate sector has all the trappings of a winner underpinned

by the booming IT/ITES, organized retail, hotels and logistics sectors, and the emergence of

India as a global manufacturing hub. Further, resilient economic factors and strong inflows have

added muscle to the growth story. Oversupply fears have been overdone; though watch out for

changes in Government policies on real estate. Overall, the sector offers lucrative investment

opportunity as evidenced in realty companies of South and West India, which are trading at

significant discount to their inherent values.

The overall economic health (upswing or downswing in the economic activity) is a leading

indicator of demand and prices in the sector. Economic growth provides impetus to commercial

real estate by improving rentals, reducing vacancy rates and increasing demand for further office

space. On the other hand, rising income levels fuel demand for residential and retail real estate.

In India, real estate and economy are deeply interlinked and interdependent for growth. The real

estate industry has linkages with various sectors of the economy (associated with 250 industries)

as is corroborated by the fact that investment in real estate results in 78% addition to the GDP

(source: Report of International Union for Housing Finance). A unit increase in expenditure in


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this sector has a multiplier effect, generating 5x income growth. As per industry estimates, real

estate could generate 3.2mn jobs over a decade, thus adding ~10mn to the current employment

base. This makes the realty sector the second largest employer after agriculture. The overall

employment generation on the back of additional investment in housing/construction is 8x the

direct employment (source: IIM-Ahmedabad Study, 00). The Indian economys impressive

performance has been mainly on account of the rise of the services sector (12.8% annual growth

in the past five years). The services sector now contributes 60% to the GDP and is still showing

unrelenting growth.


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It has also been suggested that India's property sector could begin to improve from late 2010 and

may attract up to US$ 12.11 billion in real estate investment over a five-year period.

The Indian economy has grown at 11% CAGR in the past five years and is expected to deliver

8%+ real growth going forward. India is the tenth largest economy in the world and fourth

largest based on purchasing power parity. Also, India is the second fastest growing economy,

well poised to become the third largest economy in the world by 50 (source: PwC). This lends

strong base for a robust growth in the real estate market.

Almost 80 per cent of real estate developed in India is residential space, the rest comprises of

offices, shopping malls, hotels and hospitals. According to the Tenth Five Year Plan, there is a

shortage of 22.4 million dwelling units. Thus, over the next 10 to 15 years, 80 to 90 million

housing dwelling units will have to be constructed with a majority of them catering to middle-

and lower-income groups.

Moreover, 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.

The report, which provides an outlook on Asia-Pacific real estate investment and development

trends, points out that India, particularly Mumbai and Delhi, are good destinations. Residential

properties are viewed as more promising than other sectors and 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.

Apart from the huge demand, India also scores on the construction front. A McKinsey report

reveals that the average profit from construction in India is 18 per cent, which is double the

profitability for a construction project undertaken in the US.

The real estate sector is also likely to get a boost from Real Estate Mutual Funds (REMFs) and

Real Estate Investment Trusts (REITs). In fact, according to a CRISIL paper, the REITs would


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have the potential to hold at least 5 per cent share of the total global real estate market, the size

of which would reach US$ 1,400 billion in the next three years.

According to the Federation of Indian Chambers of Commerce and Industry (FICCI), the Indian

real estate sector is likely to experience consolidation wherein bigger players may opt for

outright buy of smaller firms or forge joint ventures or business alliances with them.

Demand Pull Factors

Robust and sustained macro economic growth

Upsurge in Industrial & business activities, esp. new economic sectors

Favorable demographic parameters

Significant rise in consumerism

Rapid urbanization

Gamut of financing options at affordable interest rates

Resultant Impact

Increasing occupier base

Significant rise in demand for office/industrial space

Demand for newer avenues for entertainment, leisure & Shopping

Creation of demand for new housing

Supply Push Factors

Policy & Regulatory reforms (100 per cent FDI Relaxation)

Positive outlook of global investors

Fiscal incentives to developers

Simplification of urban development guidelines

Infrastructure support & development by government

Resultant Impact

Entry of number of domestic & foreign players increasing competition & consumer

affordability

Easy access to mean of project financing

Increases developers riskappetite & allows large scale development

Improved quality of real estate assets

Development of new urban areas & effective utilisation of prime land parcels in large cities


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Economic Survey 2006-07: Key Highlights

Factors Driving Growth

Favorable demographics expected to benefit India till 2045

High growth with demographic dividend will increase savings, improving investment

Mature and progressive domestic market

Growth in services such as IT/ITes, tourism and hospitality etc.

Growing Tourism

Foreign tourist arrivals in India grew at a CAGR of 17.6 per cent between 2003-04 and 2005-06

Foreign exchange earnings from tourism during the same period has growth at a CAGR of 22.1per cent

India accounts for more than halfof the international tourist arrival in the region

Credit to Real Estate

RBI raised risk weight on exposures to CRE from 125 per cent to 150 per cent

Credit to housing loans expanded by US$ 12.4 billion (38.0 per cent) in 2005-06

Loans to other real estate during 2005-06 increased to US$ 3.12 billion at a growth rate 94.7

per cent

Share of real estate in financial institutions lending to sensitive sectors increased from 88.9 percent to 90.8 per cent 2005-06

Real Estate Housing Index

National Housing Board (NHB) set up a Technical Advisory Group (TAG) to evaluate thefeasibility of a real estate price index

Work on property price indices in 5 cities and methodology to be adopted for compilation andregular dissemination of the index is underway


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Favorable demographics for real estate sector

Rising income levels

Indias per capita disposable income has grown 2.6x in the past 10 years and 1.6x in the past five

years. From the current levels of Rs29, 800, we expect the per capita disposable income to grow

8-13% in the next five years.

Affordability

Which measures the number of years annual income required to buy a house, dipped to as low

as 4.3 years in 04 from 20 years in 1995? However, the affordability index has started rising,

reaching 5.1 years by 07. We expect a sharper rise in realty prices that would further increase

the affordability index. However, affordability, in terms of years of annual income, is still not the

key concernthe affordability index was >10 years before 1997-98. Rising financing cost and

the impact of increasing mortgage payments are key concerns.


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Growing urban population

Indias urban population has grown ~3% annually to 285mn in 01 from 109mn in 1971. We

expect the growth trend to continue, with the urban population touching ~370mn by 11E. Indian

cities with >1mn population grew from 12 in 1981 to 35 in 01 and are expected to reach 70 by25. The urban population in these cities would likely grow to 41% by 25 from 37.8% in 01,

implying migration from smaller to larger cities.


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Burgeoning Indian middle class

The number of Indian middle class households with annual income between Rs0.2mn and

Rs2mn has quadrupled in the past 10 years from 4.7mn households in 1996 to 17.5mn in 06.

The number of upper-class households with annual income at >Rs2mn has grown 6x from0.08mn in 1996 to 0.6mn in 06. The Indian middle and upper class together stand at ~100mn

and are expected to grow 15-16% annually in the next five years, which will drive housing

demand further.


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Young India

Indias median age was 24 in 05 against Chinas 33 years and Japans 43 years. As per industry

estimates, average age of a home buyer has decreased from 42 years to 31 years. The younger

generation is creating further demand for residential units and the trend should continue as the

income generation capability of the Indian youth improves.

Nuclearisation

Reduction in household size has created additional demand in residential units. The size of an

average urban household decreased from 6.06 in 01 to 5.5 at present against the average

household size in Europe varying from 2.3 to 2.8 respectively. Rising income, greater number of

income generators per household, especially working women and the younger generation, and

changing mindset are the primary reasons for reduction in the household size. We expect the

household size to continue to decline 0.5-0.3% annually, reaching ~5.14 in the next 10 years.


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Increasing funding options

In India, home loan as a percentage of GDP was at ~6% as of FY07 versus ~4% in FY06. The

ratio is still considerably low compared to developed countriesthe US (71%), the UK (80%),

and Denmark (94%)and other Asian countries. We believe that a sizeable opportunity exists

for funding residential units in India, which in turn would propel further residential demand.

However, rising interest rates have reduced the attractiveness of home loans.

Growth in other sectors supporting real estate


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IT/ITES and other businesses

The IT/ITES sector grew at a phenomenal pace in the past decade, significantly impacting office

real estate in India. The sector comprises ~75-80% of the current commercial demand. In FY06,

industry exports grew 33% to US$23.6bn and the sector is expected to grow 25-30% annually in

the next few years. At present, the IT/ITES sector employs ~1.3mn people, with more than

350,000 additions expected next year. We estimate the number of employees in the IT/ITES

sector at ~4.5mn by FY12E and ~8mn by FY17E. As per industry estimates, ~3.5mn jobs will be

outsourced to India by FY17E. Bangalore is the traditional hub for IT/ITES space in India. In the

South, Hyderabad,Pune and Chennai are developing as key centers of commercial development.

In the North, Delhi, Noida and Gurgaon are the preferred destinations. As regards the West,

Mumbai is grappling with upcoming demand that is pushing up the prices in commercial

business districts (CBDs) and peripheral areas. At present, Tier II cities offer more advantages to

IT/ITES companies, considering the lower real estate prices. Cities such as Coimbatore,

Mangalore, Chandigarh, Vishakapatnam, Madurai, Mangalore, Kochi, Jaipur, Gurgaon, and


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Nagpur are also in the midst of the IT/ITES led real estate boom. Apart from IT/ITES,

biosciences, insurance, banking and consulting sectors are also contributing to office space

demand. Further, India has emerged as the global manufacturing base, especially for textiles,

auto & auto components and light engineering industries. Office space in India currently stands

at 135mn sqft, which is low than international peers. Hong Kong alone has more office space

than India and Manhattan (New York) has > 430mn sqft.

Organized retail

At present, Indias retail market is ~US$270bn and growing ~7 -9% annuallywe estimate the

retail market to be US$600bn by FY17E. And, given that retail is globally the largest industry at

~US$7.2trn, we expect significant action in the space as is evident by the fact that manyinternational retailers and brands are entering the Indian retail market. AT Kearneys recent retail

reportGlobal Retail Development Index, 06 rated India as the most attractive place for the

retail industry. The size of the organized retail market, as a component of total retail, increased

from 2% in FY03 to ~6% in FY07. However, the share of organized retail in India is very low


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against >15% in China and >40% in other Asian countries.

We expect organized retail to grow at 21% CAGR to US$109bn in FY17E. Improving

demographics, increasing urbanization and cultural shift are key reasons for growth in organized

retail.

In next three years, ~220 malls are expected to come up in India, including specialized malls

catering to automobiles, jewellery, furniture and electronics. Further, many upcoming malls

would offer hotel and amusement facilities.


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Hotels and logistics

The growth in tourism and business travel and the emergence of low cost airlines have led to

increased demand for hotel rooms. As a result, there is a shortage of quality hotel rooms across

all major cities. Occupancy rates are at an all-time high, with luxury hotels in Mumbai, New

Delhi and Bangalore quoting room rates higher than the average room rate (ARR) in the US.

Further, the mid-tier budget hotel segment, which aptly meets the service demands of the average

Indian, is witnessing a supply crunch and is expected to grow 40% through the next 2-3 years.

In 05, 4mn tourists arrived in India, generating US$5.7bn revenue. Indias share of international

tourism is very lowat 0.84% revenue wise and 0.49% in terms of international tourist arrivals.

The country is gradually emerging as one of the key destinations for international tourism. A

recent World Travel & Tourism Council (WTTC) tourism annual growth estimate of India is

8.6% for the next 10 years. According to the Department of Tourism, there are ~105,000 hotel

rooms in India, of which only 25% are branded against Manhattan that alone has >100,000

branded hotel rooms. China has >800,000 branded hotel rooms.

The IT/ITES sector has also contributed to the hotel boom. NASSCOM estimates that the sector

accounted for 8,900 hotel rooms/day in FY07 and is likely to generate 30,000 rooms/day

demands by FY12E.

Real estate developers have aggressively ventured into the hotel business to capture unmet

demand. We believe the sectors offers tremendous opportunity and would be a significant growth

driver. The usual business model followed by developers is to build and own hotels and

multinational hotel chains are tied-up for management, branding, and marketing.

Logistics and warehousing (new territories for real estate developers) offer tremendous growth

opportunities. Key segment drivers are growth in overall industrial and manufacturing activity,

increasing exports and imports, entry of large retailers in the Indian market, growth in organized

retail and increasing reach in rural India. We foresee a paradigm shift in logistics, warehousing

and retailing from the unorganized to organized sector. In a developed market, logistics space

contributes 10-15% to non-residential real estate demand.


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Indian real estate pie

We estimate the current size of Indian real estate market at US$57bn or 6.2% of Indias GDP. In

terms of value, the real estate market would likely grow at 12.8% CAGR in the next five years to

US$105bn or 7.1% GDP by FY12E. In the next five years, the average annual investments

required in the real estate sector are ~US$85bn, of which the residential segment constitutes 88%

at US$74bn. We estimate annual investments for office space at US$5.7bn and retail segment at

US$4.8bn. These are based on requirements of investment in land and construction cost to meet

the intrinsic real estate demand in India and not on sales as the mark up on costs could vary with

market conditions.

As of end-FY07, the stock estimates (in terms of constructed area) are as follows residential -

~38bn sqft, office - ~135mn sq.ft and retail - ~90mn sqft. In FY07, ~1.8bn sq.ft residential,

35mn sqft office and 24mn sq.ft retail space was added. We estimate the market to grow at 4.6%

CAGR with 4.2%, 15.2% and 14.3% CAGR in residential, commercial and retail segments

respectively. Also, we expect the next five-year average annual demand for residential, office

and retail space at 2bn sq.ft, 65mn sq.ft and 37mn sq.ft respectively.


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Current demand and supply

We believe that demand and supply are on an even keel across India and estimate that there

would not be significant oversupply in either residential, office or retail segments till end-CY09.

However, further tightening of interest rate could reduce demand, leading to lesser absorption of

supply. We believe that there would not be a sharp correction in real estate prices, although a

mild correction can not be ruled out. However, such a correction should not last long and would

be predominantly confined to a few overheated locations. Given the significant capital

appreciation in the past two years and higher operating margins enjoyed by developers (50-80%),

a marginal drop in prices should not impact the sector significantly.

Residential segment

Residential markets are stabilizing and we do not expect prices to rise beyond the normal

inflationary growth. Given the current supply scenario and recent hikes in interest rate, home

buyers have adopted a wait and watch stance, implying that differentiated product offerings and

brand name would play a critical role in closing a sale. Further, this would increase the

possibility of a sporadic drop in prices in certain pockets. However, once the interest rates

stabilize, improving demographics and the latent housing demand would again push up theresidential demand. We believe that as this market in various Indian cities matures (i.e. no

supply-side constraints for quality homes), developers with business competencies/skills will

differentiate themselves and move forward.

As per the National Housing Bank (NHB), there was a housing shortage of 19.4mn units

(12.7mn units in rural areas and 6.7mn units in urban areas) in FY03. As per the X five-year

plan, there would be a shortage of 22.7mn housing units by 07. Industry estimates of cumulative

demand supply gap stand at 4.1bn sqft. We estimate demand for residential units in urban India

at ~2bn sqft/annum. Although, it is difficult to estimate residential demand within the target

segment of real estate developers, we estimate the demand at ~450-550mn sqft. This is based on

the new housing demand created by rising middle and upper income households. Demand for the

high-end residential segment (properties with a ticket size >Rs2.5mn) is 100- 130mn sqft. As per


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a recent AC Neilson report, supply from the high-end residential segment is ~120mn sqft. This

implies that the demand & supply situation is comfortably matched; we do not expect the

equilibrium to shift significantly.

Office segment

Currently, demand for office space is far exceeding supply in most locations across India. This

can be gauged by the large number of pre-leases and the low vacancy rates. Office properties

have hardly seen drop in prices except in Whitefield, Bangalore, where poor infrastructure was a

damper. We estimate that the current supply pipeline would not lead to an oversupply; however,

the rentals might not move further, signaling an end to capital appreciation on office properties.

The development of IT/ITES SEZs remains a key risk to our estimate, which could create

additional 33mn sqft supply annually.

Retail segment

We estimate retail sector demand at 37mn sqft/annum; currently, there is high demand for

quality retail space across India. We estimate supply to exceed demand in the next two years as

many large projects would come on stream across most metros. In the next two years, we expect

rentals to remain flat or drop marginally. However, we remain wary of the possible oversupply

situation post CY09. Oversupply is likely to hit retail before office and residential segments and

would have a more severe impact given the high land and construction cost (input costs).


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BangaloreRental value

Bangalore- Capital value


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Key regulations in the real estate sectorA snapshot

Urban Land (Ceiling and Regulation) Act, 1976/Rent Control Act

ULCRA, which was an impediment to the consolidation of land for private development, hasbeen repealed by all states except West Bengal, Maharashtra and Andhra Pradesh. This would

enable the development of land parcels >500sq meters in metros.

Land Acquisition Act, 1894

This Act, to a large extent, still governs the procurement of raw land. Its provisions need to be

reviewed to enable private developers (certified by a designated authority) to procure land

directly from farmers for public purposes and to obviate need for hundreds of entities to becreated to procure a large parcel of land.

Registration Act, 1908 and Indian Stamp Act, 1899

Registration and Other Related Laws (Amendment) Act, 01 received the assent ofthe President

on September 24, 01 and was notified in the official gazette as Act 48 of 01. But the official

press release states that it will come into force from a date to be notified by the Government. A

de-materialized form of execution of land titles to promote a healthy property market. Urgentneed to review the laws and focus on stamp and registration laws, restrictive conditions in

leasehold properties, lender protections vis--vis leasehold properties, transfer facilitation in

restructuring and mergers and/or de-mergers.

In several states, stamp duty on transfer of land continues to be high at 14-15%. While many

states have reduced this to 6-8%, the industry expects it to be rationalized further to 2-3% over

the medium term.

Public-private partnership for amenities

A regulatory framework that encourages private sector participation in formulating and delivery

of basic amenities such as water, sanitation, sewerage, transport and electricity is necessary.

Foreclosure laws Existing laws are cumbersome and time consuming for a resolution in instances


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of default. Amendment of National Housing Board (NHB) Act has been initiated and

implementation must be expedited.

Real Estate Investment Trusts (REIT)

Although there has been a lot of talk about REITs in India, it seems it will be quite some time

before we see any active play from them. The current regulatory environment in the form of high

stamp duties and other impediments are still a burden for them.

Real Estate Mutual Funds

The SEBI, in June 06, approved guidelines for real estate mutual funds, allowing them to invest

directly in real estate properties in India. These funds would initially be close-ended schemes.Their units would be compulsorily listed on stock exchanges and NAVs of the schemes would be

declared daily. However, they are yet to take off in any significant way.


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OVERVIEW OF THE COMPLETED WORK

RESEARCH DESIGN

There are two stages in this project.

Stages 1: The first stage was preparing questionnaire. The questionnaire had two main sections.

The first section comprised of the introductory details, Sales force details and existing projects

and current projects. In the second section a rating scale to find out the expectations and lapses in

the business of HDFC Sales.

Stage 2: In this Stage personal interview method: builders are identified and called for

appointments. Most of the meetings happen with the marketing heads or associates.

The information is recorded on survey sheet.


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Questionnaire

Market Survey

Name of Builder/Proprietor:

Address:

Contact person:

Contact numbers:

Organization structure:1.How many employees work in your organization?

A. 0-20

B. 20-40C. 40-60

D. 60+

2. Out of the total number of employees how many constitute the sales force?

A. 0-5

B. 5-10C. 10-20D. 20+

3. Details of sales Force

Name Department Designation Contact no.


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Why do you prefer a bank/Finance Institution?

Parameters/Rating 1 2 3 4 5

Ease of process

faster processing

Legal / technical flexibility

reputation of the financier

customer preference

ROI

Existing relationship

Funding value

Others(pl specify)

1-Least and 5-Most

This question will provide us with the need of developers.

Who is your preferred banker? Reasons:

This will enable us to list out the banks which have been doing well in this field.

How do you rate the following Banks/Financial Institutions?

Parameters SBI LIC HDFC ICICI Axis

Ease of process

Faster processing

Legal/Technical flexibility

Reputation of the financier

Customer preference

ROI


Funding value

Others(Please specify)

1-Least and 5-Most

The grid will enable us to get the position of HDFC in their mind and the competitors which they like,

reasons and comparison.


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Existing Projects

-Name of project

-Nature

-Sub classification

-Stage of completion

-Approval Status

-Banks Approved

-No. of Units

-No, of units sold

-Price Range

-Area (Sq.Ft)

-Stage of completion

Future projects

Sl. No Nature Units Location Approval

Status

Commencement

Target Date


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PURPOSE OF THE REPORT

The purpose of the project is

1. To increase sales figures of the company

The Company can find out the sales statistics of various builders, target customers and their

needs. This will also create awareness about other banks in the field of real estate financing.

2. In the process create lead generation for HDFC Home loans and HDFC Realty. The survey

consists of the various projects of developers which include residential and commercial projects

which will help in identifying the new developers.

OBJECTIVE OF THE REPORT

The objective of the project is to study the changing market dynamics of real estate market,

identification of developers, their projects and banks which fund various projects.

SCOPE

The scope of the project is to increase sales and get prospective customers for the

company. To introduce the company to new developers as a part of lead generation.

LIMITATIONS

The limitations of the project are:

1. Time is one constraint. Real estate market is too huge to be covered in 13 weeks. There

are about 1550 real estate developers in Bangalore.

2. Travelling distances was also one limitation. The builders are widespread. The

meetings scheduled would be hard to manage.


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SOURCES & TOOLS OF DATA COLLECTION

The sources for the project are as follows:

PRIMARY SOURCES:

The primary source of information was the data collected by conducting interviews with various

real estate owners.

SECONDARY SOURCES

The secondary sources include the following:

1. Internet:http://www.magicbricks.com/http://www.99acres.com/

http://wwww.justdial.com/

http://www.hdfc.com/others/popup/about_us/hlsil.htm

2. Print: Daily: Times of India: Friday supplement & Economic Times

Magazines: Real estate reporter & Realty plus
http://www.magicbricks.com/http://www.magicbricks.com/http://www.magicbricks.com/http://www.99acres.com/http://www.99acres.com/http://wwww.justdial.com/http://wwww.justdial.com/http://www.hdfc.com/others/popup/about_us/hlsil.htmhttp://www.hdfc.com/others/popup/about_us/hlsil.htmhttp://www.hdfc.com/others/popup/about_us/hlsil.htmhttp://wwww.justdial.com/http://www.99acres.com/http://www.magicbricks.com/


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Companies I Interviewed.

Nitesh Estates

Bearys GroupJain Heights and Structures

IVR Prime(Sister Concern of IVRCL)

Skyline Builders

Concorde

Nandi Constructive

Blue valley

ETA StarHiranandani


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Findings and conclusions

Expected ratings of a Home loan Institution

Respondent

Ease ofproces

s

Fasterprocessi

ng


Reputation of the

financier

Customer

preferen

ce

ROI Existingrelationsh

ip

Funding

value

1 1 4 5 4 5 5 2 1

2 2 2 2 3 4 1 5 3

3 1 3 2 4 5 2 5 5

4 2 3 4 3 3 3 4 5

5 3 4 5 2 3 3 4 5

6 5 4 4 2 3 1 2 3

7 1 1 1 5 3 4 2 18 3 4 2 1 1 1 1 5

9 1 4 5 4 1 4 5 4

10 5 5 2 1 2 3 4 3

11 1 1 1 5 3 4 5 2

12 3 4 5 2 5 4 4 2

13 3 3 4 5 1 1 1 5

14 3 3 4 5 3 4 2 1

15 3 1 2 3 1 4 5 4

16 4 1 5 3 2 2 2 3

17 5 2 5 5 1 3 2 418 3 3 4 5 2 3 4 3

19 3 3 4 5 3 4 5 2

20 3 1 2 3 5 4 4 2

21 3 4 2 1 1 1 1 5

22 1 1 1 5 3 4 2 1

23 1 4 5 4 1 4 5 4

24 2 3 4 3 5 5 2 1

25 3 4 5 2 1 1 1 5

26 5 4 4 2 3 4 5 2

27 1 1 1 5 3 3 4 528 3 4 2 1 3 3 4 5

29 1 4 5 4 3 1 2 3

30 2 2 2 3 2 2 2 3

31 1 3 2 4 1 3 2 4

32 2 3 4 3 2 3 4 3

33 3 4 5 2 3 4 5 2


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34 5 4 4 2 5 4 4 2

35 1 1 1 5 1 1 1 5

36 3 4 2 1 3 4 2 1

37 1 4 5 4 1 4 5 4

38 5 5 2 1 5 5 2 1

39 1 1 1 5 1 1 1 5

40 3 4 5 2 3 4 5 2

41 3 3 4 5 3 3 4 5

42 3 3 4 5 3 3 4 5

43 3 1 2 3 3 1 2 3

44 2 3 4 3 2 3 4 3

45 3 4 5 2 3 4 5 2

46 5 4 4 2 5 4 4 2

47 1 1 1 5 1 1 1 5

48 3 4 2 1 3 4 2 1

49 1 4 5 4 1 4 5 4

50 5 5 2 1 5 5 2 1

51 1 1 1 5 1 1 1 5

52 3 4 5 2 3 4 5 2

53 3 3 4 5 3 3 4 5

54 3 3 4 5 3 3 4 5

55 3 1 2 3 3 1 2 3

56 1 1 1 5 1 1 1 5

57 3 4 5 2 3 4 5 2

58 3 3 4 5 3 3 4 5

59 3 3 4 5 3 3 4 5

60 3 1 2 3 3 1 2 3

61 2 5 4 4 2 5 4 4

62 5 1 1 1 5 1 1 1

63 1 3 4 2 1 3 4 2

64 4 1 4 5 4 1 4 5

65 1 5 5 2 1 5 5 2

66 5 1 1 1 5 1 1 1

67 2 3 4 5 2 3 4 5

68 5 3 3 4 5 3 3 469 5 3 3 4 5 3 3 4

70 3 3 1 2 3 3 1 2

71 1 1 1 5 1 1 1 1

72 2 2 2 3 4 1 5 3

73 1 3 2 4 5 2 5 5

74 2 3 4 3 3 3 4 5


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75 3 4 5 2 3 3 4 5

76 5 4 4 2 3 1 2 3

77 1 1 1 5 3 4 2 1

78 3 4 2 1 1 1 1 5

79 1 4 5 4 1 4 5 4

80 5 5 2 1 2 3 4 3

81 1 1 1 5 3 4 5 2

82 3 4 5 2 5 4 4 2

83 3 3 4 5 1 1 1 5

84 3 3 4 5 3 4 2 1

85 3 1 2 3 1 4 5 4

86 2 2 2 3 4 1 5 3

87 1 3 2 4 5 2 5 5

88 2 3 4 3 3 3 4 5

89 3 4 5 2 3 3 4 5

90 5 4 4 2 3 1 2 3

91 1 1 1 5 3 4 2 1

92 3 4 2 1 1 1 1 5

93 1 4 5 4 1 4 5 4

94 5 5 2 1 2 3 4 3

95 1 1 1 5 3 4 5 2

96 3 4 5 2 5 4 4 2

97 3 3 4 5 1 1 1 5

98 3 3 4 5 3 4 2 1

99 3 1 2 3 1 4 5 4

100 2 2 2 3 4 1 5 3

101 1 3 2 4 5 2 5 5

102 2 3 4 3 3 3 4 5

103 3 4 5 2 3 3 4 5

104 5 4 4 2 3 1 2 3

105 1 1 1 5 3 4 2 1

106 3 4 2 1 1 1 1 5

107 1 4 5 4 1 4 5 4

108 5 5 2 1 2 3 4 3

109 1 1 1 5 3 4 5 2110 3 4 5 2 5 4 4 2

111 3 3 4 5 1 1 1 5

112 3 3 4 5 3 4 2 1

113 3 1 2 3 1 4 5 4

114 4 1 5 3 2 2 2 3

115 5 2 5 5 1 3 2 4


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116 3 3 4 5 2 3 4 3

117 3 3 4 5 3 4 5 2

118 3 1 2 3 5 4 4 2

119 3 4 2 1 1 1 1 5

120 1 1 1 5 3 4 2 1

121 1 4 5 4 1 4 5 4

122 2 3 4 3 5 5 2 1

123 3 4 5 2 1 1 1 5

124 5 4 4 2 3 4 5 2

125 1 1 1 5 3 3 4 5

126 3 4 2 1 3 3 4 5

127 1 4 5 4 3 1 2 3

128 2 2 2 3 2 2 2 3

129 1 3 2 4 1 3 2 4

130 2 3 4 3 2 3 4 3

131 3 4 5 2 3 4 5 2

132 5 4 4 2 5 4 4 2

133 1 1 1 5 1 1 1 5

134 3 4 2 1 3 4 2 1

135 1 4 5 4 1 4 5 4

136 5 5 2 1 5 5 2 1

137 1 1 1 5 1 1 1 5

138 3 4 5 2 3 4 5 2

139 3 3 4 5 3 3 4 5

140 3 3 4 5 3 3 4 5

141 3 1 2 3 3 1 2 3

142 2 3 4 3 2 3 4 3

143 3 4 5 2 3 4 5 2

144 5 4 4 2 5 4 4 2

145 1 1 1 5 1 1 1 5

146 3 4 2 1 3 4 2 1

147 1 4 5 4 1 4 5 4

148 5 5 2 1 5 5 2 1

149 1 1 1 5 1 1 1 5

150 3 4 5 2 3 4 5 2151 3 3 4 5 3 3 4 5

152 3 3 4 5 3 3 4 5

153 3 1 2 3 3 1 2 3

154 1 1 1 5 1 1 1 5

155 3 4 5 2 3 4 5 2


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Ratings for HDFC

Respon

dent

Ease of

process

Faster

processing

Legal/Tech

nical

flexibility

Reputation

of the

financier

Customer

preferenc

e

ROI Existing

relation

ship

Fundi

ng

value

1 1 1 3 3 3 3 2 3

2 1 3 2 1 4 5 3 1

3 5 3 1 5 4 3 1 2

4 1 1 3 3 3 3 2 3

5 1 3 2 1 4 5 3 1

6 5 3 1 5 4 3 1 2

7 3 1 1 3 3 3 3 3

8 1 1 3 2 1 4 5 1

9 5 5 3 1 5 4 3 5

10 3 1 1 3 3 3 3 3

11 1 1 3 2 1 4 5 112 5 5 3 1 3 4 3 3

13 3 3 2 3 1 3 3 1

14 4 5 3 1 5 1 1 5

15 4 3 1 2 3 5 5 3

16 3 3 2 3 1 3 3 1

17 4 5 3 1 5 1 1 5

18 4 3 1 2 3 5 5 1

19 1 1 3 3 3 3 2 3

20 1 3 2 1 4 5 3 1

21 5 3 1 5 4 3 1 222 3 1 1 3 3 3 3 3

23 1 1 3 2 1 4 5 1

24 5 5 3 1 5 4 3 5

25 3 1 1 3 3 3 3 3

26 1 1 3 2 1 4 5 1

27 5 5 3 1 3 4 3 3

28 3 3 2 3 1 3 3 1

29 4 5 3 1 5 1 1 5

30 4 3 1 2 3 5 5 3

31 3 3 2 3 1 3 3 132 4 5 3 1 5 1 1 5

33 4 3 1 2 3 5 5 1

34 1 3 2 1 4 5 3 1

35 5 3 1 5 4 3 1 2

36 1 1 3 3 3 3 2 3

37 1 3 2 1 4 5 3 1


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38 5 3 1 5 4 3 1 2

39 3 1 1 3 3 3 3 3

40 1 1 3 2 1 4 5 1

41 5 5 3 1 5 4 3 5

42 3 1 1 3 3 3 3 3

43 1 1 3 2 1 4 5 1

44 5 5 3 1 3 4 3 3

45 3 3 2 3 1 3 3 1

46 4 5 3 1 5 1 1 5

47 4 3 1 2 3 5 5 3

48 3 3 2 3 1 3 3 1

49 4 5 3 1 5 1 1 5

50 4 3 1 2 3 5 5 1

51 1 1 3 3 3 3 2 3

52 1 3 2 1 4 5 3 1

53 5 3 1 5 4 3 1 2

54 3 1 1 3 3 3 3 3

55 1 1 3 2 1 4 5 1

56 5 5 3 1 5 4 3 5

57 3 1 1 3 3 3 3 3

58 1 1 3 2 1 4 5 1

59 5 5 3 1 3 4 3 3

60 3 3 2 3 1 3 3 1

61 4 5 3 1 5 1 1 5

62 4 3 1 2 3 5 5 3

63 3 3 2 3 1 3 3 1

64 4 5 3 1 5 1 1 5

65 4 3 1 2 3 5 5 1

66 1 3 2 1 4 5 3 1

67 5 3 1 5 4 3 1 2

68 1 1 3 3 3 3 2 3

69 1 3 2 1 4 5 3 1

70 5 3 1 5 4 3 1 2

71 3 1 1 3 3 3 3 3

72 1 1 3 2 1 4 5 173 5 5 3 1 5 4 3 5

74 3 1 1 3 3 3 3 3

75 1 1 3 2 1 4 5 1

76 5 5 3 1 3 4 3 3

77 3 3 2 3 1 3 3 1

78 4 5 3 1 5 1 1 5


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79 4 3 1 2 3 5 5 3

80 3 3 2 3 1 3 3 1

81 5 5 3 1 3 4 3 3

82 3 3 2 3 1 3 3 1

83 4 5 3 1 5 1 1 2

84 4 3 1 2 3 5 5 3

85 3 3 2 3 1 3 3 1

86 4 5 3 1 5 1 1 5

87 4 3 1 2 3 5 5 3

88 1 1 3 3 3 3 2 1

89 1 3 2 1 4 5 3 3

90 5 3 1 5 4 3 1 1

91 3 1 1 3 3 3 3 5

92 1 1 3 2 1 4 5 3

93 5 5 3 1 5 4 3 1

94 3 1 1 3 3 3 3 5

95 1 1 3 2 1 4 5 1

96 5 5 3 1 3 4 3 1

97 3 3 2 3 1 3 3 2

98 4 5 3 1 5 1 1 3

99 4 3 1 2 3 5 5 1

100 3 3 2 3 1 3 3 2

101 4 5 3 1 5 1 1 3

102 4 3 1 2 3 5 5 1

103 1 3 2 1 4 5 3 5

104 5 3 1 5 4 3 1 3

105 5 1 3 3 3 3 2 1

106 1 3 2 1 4 5 3 3

107 1 3 1 5 4 3 1 1

108 2 1 1 3 3 3 3 5

109 3 1 3 2 1 4 5 3

110 1 5 3 1 5 4 3 1

111 2 1 1 3 3 3 3 3

112 3 1 3 2 1 4 5 1

113 1 5 3 1 3 4 3 2114 5 3 2 3 1 3 3 3

115 3 5 3 1 5 1 1 1

116 1 3 1 2 3 5 5 5

117 3 3 2 3 1 3 3 3

118 1 5 3 1 5 1 1 1

119 5 3 1 2 3 5 5 3


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120 3 1 3 3 3 3 2 1

121 1 3 2 1 4 5 3 5

122 5 3 1 5 4 3 1 3

123 3 1 1 3 3 3 3 1

124 5 1 3 3 3 3 4 5

125 1 3 2 1 4 5 3 1

126 1 3 1 5 4 3 3 1

127 2 1 1 3 3 3 4 2

128 3 1 3 2 1 4 4 3

129 1 5 3 1 5 4 3 1

130 2 1 1 3 3 3 1 2

131 3 1 3 2 1 4 5 3

132 1 5 3 1 3 4 3 1

133 5 3 2 3 1 3 1 5

134 3 5 3 1 5 1 3 3

135 1 3 1 2 3 5 4 1

136 3 5 4 5 4 3 3 3

137 1 3 3 3 3 1 3 1

138 5 3 3 3 3 5 4 5

139 3 1 4 1 4 3 4 3

140 1 5 4 5 4 1 3 1

141 4 3 3 3 3 4 1 4

142 3 2 1 2 1 3 5 3

143 3 1 5 1 5 3 3 3

144 4 3 3 3 3 4 1 4

145 4 3 4 4 4 4 3 4

146 3 1 3 3 3 3 3 3

147 1 5 1 1 1 1 1 1

148 5 3 5 5 5 5 5 5

149 3 1 3 3 3 3 3 3

150 1 3 1 1 1 1 1 1

151 3 4 3 3 3 3 3 3

152 1 5 1 1 1 1 1 1

153 5 3 5 5 5 5 5 5

154 3 1 3 3 3 3 3 3155 1 3 1 1 1 1 1 1


62/79

62 | P a g e

Ratings of SBI Housing

Respon

dent

Ease of

process

Faster

processing

Legal/Tec

hnicalflexibility

Reputati

on ofthe

financier

Custom

erpreferen

ce

ROI Existing

relationship

Fundi

ngvalue

1 5 4 3 3 3 3 2 3

2 4 4 3 3 3 3 2 3

3 4 3 2 4 4 5 3 4

4 5 3 4 5 4 3 4 2

5 4 4 3 3 3 3 2 3

6 4 3 2 4 4 5 3 4

7 5 3 4 5 4 3 4 2

8 3 4 1 3 3 3 3 3

9 4 4 3 2 4 4 5 4

10 5 5 3 4 5 4 3 5

11 3 4 4 3 1 3 3 3

12 4 4 3 2 4 4 5 4

13 5 5 3 4 3 4 3 3

14 3 3 2 3 4 3 3 1

15 4 5 3 4 5 4 4 5

16 4 3 4 1 3 1 5 3

17 3 3 1 3 4 3 3 4

18 4 1 3 4 5 4 4 5

19 4 3 4 2 3 5 5 420 4 4 1 3 3 3 2 3

21 4 3 2 1 4 5 3 4

22 5 3 4 5 1 3 4 2

23 3 4 4 3 3 1 1 3

24 4 4 3 2 4 4 5 1

25 5 5 3 4 5 4 3 5

26 3 4 1 1 1 1 3 3

27 4 4 3 2 4 4 5 4

28 5 5 1 4 1 4 1 3

29 3 3 2 3 4 3 3 430 4 5 3 4 5 4 4 5

31 4 3 1 1 1 1 5 3

32 3 3 2 3 4 3 3 4

33 4 5 3 4 5 4 4 5

34 4 3 1 2 1 1 1 4

35 4 3 2 4 4 5 3 4


63/79

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36 5 1 4 5 1 3 4 2

37 4 4 3 3 3 3 2 3

38 4 3 2 4 4 5 3 4

39 5 1 4 1 4 3 4 2

40 3 4 4 3 3 3 3 3

41 4 4 3 1 1 1 1 1

42 5 5 3 4 5 4 3 5

43 3 4 4 3 3 3 3 3

44 4 4 3 2 4 4 5 4

45 1 1 1 4 3 1 1 3

46 3 3 2 3 4 3 3 4

47 4 5 3 4 5 4 4 5

48 1 1 1 2 3 5 5 3

49 3 3 2 3 4 3 3 4

50 4 5 1 1 5 4 4 5

51 4 3 4 1 1 5 5 4

52 4 4 3 3 1 3 2 3

53 4 3 2 4 4 5 3 4

54 5 3 4 5 4 3 4 2

55 3 4 4 3 3 3 3 3

56 4 4 3 2 4 4 5 4

57 5 5 3 4 5 4 3 5

58 3 4 4 3 3 3 3 3

59 4 4 3 2 4 4 5 4

60 5 5 3 4 3 4 3 3

61 3 3 2 3 4 3 3 4

62 4 5 3 4 5 4 4 5

63 4 3 4 2 3 5 5 3

64 3 3 2 3 4 3 3 4

65 4 5 3 4 5 4 4 5

66 4 3 4 2 3 5 5 4

67 4 3 2 4 4 5 3 4

68 5 3 4 5 4 3 4 2

69 4 4 3 3 3 3 2 3

70 4 3 2 4 4 5 3 471 5 3 4 5 4 3 4 2

72 3 4 4 3 3 3 3 3

73 4 4 3 2 4 4 5 4

74 5 5 3 4 5 4 3 5

75 3 4 4 3 3 3 3 3

76 4 4 3 2 4 4 5 4


64/79

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77 5 5 3 4 3 4 3 3

78 3 3 1 3 4 3 3 4

79 4 5 3 4 5 4 4 5

80 4 3 4 2 3 5 5 3

81 3 3 2 3 1 3 3 4

82 5 5 3 4 3 4 3 3

83 3 3 2 3 4 3 3 4

84 4 5 3 4 1 4 4 2

85 4 3 4 2 3 5 5 3

86 3 3 2 3 4 3 3 4

87 4 5 3 4 1 4 4 5

88 4 3 4 2 3 5 5 3

89 1 1 3 3 3 3 1 4

90 4 3 2 4 4 5 3 3

91 5 3 4 5 4 3 4 4

92 3 1 4 3 3 3 3 5

93 1 4 3 2 4 4 5 3

94 5 5 3 4 5 4 3 4

95 3 4 4 3 3 3 3 5

96 1 4 3 2 4 4 5 4

97 5 5 3 4 3 4 3 4

98 3 3 2 3 4 3 3 2

99 4 1 3 4 5 4 4 3

100 4 3 4 2 3 5 5 4

101 3 3 2 3 4 3 3 2

102 1 5 3 4 5 4 4 3

103 4 3 1 2 3 5 5 4

104 4 3 2 4 4 5 3 5

105 5 3 4 1 4 3 4 3

106 5 4 3 3 3 1 2 4

107 4 3 2 4 4 5 3 3

108 4 3 4 5 4 3 4 4

109 2 4 4 3 3 3 3 5

110 3 4 3 2 4 4 5 3

111 4 5 3 4 5 4 3 4112 2 4 4 3 3 3 3 3

113 3 4 3 2 4 4 5 1

114 4 5 3 4 3 4 3 2

115 5 3 2 3 4 3 3 3

116 3 5 3 4 5 4 4 4

117 4 3 4 2 3 5 5 5


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118 3 3 2 3 4 3 3 3

119 4 5 3 4 5 4 4 4

120 5 3 4 2 3 5 5 3

121 3 4 3 3 3 3 2 4

122 4 3 2 4 4 5 3 5

123 5 3 4 5 4 3 4 3

124 3 4 4 3 3 3 3 4

125 5 4 3 3 3 3 4 5

126 4 3 2 4 4 5 3 4

127 4 3 4 5 4 3 3 4

128 2 4 4 3 3 3 4 2

129 3 4 3 2 4 4 4 3

130 4 5 3 4 5 4 3 4

131 2 4 4 3 3 3 4 2

132 3 4 3 2 4 4 5 3

133 4 5 3 4 3 4 3 4

134 5 3 2 3 4 3 4 5

135 3 5 3 4 5 4 3 3

136 4 3 4 2 3 5 4 4

137 3 5 4 5 4 3 3 3

138 4 3 3 3 3 4 3 4

139 5 3 3 3 3 5 4 5

140 3 4 4 4 4 3 4 3

141 4 5 4 5 4 4 3 4

142 4 3 3 3 3 4 4 4

143 3 2 4 2 4 3 5 3

144 3 4 5 4 5 3 3 3

145 4 3 3 3 3 4 4 4

146 4 3 4 4 4 4 3 4

147 3 4 3 3 3 3 3 3

148 4 5 4 4 4 4 4 4

149 5 3 5 5 5 5 5 5

150 3 4 3 3 3 3 3 3

151 4 3 4 4 4 4 4 4

152 3 4 3 3 3 3 3 3153 4 5 4 4 4 4 4 4

154 5 3 5 5 5 5 5 5

155 3 4 3 3 3 3 3 3


66/79

66 | P a g e

The above ratings are tabulated and the average of these is plotted on a graph. I have collected ratings

for ICICI, Axis, and IDBI as well. But I have chosen to compare the expected ratings and ratings for

HDFC with SBI because out of 155 respondents few have not dealt with Axis or IDBI.

\

fig. Average Expected Ratings

By this graph I interpret that builders/developers largely go by reputation of builder, existing

relationship, funding value and legal/technical flexibility. This graph is the ratings of expectation from

finance institutions. By this HDFC can look up to where they need to match the current levels.

0.0000

0.5000

1.0000

1.5000

2.0000

2.5000

3.0000

3.5000

Expected Ratings(Average)


67/79

67 | P a g e

Fig. Ratings for HDFC

HDFC is rated to be technically less flexible. Stringent process and speed of process is

alright. Surprisingly, the reputation is voted down. Funding value is lesser than it s

competitors. But many builders applauded the systematic processing of HDFC which is

not at all present in nationalized banks.

0.0000

0.5000

1.0000

1.5000

2.0000

2.5000

3.0000

3.5000

HDFC Ratings(Average)

Average Ratings


68/79

68 | P a g e

Fig. Ratings of SBI

SBI is nationalized bank which has peoples never dying trust. People find every

parameter satisfactory. The coverage is far more widespread than HDFC. They finance

all the projects and have very high customer preference.

0.0000

0.5000

1.0000

1.5000

2.0000

2.5000

3.0000

3.5000

4.0000

SBI Ratings(Average)

Average Ratings


69/79

69 | P a g e

The above graph shows overview of comparison of Expected, HDFC and SBI ratings.

0.0000

0.5000

1.0000

1.5000

2.0000

2.5000

3.0000

3.5000

4.0000

Expected

HDFC

SBI


70/79

70 | P a g e

Ease of process

Here 0 being the least easy process (rigid process). HDFCs process is stringent and does

not flout any of norms i.e., rules and regulations. SBI is slightly customer friendly. Large

numbers of builders prefer SBI on HDFC for the same.

Faster processing

0

0.5

1

1.5

2

2.5

3

3.5

4

Expected HDFC SBI

Ease of process

Rating

0.0000

0.5000

1.0000

1.5000

2.0000

2.5000

3.0000

3.5000

4.0000

Expected HDFC SBI

Faster processing

Rating


71/79

71 | P a g e

Here in the above mentioned graph, 0 means slowest processing and 5 meaning fastest

processing. The average rating shows that expectation and deliverance is up to mark. But people

feel SBI has comparatively faster system. This is where HDFC has to improve in order to

compete with SBI.


HDFC is known for its strict checks on property details. Each and every document is verified andchecked. Many builders who are on par with these standards don not find any problem with this

factor but, the builders who do not possess land conversion documents find the procedure

cumbersome and irritable just because the other banks do not seek these documents. The

nationalized banks like SBI also are flexible in such matters. By the above graph we can observe

HDFC is voted to have been rigid both in terms of expected and SBI.

0.0000

0.5000

1.0000

1.5000

2.0000

2.5000

3.0000

3.5000

Expected HDFC SBI


Rating


72/79

72 | P a g e

Reputation of the financier

Shockingly, HDFC is voted for less reputation than SBI and expected from any home loan

institution. SBI has very good reputation even though it has a cumbersome and delayed process

but, match the expected levels.

0.0000

0.5000

1.0000

1.5000

2.0000

2.5000

3.0000

3.5000

Expected HDFC SBI

Reputation of Financier

Rating


73/79

73 | P a g e

Customer preference

Customers forget all the ill points when it comes to SBI. SBI with cumbersome process, delayed

disbursements, lack of organized handling is still most preferred in the list of banks I surveyed

upon. People have complete faith in the nationalized banks. Here in this graph the 5 rating means

highly preferred by customers. HDFC is not preferred over SBI.

0.0000

0.5000

1.0000

1.5000

2.0000

2.5000

3.0000

3.5000

4.0000

Expected HDFC SBI

Customer preference

Rating


74/79

74 | P a g e

ROI

In terms of ROI, expected, HDFC and SBI all are not independent but bound by rules of RBI. So

discussing on this point in not on the free lines of ones own organization. But here also we can see that

SBI is meeting the expectations of the builders above par expected and HDFC.

0.0000

0.5000

1.0000

1.5000

2.0000

2.5000

3.0000

3.5000

4.0000

Expected HDFC SBI

ROI

Rating


75/79

75 | P a g e


Existing relationship as a parameter of choosing a bank is voted as one of the important ones.

HDFC has fewer relationships than compared to SBI. SBI has its own positive points. Builders

feel there is a personal touch with nationalized banks than private banks. The private bank like

HDFC is bound by its own rules and regulations. For Eg., A builder gave me the reason being

availability of cheque book at branch. HDFC has a centralized system where Cheque book is

delivered by mail and not handed over to the customer. Such minor things prove as thorns in the

path of competition.

2.6000

2.7000

2.8000

2.9000

3.0000

3.1000

3.2000

3.3000

3.4000

3.5000

3.6000

Expected HDFC SBI


Rating


76/79

76 | P a g e

Funding Value

The above graphs give a comparison of the expectations, deliverance of HDFC and its toughest

competitor SBI. The HDFC mainly lags behind coverage in Bangalore. Most of upcoming projects are

from BMRDA approved areas. HDFC does not fund the BMRDA projects. The speed of process needs

to improve. There should be more technical/legal flexibility which is completely rigid now. Fundingvalue needs to be increased according to general opinion. Existing relationship is playing a significant

role where HDFC is not doing its best. Customers need to be educated about the positive side of

HDFC as a private bank.

0.0000

0.5000

1.0000

1.5000

2.0000

2.5000

3.0000

3.5000

4.0000

Expected HDFC SBI

Funding value

Rating


77/79

77 | P a g e

Suggestions

HDFC is rated to be technically less flexible. Stringent process and speed of process is alright.

Surprisingly, the reputation is voted down. Funding value is lesser than it s competitors. But

many builders applauded the systematic processing of HDFC which is not at all present in

nationalized banks.

SBI is nationalized bank which has peoples never dying trust. People find every parameter

satisfactory. The coverage is far more widespread than HDFC. They finance all the projects and

have very high customer preference.

HDFCs process is stringent and does not flout any of norms i.e., rules and regulations. SBI is

slightly customer friendly. Large numbers of builders prefer SBI on HDFC for the same.

The average rating shows that expectation and deliverance is up to mark. But people feel SBI has

comparatively faster system. This is where HDFC has to improve in order to compete with

SBI.HDFC is known for its strict checks on property details. Each and every document is

verified and checked. Many builders who are on par with these standards don not find any

problem with this factor but, the builders who do not possess land conversion documents find the

procedure cumbersome and irritable just because the other banks do not seek these documents.

The nationalized banks like SBI also are flexible in such matters.

HDFC is voted for less reputation than SBI and expected from any home loan institution. SBI

has very good reputation even though it has a cumbersome and delayed process but, match the

expected levels.

Customers forget all the ill points when it comes to SBI. SBI with cumbersome process, delayed

disbursements, lack of organized handling is still most preferred in the list of banks I surveyed

upon. People have complete faith in the nationalized banks.

In terms of ROI, expected, HDFC and SBI all are not independent but bound by rules of RBI. So

discussing on this point in not on the free lines of ones own organization. But here also we can

see that SBI is meeting the expectations of the builders above par expected and HDFC.

Existing relationship as a parameter of choosing a bank is voted as one of the important ones.

HDFC has fewer relationships than compared to SBI. SBI has its own positive points. Builders

feel there is a personal touch with nationalized banks than private banks. The private bank like


78/79

78 | P a g e

HDFC is bound by its own rules and regulations. For E.g., A builder gave me the reason being

availability of cheque book at branch. HDFC has a centralized system where Cheque book is

delivered by mail and not handed over to the customer. Such minor things prove as thorns in the

path of competition.

The HDFC mainly lags behind coverage in Bangalore. Most of upcoming projects are from

BMRDA approved areas. HDFC does not fund the BMRDA projects. The speed of process

needs to improve. There should be more technical/legal flexibility which is completely rigid

now. Funding value needs to be increased according to general opinion. Existing relationship is

playing a significant role where HDFC is not doing its best. Customers need to be educated

about the positive side of HDFC as a private bank


79/79

My learning

I have learnt many things during this project. First and foremost, perseverance is the key to

success. I once remember seeing a motivation poster in one of the institutes that I studied in. it

had a picture of a mark of shoe on a white surface. It read Persevere that is how man landed

on the moon. Now I have learnt most tasks are possible by hard work, faith and relentless

perseverance.

I have learnt discipline and punctuality (in a hard way at times). I have learnt to communicate

better and effectively. I have come across various types of people. The exposure to the set of

people did no wonder teach me patience and also how to tackle irate and rude people.

The course of this project did reward me and will help me with future endeavors.

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