Escolar Documentos
Profissional Documentos
Cultura Documentos
PROJECT REPORT
ON
CUSTOMERS/INVESTORS PERCEPTION
ABOUT INVESTING IN REAL ESTATE
AS A PARTIAL FULFILLMENT FOR THE AWARD OF MASTER OF BUSINESS ADMINISTRATION
SESSION: 2009-2011
Submitted to:
PUNJAB TECHNICAL UNIVERSITY, JALANDHAR
PROJECT GUIDE :~
SUBMITTED BY: ~
1
CERTIFICATE OF ORIGIN
This is to certify that Mr. ABU OBAID, a student of Master of Business Administration,
Punjab Institute of Management & Technology, Mandi Gobindgarh, has worked in UNICON
REAL ESTATES PVT. LTD., under the able guidance and supervision of Arpit Singh,
Manager Marketing & Mr. Ajay Krishnan, Senior Manager Marketing, Unicon Real Estates
Pvt. Ltd. Noida
The period for which he was on training was for 8 weeks starting from 16/06/2010 to
30/07/2010. This Summer Internship report has the requisite standard for the partial
fulfillment of the Master of Business Administration. To the best of our knowledge no part of
his report has been reproduced from any other report and the contents are based on original
project.
Signature Signature
(Faculty Guide) (Student)
2
ACKNOWLEDGEMENT
I express my sincere gratitude to my industry guide Mr. Arpit Singh, Manager Marketing &
Mr. Ajay Krishnan, Senior Manager Marketing, Unicon Real Estates Pvt. Ltd., Noida, for
his able guidance, continuous support and cooperation throughout my project, without which
the present work would not have been possible.
I would like to thank the entire team of Unicon Real Estates Pvt. Ltd., for their constant help
in the successful completion of my project.
Also, I am thankful to my faculty guide Ms Priya Arora, for her continued guidance and
invaluable encouragement.
3
TABLE OF CONTENTS
Subject
Executive Summary
Definition of Real Estate
Real Estate in India
Commercial
Residential
Retail
Growth Drivers of Real Estate
Research Methodology:
Primary Objective(s)
Hypothesis
Research Design
Sample Design
Scope of the Study
Limitations
Critical Review of Literature
Real Estate Investment
Industry Profile
Company Profile
Study of Competitors
Data Collection
Primary Data
Findings and Analysis
Recommendations
Bibliography
Annexure
4
CHAPTER 1
EXECUTIVE SUMMARY
EXECUTIVE SUMMARY
This research work is related to customers and investors research study, titled
“CUSTOMERS OR INVESTORS PERSPECTIVE ABOUT INVESTING IN REAL
ESTATE” in high tech cities like Greater Noida, Ghaziabad, Noida and New Delhi.
The research addresses the factors influencing the customers and investors decision to
allocate resources to real estate. The survey includes a sample of major customers and
5
investors via a questionnaire. They answered question about their target real estate allocation,
their plans to increase or decrease their allocation, the major reasons for investing in real
estate, and their view point on major factors which are to be considered by a company before
starting a company.
During the course of this research work I was provided with an opportunity to interact with
the number of people to receive their responses for questionnaire gave a glimpse of the
behaviors of people and how a researcher should proceed to elicit the responses comfortably.
The experience gathered during this research study will help me to understand the real estate
sector and customers perception about investing in real estate.
6
CHAPTER 2
7
The term ‘real estate’ is defined as land, including the air above it
and ground below it, and any buildings or structures on it. It is
also referred to as realty. It covers residential housing,
commercial offices, trading space such as theatres, hotels &
restaurants, retail outlets, industrial buildings such as factories &
government buildings. Real estate involves purchase, sale and
development of land, residential & non-residential buildings. The
main players in real estate market are landlords, developers,
builders, real estate agents, tenants, buyers etc. The activities of
the real estate sector encompass the housing and construction
sectors also.
8
Source: Knight Frank Research
9
Some have a multiplex, shopping complex. There are those which offer a servant entrance.
The next step is creating an ambience. What does on differentiate in a house? So you now
have themed houses.
The concern is that in India, the stock prices are at the height of a boom. As it happens,
a boom in one sector translates into a boom in another sector with invertors rushing to park
their money in a safe place. Also, add the foreign exchange glut in India fuelled to a great
extent by software engineers parking their dollar salaries in real estate (especially near the
tech hubs). Low interest rates (relatively, as compared to 10 years back) over the last few
years made bank loans easier.
Driven by positive growth in the economy, real estate in India is booming. The year
2006 started as on a promising note when the Government of India opened the construction
and development sector in February 2006, and allowed 100 percent foreign direct investment
(FDI) under the ‘automatic route’ in order to spur investment in the vital infrastructure
sector. The government has thrown open the lucrative parts of the Indian reality market to
global investors for the first time.
The relaxation of the FDI ceiling saw big names joining hands with the Delhi based
developments to announce India’s largest FDI in the reality sector. Groups showing interest
in India include major Indian and International Companies.
The development of real estate in India focuses on two primary areas: retail and residential.
• The global real-estate consulting group Knight Frank has ranked 5th in the list of 30
emerging retail markets and predicted an impressive 20 percent growth rate for the
organized retail segment by 2010.
• The organized segment is expected to grow from a mere 2 percent to 20 percent by the
end of the decade, it said.
The boom is also attracting interest from foreign players. In recent years, non-resident Indians
(NRIs) have played a very important role in transforming the Indian real estate market.
Opening–up of the Indian economy provided them with new opportunities and they have
shown a great deal of confidence in the changed set up. Since 1994, NRIs have invested in
sizeable amount, of which a big chunk has found its way into the property market.
Anticipation by NRIs has brought about a lot of maturity in the market which in the past had
solely banked on the actual users.
2.1 COMMERCIAL
10
• India has been hit by the global outsourcing
waves. If IT/ITES continues to grow at the
estimated growth rate for the next four years
it will be an approximately US$24 bn.
Industry by FY 2010.
• NASSCOM-MCKINSEY surveys have
predicted that the ITES sector in India will
provide jobs to 1.1mn sq. ft. of office space.
• Over the course of the past five to ten years,
the major occupier of the commercial real
estate has been the IT/ITES/BPO sector as
opposed to banking, finance,
multinational, corporate and large Indian manufacturing companies. Almost 80
percent of demand for commercial space today is thanks to the above sector.
• Accordingly, a shift is happening towards cheaper and larger locations in the suburbs
closer to dense population pockets supplying quality workforce at competitive rates.
Thus, a gradual decline in the status of the CBDs, which is already experiencing
vacancy rates of over 20-30 percent, is expected over time.
• More and more developers are building quality built-to suit space catering to the end
user in the suburbs. In a nutshell, there will be a huge demand for commercial space in
suburban area of major cities.
• Most developers are providing a more efficient and better class of product than they
were five years ago. At cheaper costs. These products are of a global standard and
developers are using new age technologies in order to reduce delivery times.
• The capital values of commercial properties have moved up by 10-12 percent over the
past 12 months, even though the rental values have remained the same. This disparity
will cease once the interest rates moving upwards.
• Looking into the future, we expect supply to continue to match demand. A number of
developers will put up quality products on to the market, thereby stabilizing rental
property rates.
2.2 RESIDENTIAL
11
• Residential property is gaining ground as
an attractive mode of investing for
middle-class people leading to growing
demand.
• With the shifting of more and more companies and offices to the suburbs, growth in
the suburban residential real estate market has also been witnessed. Lavish townships
with good quality construction with luxurious amenities and facilities are now
coming up.
• The demand for good housing is evident, as most of these developments have
witnessed a pre-construction booking of 75-80 percent and even 100 percent in
some cases, both by end users and investors.
• There is the total national housing shortage of 41 mn. Units. Out of the above, close to
80 percent consists of housing for the weaker section.
• A study has shown that 50 percent of the formal housing in the country is accessed
through the rental route and not ownership. It is thus pertinent to put in place an
environment to encourage more stock of rental housing.
2.3 Retail
12
• Retail is considered the world’s largest private industry with total sales of US$ 6.6tn.
With close to 12 mn. Outlets, India has the largest outlet density in the world. The
consumers demand for international quality ambience, convenience and infrastructure
will drive future growth.
• Retailing is becoming the next boom industry with organized retail being a market of
US$6 bn. It is due to the growing eight fold in the coming decade. It is expected that
the share of modern retail shall grow from about 8 percent in 2007 to 20 percent by
the end of the decade.
• The total retail industry growing exponentially at 8.5 percent per annum and
consumer spending has increased at 12 percent per annum during the last 3 years.
• The Indian consumer today is evolving. The increased purchasing power of the urban
educated middle class, more exposure to brands and products through television and
foreign trips, and the growing number of working couples has led to a change in
buying habits and thus the retail scope in India today about 50 mn. Sq. ft. of organized
retail space will be coming up across the country by the year 2010.
• However, the real estate industry is at a critical point. Currently, we have a depleting
pool of retailers and successful department store chains with a lot of shopping center
space competing for the same tenants. This accordingly, creates an opportunity for
foreign retailers. There is a dire need to allow 100 percent in retailing.
• Developers who can show most ingenuity in creating an interesting environment, both
from a shopping and an experimental standing point, will be the ones that will create
an asset that will withstand the test of times.
1. Consumer demographics3
2. Developer reputation
3. Cost of leasing space
4. Quality of other tenants
5. Car parking
6. Support facilities
7. Infrastructure
8. Maintenance
Whilst the number of shopping malls has seen a surge in the recent past, the future
development is now focused on providing for leisure activities as well. A significant number
of multiplexes are being developed as an integral part of retail malls, along with amenities
such as food courts and video game parlors. PVR, INOX, Satyam Cineplex’s and Shringar
13
Films are diving the multiplex business expansion across the nation while Appu Ghar, The
Delhi Based Amusement Park, has plans of starting operations in at least two new locations.
The next step in the evolution of malls in India is specialty malls and theme malls that
cater to a specific target audience. These would include wedding malls, auto malls, home
accessories and life style malls, factory outlet malls, etc.
Some of these chains after setting up in the metros are already looking to foray in to the non-
metros to reach out to a broader customer base.
ForecastedNewRetail SpaceDistributionby2010
NCR NCR
Others 22% Mumbai
35%
Pune
Mum bai
Hyderabad
15%
Bangalore
Kolkata
Pune Chennai
8%
4% Kolkata
Chennai Hyderabad
Bangalore Others
4% 7%
5%
Distributionofcurrent retaN
ilospaceinNCR
ida
5%
Ghaziabad Gurgaon Noida
26% 26% Gurgaon
GreaterNoida
Faridabad Delhi
4% Faridabad
Delhi GreaterNoida Ghaziabad
22% 17%
14
• The robust growth in IT sector has pumped up the growth in Real
Estate Sector. An estimated 70% of new construction for offices is to
cater to the IT Sector. Examples are cities like Pune and Gurgaon where
real estate activity is primarily the offshoot of the IT sector revolution in
India and the dot com boom.
• Rapid Urbanization
15
→ Increasing working age population (Almost 64% in 16-64
age group)
• Market Structure
• The sector has recently shown a huge growth over the past decade
with action in all spaces; residential, commercial, retail, hospitality &
SEZ. However, all this activity has lead to skyrocketing of prices.
Many, including the FIIs’, feel that prices are high and that a
correction is in store.
16
in on the rising prices of real estate. This is increasing demand. But
prices faced a downward pressure when the properties were ready
for delivery as the end users were limited. This lead to a situation of
excess supply at the existing rates, eventually leading to a
correction in prices.
17
Indian Real Estate Market Growth Drivers:
18
FDI in Real Estate
Till recently, FDI in real estate was restricted to development of industrial
parks, hotels, integrated townships and SEZ’s. On March 3, 2005,
Government of India replaced the integrated township policy to permit FDI
up to 100% in townships, housing, built-up infrastructure & construction -
development projects, under automatic route.
→ Townships
→ Housing
→ Commercial premises
→ Hotels
→ Resorts
→ Hospitals
→ Industrial parks
→ Resorts
→ Hospitals
→ Educational institutions
→ Recreational facilities
→ SEZ’s etc.
19
premises, hotels, resorts, hospitals, educational institutions,
recreational facilities and regional level infrastructure
20
21
FDI in Industrial parks &
hotels:
22
Growth in Real Estate
• Merrill Lynch forecasts that Indian Real Estate Sector shall grow
from US 12Billion in 2005 to US $ 90 Billion by 2015.
DLF
UNITECH
PARSVNATH DEVELOPERS
OMAXE LTD.
ELDECO &
EROS
ANSALS
23
CHAPTER 3
OBJECTIVES
24
Objectives
1. Study the profit margins of Real Estate developers in different projects.
3.To study the risk and return factors in investing in real estate.
3.2 Hypothesis:
(1) H0: The customers do not have interest in investing in real estate.
H1: The customers have interest in investing in real estate.
(2) H0: The developers are unsuccessful in solving the problems and providing necessary
specifications to customers.
H1: The developers are successful in solving the problems and do not provide necessary
specifications to customers.
25
CHAPTER 3
RESEARCH METHODOLOGY
26
Research methodology
3.1 Research Design:
The study is to conduct on the part of business expansion plan of Unicon Real Estates Pvt.
Ltd. to expand their business and solve customer’s issues. On this part, Market Survey is
conducted to know the customer/investor perception about investing in real estate.
In this research focus is on current customers views about real estate as an asset class.
The approach is direct. The survey is going to be done through a large sample of major
customers/investors via questionnaire in NCR.
The sample size for the above study was a total of 200 from the whole NCR. The
respondents of a sample are selected using non-probability procedures. The target
respondents were HNI’s (High Network Individuals), upper segment of middle class, high
level executive workforce of corporations.
• Legal and regulatory risk, hard to determine the best opportunities and risk of
poor professional advice are given as the main reason for real estate investing.
• Despite of developers investing their large part of funds on entertainment centers like
shopping malls, multiplexes etc. large part of customers prefer to invest in residential
projects such as plots and group housing.
27
• The most important factors influencing the real estate asset allocation decision are
statistical estimates of risk and return, advice from external consultants and long term
historical performance.
• With the shifting of more and more companies and offices to the suburbs, growth in
the suburban residential real estate market has been witnessed. Lavish townships with
good quality construction replete with luxurious amenities and facilities are now
coming up. Survey reveals the factors or specification needed by the customers
where they are investing their funds and also the lack of facility in their previous
or current residence.
3.4 Limitations:
• Our respondents locate real estate much more than any other asset class such as
equities, debt and commodities. But they mention that the cost associated in
investing in real estate is much more than these classes.
• The key fact is the ability to service the debt. The general thumb rule for debt serving
is to restrict all EMI payments to 45 percent of the investor’s disposable income. This
figure could vary according to the age of the person and his financial commitments.
25 years old unmarried person with no commitment can commit even to the extent of
75 percent of his disposable income to servicing a home loan EMI. But a 40 years old
person with a wife and a child may struggle to service an EMI of 55 percent of his
disposable income. The quantum of loan and structuring the EMIs has to carefully
plan before hand to fall in debt trap.
• In reality asset allocation is far more sophisticated process. It varies from person to
person and depends on person’s financial plan, background, disposable income, age,
and investor’s preferences.
• Consider middle-aged person from a middle class background seeking a stable life
long job. He cannot be expected to invest in equities and property. His preference
would be bank FDs. On the other hand, a market save young couple in the corporate
sector with high surplus would prefer to invest in property.
28
CHAPTER 4
29
Critical Review of Literature
• Our respondents locate real estate much more than any other asset class such as
equities, debt and commodities. But they mention that the cost associated in
investing in real estate is much more than these classes.
• In one of our question in questionnaire we ask the factors you find appropriate for risk
in real estate. i.e. asset volatility, lack of reliable valuation data, legal and regularity
risk, risk of poor professional advice, hard to determine best opportunities.
May be some of the factors are hard to determine and uncontrollable and
unavoided.
• The key fact is the ability to service the debt. The general thumb rule for debt serving
is to restrict all EMI payments to 45 percent of the investor’s disposable income. This
figure could vary according to the age of the person and his financial commitments.
• In reality asset allocation is far more sophisticated process. It varies from person to
person and depends on person’s financial plan, background, disposable income, age,
and investor’s preferences.
30
• Consider middle-aged person from a middle class background seeking a stable life
long job. He cannot be expected to invest in equities and property. His preference
would be bank FDs. On the other hand, a market savvy young couple in the corporate
sector with high surplus would prefer to invest in property. The age factor should be
properly defined before targeting.
• Diversification and inflation hedging are given as the main reasons for investing in
real estate in US market.
• The expected risk & return of real estate is perceived as midway between US stocks
and bonds.
CHAPTER 5
31
5.1 Industry profile
India, like many other parts of the world is zooming away in the face of a real estate boom. In
India there is a real estate boom in any direction you wish to see. Whether it is Bangalore,
Pune, Calcutta or Chennai or Hyderabad or even already sky high Mumbai or Delhi –
the story is same.
Now apartments are more than just houses. They are about lifestyle. So while the first
housing colonies had nothing but a security guard, these new housing colonies have a gym
(spa, Jacuzzi, steam), swimming pool (heated, lined with Italian marble) some have a
multiplex, shopping complex. There are those which offer a servant entrance. The next step is
creating an ambience. What does one differentiate in a house? So you now have themed
houses.
The concern is that in India, the stock prices are at the height of a boom. As it happens, a
boom in one sector translates into a boom in another sector with invertors rushing to park
their money in a safe place. Also, add the foreign exchange glut in India fuelled to a great
extent by software engineers parking their dollar salaries in real estate (especially near the
tech hubs). Low interest rates (relatively, as compared to 10 years back) over the last few
years made bank loans easier.
Driven by positive growth in the economy, real estate in India is booming. The
year2005started as on a promising note when the Government of India opened the
construction and development sector and allowed 100 percent foreign direct investment
(FDI) under the ‘automatic route’ in order to spur investment in the vital infrastructure
sector. The government has thrown open the lucrative parts of the Indian reality market to
global investors for the first time.
The relaxation of the FDI ceiling saw big names joining hands with the Delhi based
developments to announce India’s largest FDI in the reality sector. Groups showing interest
in India include major Indian and International Companies.
32
With property boom spreading in all directions, real estate in India is touching new heights.
However, the growth also depends on the policies adopted by the government to facilitate
investments mainly in the economic and industrial sector. The new stand adopted by Indian
government regarding foreign direct investment (FDI) policies has encouraged an increasing
number of countries to invest in Indian Properties.
India has displaced US as the second-most favored destination for FDI in the world. As the
investment scenario in India changes, India which has attracted more than three times foreign
investment at US$ 7.96 billion during the first half of 2005-06 fiscal, as against US$ 2.38
billion during the corresponding period of 2004-05, making India amongst the "dominant host
countries" for FDI in Asia and the Pacific (APAC).
The positive outlook of Indian government is the key factor behind the sudden rise of the
Indian Real Estate sector - the second largest employer after agriculture in India. This
budding sector is today witnessing development in all area such as - residential, retail and
commercial in metros of India such as Mumbai, Delhi & NCR, Kolkata and Chennai. Easier
access to bank loans and higher earnings are some of the pivotal reasons behind the sudden
jump in Indian real estate.
• It’s ever growing economy which is on a continuous rise with 8.1 percent increase
witnessed in the last financial year. The boom in economy increases purchasing power
of its people and creates demand for real estate sector.
• India is going to produce an estimated 2 million new graduates from various Indian
universities during this year, creating demand for 100 million square feet of office and
industrial space.
• Presence of a large number of Fortune 500 and other reputed companies will attract
more companies to initiate their operational bases in India thus creating more demand
for corporate space.
• Real estate investments in India yield huge dividends. 70 percent of foreign investors
in India are making profits and another 12 percent are breaking even.
• Apart from IT, ITES and Business Process Outsourcing (BPO) India has shown its
expertise in sectors like auto-components, chemicals, apparels, pharmaceuticals and
jewellery, where it can match the best in the world. These positive attributes of India
is definitely going to attract more foreign investors in the near future.
The relaxed FDI rules implemented by India last year has invited more foreign investors and
real estate in India is seemingly the most lucrative ground at present. The revised investor
friendly policies allowed foreigners to own property, and dropped the minimum size for
housing estates built with foreign capital to 25 acres (10 hectares) from 100 acres (40
33
hectares). With this sudden change in investment policies, the overseas firms can now put up
commercial buildings as long as the projects surpass 50,000 square meters (538,200 square
feet) of floor space.
Indian real estate sector is on boom and this is the right time to invest in property in India to
reap the highest rewards.
34
our commitment levels and transparency of our deals that we have
a 100% client retention ratio and over 2000 satisfied
customers in just a period of over 2 yrs.
UNICON REAL ESTATE PVT.LTD is an
underwriting company that manages to lead all the sales charts for
the products we decide to promote. Investors today have two
choices; either they go through the grind manoeuvring through an
unorganized market or choose a Professionally Managed Group and
deal with the other party with a sense of security. We provide that
security; this is our strength and we welcome all to be a part of this
revolution with us and help regulate this industry.
35
Whether you are looking to buy, sell or lease a home, office or retail
showroom, UNICON can assist you in every step of the way.
36
CHAPTER 6
STUDY OF DEVELOPERS
THE DEVELOPER
37
DLF
UNITECH
OMAXE LIMITED
SOBHA DEVELOPERS
PARSVNATH DEVELOPERS
DLF
Company background
38
Developed 22 urban colonies/ integrated townships over
the last 6 decades, including DLF City, a 3,000-acre project
in Gurgaon
Key Highlights
39
→ Portfolio of largely developing
assets = Risk of delays in DOT/ non-compression of cap rates
40
→ Exclusive tie up with Lang O’Rourke (50:50 construction JV) for
planned scale up from current levels
Hilton - Hospitality;
up through JV/JDAs
41
office segment
Large portfolio of REIT able
assets to help churn capital faster
• Sale to DLF Assets Ltd (DAL) formed ~40% of total sales in FY08
42
→ Delay in listing of DLF Office Trust (DOT) on the
Singapore exchange lead to liquidity crunch impacting ability of
DAL to purchase assets from DLF Ltd.
• Execution risk
43
Sentiment effect = Further slowdown
in sales = Inventory build up
DLF presently has its land bank in 31 different cities, through with a small presence (less than
100 acres) in 20 of these. In addition to 574 mn Sq. ft. land bank, DLF has 23 super luxury
hotel sites, a golf course and clubs.
7% NCR(Approx95%in
2% gurgaon)
3% Kolkata
4%
Goa
4%
Chandigarh
5%
52% Pune
Indore
Bangalore
23% Others
44
UNITECH
Company background
Key Highlights
45
1.56 mn sq. ft. in FY’05 to 7.15
mn sq.ft. in FY’07 -CAGR of 114%
Planned listing of
Unitech Office Trust (UOT) in Singapore.
46
Key risk factors
47
going forward
48
• Diversification into telecom
49
→ Focused on undertaking large mixed-use projects in high
growing suburban areas of
major cities
• Strong execution capabilities
50
Lease income from commercial/ retail/ hospitality
projects
→ Sale of properties to Unitech Corporate Park Plc (UCP)
51
Threats & Weaknesses
• Paucity of Funds
• Execution risk
52
The Rs. 1600crores Unitech Group is one of the Major Township Planning and real estate
development companies in India and has a diverse business portfolio of heavy construction,
leisure and entertainment projects, hospitality business and residential property
developments.
After playing second fiddle to DLF in Gurgaon, the low-profile Unitech Group is gradually
asserting itself in the real estate market of the national capital region. In May 2006, in an
upset of sorts, Unitech got the better of DLF by grabbing 345 acres of prime land in Noida for
whopping Rs. 1582 crores. Unitech has a land bank of 10500 acres whose breakdown is
shown below and its future plans are of 500m sq ft for the year 2008-09 for which they need
huge amount of funding.
2% 8% 8%
8% Noida/G.Noida
4%
kochi
9% Gurgaon
11% Kolkata
Chennai
10% Varanasi
Agra
Hyderabad
18% Bangalore
22% Others
Unitech Builder plans to use the Noida land to make 4000 top-of-the-line apartments priced at
Rs. 2 crores (Rs. 20 million) each. The investment required to build this dream residential
project: Rs. 3000 crores (Rs. 30 billion). Besides inking this mega deal, Unitech has been on a
land-buying spread across the country – from Gurgaon to Kolkata, Kochi, Hyderabad and
Chennai – to establish a pan-Indian presence. In the last few months, the Group has created a
land of over 8,000 acres.
53
PARSVNATH
Parsvnath developers announced that they would invest Rs. 1600 crores over the next three
years to construct a metro station cum shopping mall near the Commonwealth Games
Village in the National Capital. The metro station cum shopping mall is spread over 7.3 acres
and about 3.65lakh sq. ft. of retail space would be developed. This will be the 12th mall which
the Parsvnath will develop at metro stations, owned by Delhi Metro Railway Station
Corporation, a building operator transfer basis.
Parsvnath projects cover saleable area of 134 million sq. ft, including owned land
development rights; this does not include land owned in SEZ business. Ongoing projects are
spread over 17 states and 46 cities.
120
DMCR 6 1.46 276.64 260 536
54
Projects under Development
ITParks Hotels
5% 3%
Residential IntegratedTownship
22% Commercial
Residential
Integrated
Commercial ITParks
4% Township Hotels
66%
55
Omaxe Limited
56
→ Out of this total land bank, Omaxe owns 82% directly and the
remaining through JVs and subsidiaries. This mitigates risks
associated with any possible default in the company’s land
acquisition.
57
ranging from integrated townships, group housing and retail
and other commercial properties, hotels, information
technology and bio-tech parks to special economic zones
(SEZ).
→ Omaxe’s wholly owned subsidiary M/s Eden Buildcon Pvt
Limited has recently bagged a 25 acre premium plot in
Hyderabad where it has plans for multi-purpose development.
Omaxe has also forayed in SEZ development and signed a
MOU with Government of Rajasthan for 5000 hectare SEZ in
Alwar District. Therefore Omaxe has a strong business model
with presence across all verticals.
58
houses, commercial complexes, retail, integrated townships
and hotels. This spread has provided the company opportunity
for both growth and risk mitigation. Omaxe is one of the first
few developers to conceptualize and develop theme malls in
northern India.
→ Omaxe is also entering into key arrangements with
strategic partners to enhance the real estate development
business. The company has entered into public-private
participation arrangements with the Patiala Urban Planning
and Developing Authority to develop an integrated township
at Patiala over an area of 336.5 acres.
59
Build and Recover basis under Public Private Partnership (PPP)
model.
→ Omaxe has also bid for revamping Udaipur Airport
60
Threats & Weaknesses
• Execution challenge
• Regional concentration
61
lead to a slowdown in real estate demand and will adversely
affect the sales, profitability, and valuation of the company.
62
technical expertise have led to low entry barriers resulting to
fierce competition. This can adversely affect Omaxe’s
business prospects and financial condition.
63
Sobha Developers
Company background
Key Highlights
64
While a correction in capital values is expected margins
expected to remain steady from increased focus on own
projects
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Strengths & Opportunities
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De risking itself from
geographical concentration within Bangalore (~60% of land
bank outside home market of Bangalore)
Key catalyst in
helping Sobha establish its mark, improve its visibility to
expand its contractual clientele and build its brand
Capitalizing on its
preferred status to further its footprint into other cities
where the software giant sets up shop
• Backward integration
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→ ‘Backward integration’ enables Sobha to build key
competencies in executing its projects
• Bangalore focused
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delay in infrastructure projects in Bangalore can adversely
affect the financial condition of Sobha.
• Client concentration
CHAPTER 7
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DATA
As a preliminary for the business development of the company it was essential to find the
customer/investor perception about investing in real estate.
For collecting the information a questionnaire was designed focusing on the main cities in
NCR like Greater Noida, Noida, New Delhi and Ghaziabad where the company is operating
its projects.
The respondents in our sample size are professionals from major public and private
institutions which include managers, consultants, proprietors, business class etc.
Approximately 200 questionnaires were filled and ultimately collected 169 with positive
response that they have their interest in investing their funds in real estate.
Table 1 summarizes the total sample size which reflects that majority of respondents have
their interest in real estate.
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Greater Noida 50 42
Noida 50 44
Ghaziabad 50 40
New Delhi 50 43
No.OfRespondentsInterestedinReal Estate
NewDelhi25% Noida25%
Noida
GreaterNoida
Ghaziabad
NewDelhi
Ghaziabad24% GreaterNoida
26%
The whole of the study is primary data based oriented through a questionnaire. The contents
of the questionnaire are:
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CHAPTER 8
72
Findings and Analysis
The company, UNICON REAL ESTATE Pvt. Ltd. has presently 3 projects out
of which 2 have been already cleared and one is yet to be executed. The
company expect 30-40% returns/profit margins, although it varies from
projects to projects due to various reasons like time, cost of purchase, etc.
8.1
Question 1 among the questionnaire reflects the real estate investment policy specifically. We
asked our respondents do you have interest in investing your funds in real estate.
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The answer to the question 1 indicate that a surprising number of respondents, nearly 169 out
of 200 have their interest in investing their funds in real estate.
Exhibit 1: Question 1
No.ofRespondents
NotInterested16%
Interested84%
Interpretation:
Certain increase in property prices in the last four years, high income, cheaper loan rates, no
longer adverse to debt and ready to discount future earnings today could be the main reasons
for development of interest in real estate of customers.
8.2
Reasons for the customers/investors for investing in real estate, may it be Short term returns,
Long term returns, End use or recurring returns. Different respondents from different cities
show different perceptions. End use and long term investment are the two reasons among four
who votes majority of respondents.
Exhibit 2: Question 2
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ReasonsforInvesting
60
50
40 ShortTerm
LongTerm
30
EndUse
20 RecurringEarning
10
Interpretation:
Since real estate has beaten all forms of investment in last four years and sought to be
emerging as a key element in customers/investors portfolio and by paying an EMI instead of
paying taxes and rent they develop a compulsory saving habit and create a valuable asset for a
long period of time could be a possible reason for this above result.
8.3
The question mentioned states about the top risk factors associated with the real estate
investing. Asset volatility, lack of reliable valuation data, legal and regularity risk, risk of
poor professional advice, hard to determine the best opportunities are the various risks
associated with real estate and mentioned in questionnaire.
Exhibit 3: Question 3
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What are the risk factors in Real Estate?
AssetVolatility
TopRiskFactors
40 Lackofreliable
35 data
30
Legal and
25 Regularotyrisk
20
Riskofpoor
15 professional
10 advice
Hardto
5
determinebest
0 oppurtunities
Interpretation:
Risk of poor profession advice, legal and regularity risk, hard determining the best
opportunities are the top three factors. Change in government policies, change in trend and
fashion cold be the main reason for above.
8.4
Various big players had registered its presence across the country with a healthy mix of
projects. The question revolves around the same perception about customers/investors view in
which project they would like to invest. – Office Spaces, Shopping Malls, Plots, multiplexes
& Group Housing are few of the projects.
Exhibit 4: Question 4
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In which project you would like to invest?
ProjectsofInterest
50
40
OfficeSpaces
30 ShoppingMalls
Plots
20 Multiplexes
GroupHousing
10
Interpretation:
There’s been an evident shift in perception and mindset in the Indian middle class over the
last five to ten years, thanks to the impact of liberalization and opening up of the Indian
economy, a rise in average income across households, and a palpable desire to own things
‘now’. The most crucial aspect of this ‘shift’ in the consumer’s mindset is perhaps explained
by the fact that the young (or Next Generation) are more in charge of their lives and eager and
impatient to assume the world. It’s a generation that is independent, self-reliant and nuclear in
nature. And it is this eagerness that is succeeding that has fuelled a drive to own what one
desires the most: a home, a car and a healthy lifestyle. Other drivers have been incentives
from the government to buy homes, improved quality of buildings and property services and
a bouquet of financial options. Tax concessions, property price dips and lower interest rates
have also helped.
8.5
The question ask “on a 5-point scale,….how does the long term expected return for the real
estate component and your portfolio compare with the long term expected return for the
following asset class in your portfolio”?
The research report that most respondents believe real estate has an expected return a little
above that for equities and debt. They expect commodities too significantly and somewhat
less.
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• First, allocation might not be based on modern portfolios theory.
• Second additional factors affecting risk and return estimates-such as higher relative
cost of real estate.
• Consistent with this notion is the real estate has done well relative to stocks and bonds
recently, a number of customers reported investing in real estate only recently.
The question asks about the factors or specifications to be included by developer where the
customers/investors are investing their funds.
Thus, we found that respondents are interested in investing in real estate and at the same time
developers are successful in satisfying the real estate investors. Each developer has an
average of 30-40% profit margins, although it varies from projects to projects because of
factors like cost of purchase, time, etc.
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CHAPTER 9
RECOMMENDATIONS
Recommendations:
• In reality asset allocation is far more sophisticated process. It varies from person to
person and depends on person’s financial plan, family background, disposal income,
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age, and investor’s preferences. So before targeting the customers the company should
consider the factor.
• Consider middle- aged person from a middle class background seeking a stable life
long job. He cannot be expected to invest in equities and property. His preference
would be bank FDs. On the other hand, a market savvy young couple in the corporate
sector with high cash surplus would prefer to invest in property. The age factor should
be properly defined before targeting.
• Company should state to its customers that since real estate has beaten all forms of
investment in last 4 years and sought to be emerging as a key element in customer’s
portfolio and by paying an EMI instead of paying taxes and rent, they develop a
compulsory saving habit and create a valuable asset for a long period of time.
• Tremendous demand for residential property such as group housing, residential plots,
and townships rather than commercial property. The company should focus on
developing the residential property more rather than commercial property.
• There should be an option for discount for customers from registered dealers of the
company.
• Customers should be approached and asked them to see sample flat without forcing
them to buy the flat. The conveniences should be born by the company.
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CHAPTER 10
BIBLIOGRAPHY:
• http://www.uniconindia.in
• http://www.uniconproperty.com
• http://www.ssrn.com
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• http://www.unitechgroup.com
• http://www.omaxe.com
• http://www.dlf.in
• http://www.parsvnath.com
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CHAPTER 11
ANNEXURE
Questionnaire
What are the customer’s and investors perceptions about investing in Real Estate!
Introduction
Thank you for taking the time to complete the survey. Your feedback is integral to our
academic research how customers think about investing in real estate. Specifically we want to
uncover why the real estate is such a limited part of most of the customers and organization
portfolios.
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Your answer will remain strictly confidential and will be used for research purpose only. The
survey should take about 5-7 minutes to complete. Thank you once again for your time.
NAME: AGE:
ADDRESS: OCCUPATION:
[ ] Yes [ ] No
[ ] Yes [ ] No
[ ] Plots [ ] Multiplexes
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[ ] Real Estate [ ] Commodities
[ ] Equity [ ] No Idea
7. What would you like more in Real Estate; almost every builder provides the following
specifications in his project like:
• Affordable Price Range, Availability of loan at low interest rates, Easy Payment Plan.
• Connectivity to Public Transport, Work Place.
• Proximity to Schools, Hospitals, Entertainment Centers.
• Clear title of property, Resale value.
• Peaceful locality, Pollution free environment.
• Quality Construction, Maintenance, Safety & Security, Water Availability, Power
Back-Up, Car parking facility, Recreational facility, Club Membership etc.
• Return on Investment (ROI)
If any other factor or specification you find appropriate or useful in the area you are
investing, please specify______________________________________________
8. Which Brand name is something that immediately comes into your mind. Please rate the
developers according to brand image.
[] DLF
[] UNITECH
[] OMAXE
[] ANSALS
[] ELDECO
[] DREAMLAND
[] EROS
[] PARSVNATH
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