Summer Training

Project Report
On

‘PERCEPTIONS OF CONSUMER ABOUT LUXURY FLATS

AND DESIGNER APARTMENTS’

Submitted to
FORTUNE (INDIA) CONSTRUCTION LTD.

In partial fulfillment of the requirements

For the degree of
Master of Business Administration
(2009-2011)
Of
Punjab Technical University

Submitted by
DEEPAK BANGA

CENTRE FOR MANAGEMENT TRAINING & RESEARCH

KHARAR – 140301, DISTT. MOHALI (PB.)
 ACKNOWLEDGEMENT

Today with humility and folded hands I am thanking Almighty from the depth of
my heart for these blissful moments and for giving me such situations and
atmosphere which is helping me in my mental growth and is a way towards
success.

So, I must preface my report by expressing sincere and deep gratitude to those
who made it possible for me to complete my thesis work.

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

I owe a deep sense of gratitude to my guide Mr. Arun Kumar Sharma, CMTR for
the inspiration, valuable suggestion and guidance which made this report
possible. I am obliged of this focused guidance. His total cooperation and
excellent directions have made me indebted to him for lifetime.

I owe my thanks to Board of directors (HR deptt.)Ind Swift MR. R.S.Dhaliwal for
allowing me to do my project in their company.

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

(Assistant Manager) who gave his valuable time and thought us many valuable
things which will help me in the long career ahead of me and Mr. Mohit Sharma
( Marketing Executive) for cooperating me in my training.

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

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

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

the research activities and an environment for my all- rounded growth.
Executive Summary
 TABLE OF CONTENTS

CONTENTS
PAGE No.

Chapter 1 INTRODUCTION 6-25

1.1 Introduction Of The Company

1.2 Company’s Milestones

1.3 Operations Of Company

1.4 Manufacturing Locations

Chapter 2 INDUSTRY PROFILE 26-35

2.1 Industry Profile

2.2 Macro-Economic Overview

2.3 Real Estate Scenario In India

2.4 Technological Environment

2.5 Issues Concerning In Real Estate

2.6 Political Environment

2.7 Government Initiatives

2.8 New Projects

________________________________________________________________

________

Chapter 3 RESEARCH METHODOLOGY 36-48

3.1 Objective Of The Study

3.2 Scope Of The Study

 3.3 Research Design

3.4 Data Collection Method

________________________________________________________________

________

Chapter 4 DATA ANALYSIS AND ITERPRETATION

4.1 Respondents Profile

________________________________________________________________

________

Chapter 5 CONCLUSION AND RECOMMENDATIONS

5.1 Conclusion

5.2 Limitations

5.3 Recommendations

________________________________________________________________

________

BIBLIOGRAPHY

ANNEXTURE
COMPANY PROFILE

BRIEF PROFILE OF IND SWIFT GROUP

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

Industry who has broaden its horizons by plucking profound & sparkling footprints
on multifarious diversified fronts, whilst going steadily and surely, scripting a
success story filled with enviable milestones and pioneering breakthroughs and
has subsequently emergent as a group with an annual turn over of 1000 Crore.

COMPANY HISTORY - IND-SWIFT

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

Chandigarh, India. It has been promoted by Ind-Swift Limited in joint venture with
the Punjab State Industrial Development Corporation Limited (PSIDC). The
group has established a strong reputation as innovators in the Indian
pharmaceutical industry.

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

manufacturing of Active Pharmaceutical Ingredients (API). Its strength in organic
synthetic chemistry resulted in the company emerging as the pioneer for a
number of products both in the National and International markets. As the
company built up vast skills in the area of research and development, quality
systems as well as matters relating to regulatory compliance, it began
establishing a presence in the highly regulated markets of the world.

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

respectable and dependable supplier of Bulk-Actives in more than 40 countries.
Not only are the company's plants built as per USFDA, the company employs
current Good Manufacturing Practices (cGMP) also, which are recognized and
accepted in the stringent regulated markets. This includes a responsible
commitment to the environment.
To leverage its quality commitment, the Company has drawn out a long term
strategy of emerging as a powerful force in the regulated markets as drugs worth
over US$ 80 billion goes off patent during this decade. Ind-Swift Laboratories Ltd.
reported a turnover of Rs. 1605.20 million and a profit after tax of Rs. 76.92
million in 2003-2004. The company's shares are listed on the Mumbai, National,
Ludhiana and Delhi stock exchanges. Ind-Swift Laboratories limited (ISLL) is
based at Chandigarh and is a part of Ind-Swift group.

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

formulation of injectables and opthalmic products at Panchkula, Dist. Ambala
(Haryana). It was incorporated as a limited company on 06.06.1986 and was
granted certificate of commencement of business on 15.12.1986. In July'89 the
Company got its project for manufacture of injectables and trading of
pharmaceutical products appraised from Haryana Financial Corporation (HFC)
which was implemented in December'90 for a total cost of 49.77 lakhs. The
company has been promoted by Shri Anil Kumar Jain, Shri Sanjiv Rai Mehta, Dr.
Gopal Munjal & Associates. The company is expanding its activities by setting up
facilities for manufacture of formulation (tablets and capsules).

Ind-Swift Laboratories Ltd. has informed that their Company has been awarded
the achievement award for the Best Performing Company in Category E by the
Express Pharma Pulse for the year 2004 Ind Swift Ltd has informed that the
Company has launches a new Marketing Division under the name 'Resurgence'
for Anesthesiology, Oncology and Surgery Segment

ORGANISATIONAL STRUCTURE-IND SWIFT GROUP

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

manufacturer of high growth multi segment pharmaceutical finished dosage
forms and API's (Active Pharmaceutical Ingredients).

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

art manufacturing facilities which are second to the none are duly certified and
approved by WHO GMP, spread over an area of 12, 00, 000 sq. ft. with
manufacturing capacities confirming to stringent TGA/MHRA approvals;
possessing an installed capacities of 3 billion units comprising tablets, capsules,
Ointments, Injectable, Liquids & Dry Syrup (all latest formulations with a
marketing network.

Company’s API section has spread over an area of 7 Lac sq. ft, carried out at 3
different state-of-th-art units approved by USFDA and E.U regulatory authorities
with a marketing network spread over in 40 countries viz. Europe/USA/Middle
East possessing 2 patented molecules with 11 molecules in offing It possesses
50% exports percentage. Ind Swift entered into bulk drugs with its own Research
and Development facility and laboratories at Derabassi. Later on, those units got
USFDA approval and got the process patents for Clarithromycin for US and allied
markets and further five more patent drugs await clearance for the moment. A
joint venture with Iran has also been signed for the manufacturing of
Clarithormycin with construction underway and will start operations by the end
2008. The company has offices and supplies pharma drugs not only in India but
overseas as well.

R & D (Research & Development)

Ind Swift is known for it's reverse engineering ability with highly focused R & D
capabilities (duly approved by Department of Science & Technology, Govt. of
India) and is equipped with state-of-the-art equipment, facilities and talented pool
of scientists and Researchers.

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

• A US patent for Claire OD, with a market size of US$ 300 million.
• Another patent for Fexofenadine ODT with a market size of US$ 2.5
billion.
• Development of 10 new molecules with a market size of US$ 6 billion.

Ind Swift's efforts and achievements in taste masking of macro ides was India's
first......... and remains the only feat of its kind in the country. The R &D
department is also involved in creating international opportunities and alliances
for CRAMS business, contributing significantly to the Company's profitability. It
also offers complete support to international partners for preparing and filing
dossiers for finished dosages. By taking giant strides on roads less traveled, Ind-
Swift has become one of India's fastest growing pharmaceutical companies.

Company’s R & D's Achievement

Its pioneering R & D efforts have led to the creation and introduction of
blockbuster drugs like:

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

estimated market size of US$ 12 billion.
• Nitazoxanide – a wonder, one of its kind anti-diarroheal with a market of
US$ 6 billion.
• Pioglitazone – an anti-diabetic drug ranked among the first five in its
Therapeutic segment.
• Arthrill – an herbal wonder for the treatment of Arthritis.
• Anaproct – an ayurvedic product providing relief from piles within 24 hours
with no allopathic cometitor.

Ind-Swift has strategic R&D and manufacturing alliances with companies in the
United Kingdom, Turkey and Iran.

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

Neurophen forte, a composition of Ibuprofen & Acetaminophen. Ind Swift is the
company to give this composition to the country for the first time. Another
formulation i.e. Suprox SR, a composition of Isoprene Hel, sustained release
tablets was first time launched in India in tablet form. Mouth dissolving tablets
technology was introduced for the first time in India by Ind Swift. The company
today stands second in the north in pharmaceutical sector.

It is an honour to add here that Company is among the top 500 fortune
companies of India and have been ranked at No. 35 by IMS/ORG in
Pharmaceutical industry & possess a portfolio of 650 products with presence in
high growth therapeutic segments of Cardiology, Diabetology, Anti depressant,
anti-allergic, Anti- infective, Neurology & Oncology with a nation wide distribution
network comprising 1200 marketing professional working with 12 marketing
divisions, 50 offices in India, 3000 super stockists and stockists.
Company’s sparkling footsteps on diversification front are as
under mentioned:-

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

name and style of “Ind Swift Infrastructures and developers Ltd, and has come
up with a multi crore project named “Regalia Towers”, of course a society with 2
bedroom /3 bedroom flats and penthouses owing a mystique which is exemplary
in itself which not only reflects a diversified transformative spell to infrastructures
front but a unique state of art with the best of specifications also. In
infrastructures, Ind Swift plans to be emergent with motels & Resorts project in
the upcoming phases.

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

acumen has also put a step in the field of publications also in the name and style
of Mansa Print & Publishers Ltd's which has hovered over the industry within a
very short span by coming up with Aluminum Division in 2007 wherein the
manufacturing & printing of various type of packaging material viz. Aluminium
collapsible tubes, mono cartons etc is undertaken and now will add a new feather
in ISL's cap by launching a separate unit for PE, Lami tubes and PET bottles. Not
only this it further proposes to come up with a stationary unit for which the
building has already been constructed. The total plan will increase Mansa's sale
by 200%.

Another project for Injunction moulding has also been proposed. Both these
plants have a total layout plan out of Rs. 40 crore.

Media & Publication: Ind Swift has focused up in media & publication sector
under the name “Ind Swift Communications Pvt. Ltd” with its illustrious and
infomercial journals as “Pharmabuzz”, “Trendz”, ADI (Drug Index), Agrovet and
further proposes to come up with General magazines and tabloids.

Software Development: Ind Swift has also entered into IT & software with
their initial projects of developing web portals, search engines optimizations,
website development, software & ERP systems development. Its initial portals
which are already on air are OTC mart.com, buysweethome.com, painting
&photographs.com, doctorsonline.com & ayurvedaherbs.com.

Company’s sparkling footsteps on diversification in Education

front are under-mentioned:-

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

plenteous private educational institutions cropping up in North India, having world
class infrastructure, faculty, laboratories and other facilities. To initiate with,
Company has instituted six months Industrial Training Courses in Pharmaceutical
Sciences, for Operator Level Training which has enabled the 10th or 10+2
students to start a career in the booming Pharma industry & until now company
has already trained and placed more than 400 students at Ind Swift which
Company feel contributes a lot to the skilled manpower starving industry.

Swift Fundamental Research Education: SFRE (Swift Fundamental

Research Education ) is a society made under the banner of Ind Swift which has
recently laid an another step on the diversification spree and has forayed up with
a Pharmacy college at Rajpura with the name & style of “Swift School of
Pharmacy”, and is a unique state of art with the best of specifications also. With
this new venture of IND SWIFT, Company has been ranked as the pioneers in
this part of the country having a solid pharmaceutical industrial background to
come up with company’s own Pharmacy & Nursing institute. The institute will be
operational from current session year 2008-2009 with an intake of 60 students in
the field of Pharmacy and Nursing each, in the first year by virtue of its high
resourcefulness and know-how and will provide quality education to one and all,
aspiring careers in the field of Pharmacy.

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

Management, Hotel Management, General Management, Schools of Dentistry,
Ayurveda Physiotherapy and Medical Technology and finally a Medical College
with its functioning operational by 2010-11 under the budget of Rs. 250 Crore
with a specific target on Medical Tourism.
Domestic Marketing: The company's new division “diagnosis” dealing in
medical equipments & devices thereby focusing personal health care was
launched in December 2007 and has reflected promising performance & is
growing leaps and bounds from the first month of its launch which has given
utmost confidence to the company to get the aggrandized sales and contribution
not in the current year but in the forthcoming years as well. Not only this, the
division projects to achieve a business objective of 10 crores with impressive
contribution to ISL and possesses a strategy of adding up few other specialty
products in the existing range of personal health care & Academic Body model
series.

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

absolutely new concept with outsourced marketing and has proved out to be an
individual profit center.

Apart from struggling uphill for the current range of products company’s Ethical
marketing have introduced those products during the year which are monopolistic
in nature viz. Cirrholiv which has proved out to be a remedy in Hepatitis and
other liver disorders. Other brands introduced by company during the year are
Topclav 625, Emtee 25 and Timcol Eye Drops.

In Generics, Company emerged as the 2nd rank Pharma Generic company and
has attained the fame of featuring its few brands (Amyclox, Swimox, Oxo, Swiflox
and Cafzone (already achieving the sales growth over 25 crore) as the top
brands in Generics. Company's brand Swimox has been enlisted among leading
brands in ORG IMS and Amyclox leads the que among top 300 brands of the
industry.

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

ACHIEVEMENTS OF COMPANY

In 2000 company set up a unique R&D centre having facilities for bio-
equivalence studies, clinical trials for Ist, IInd and IIIrd phase, and toxicologial
studies.

In 2001 the Company has launched two new divisions, Super Speciality Division
and Healthcare Division. These divisions have launched 20 products in the
fastest growing segments viz. Diabetology, Neurology, Cardiology, Anti-AIDS,
Anti-Viral, etc.

In 2002 Company has informed that it has restructured its Board by inducting
three professional Directors on its Board. The three new Directors are Dr R S
Bedi, Dr J K Kakkar & Mr K M S Nambiar. The Company's Board is gradually
shifting from a closely held Board to professionally held Board.

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

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

• Allottement of 1227375 equity shares to Promoters & other Bodies

corporates upon the conversion of their preference shares into equity
shares.
 • Out come of board meeting Issuance of GDRs aggregating up to US $ 20
million Preferential issue of up to 1.6 million equity shares at a premium of
Rs 80 per share to the promoters as well as other investors Issuance of
350000 zero coupon fully convertible warrants to the promoters Increase
in Authorised share capital of the company from Rs 100 million to Rs 150
million Delisting of equity shares from Ahmedabad, Delhi & Jaipur Stock
Exchanges.

In 2004 Company Allotted 3,50,000 zero coupon warrants to the promoters of the
company convertible into equity shares on or before March 31, 2004.

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

convertible into equity shares on or before March 31, 2004.
• Allotment of 3,50,000 zero coupon warrants to the promoters of the
company convertible into equity shares at any time within 18 months but
not before April 1, 2004.
• Ind Swift Ltd ties up with Lupin Ltd for a Co-marketing pact to launch
Nitazoxanide, an anti-diarrhoeal / anti-helmintic drug for the first time in
India under the brand name Netazox and Nizonide respectively
• Ind-Swift Laboratories Ltd. has informed that their Company has been
awarded the achievement award for the Best Performing Company in
Category E by the Express Pharma Pulse for the year 2004
• Ind Swift Ltd has informed that the Company has launches a new
Marketing Division under the name 'Resurgence' for Anesthesiology,
Oncology and Surgery Segment.

RESEARCH & DEVELOPMENT

Looking at the current scenario where the pharmaceutical majors are engaged in
the advancement of R & D, Company has been competent enough to work out
on non infringing processes, Novel Drug Delivery Systems, dossiers, stability
data profiling, conceptualization of new molecules (and therefore a nmber of
product combination have been developed and are ready to be launched by
company’s marketing divisions). Company's R&D is involved in creating
international opportunities and alliances for CRAMS (specially contract
Research) to make it contribute 30% of profits. Till date two major contracts were
signed an have been delivered. Company is hopeful to attain more contracts on
product development and stability data profiling. Apart from this, Company is
applying invincible efforts to get approvals for a Bio-equivalence centre which will
further strengthen the basket of R&D. To strengthen the CRAMS business to the
exquisite level, company is tying up with various academic institutes.

By virtue of the hard endeavors of R&D all through the year, unique
combinations/NDDS of single molecule are around the corner and awaiting
launch by this year. Apart from this, R&D is emphasizing on a major area which
is cost Reduction. More than 5% of total revenues have been planned to spend
on the company's R&D and the same will be continued in the forthcoming years
as well.

NEW MANUFACTURING FACILITIES:

Apart from its existing plants in tax exempted zone of J&K and Baddi, duly
certified and approved by WHO GMP, company has successfully commissioned
another Manufacturing facility at the same tax exempted zone and green plains
of Baddi during the year. This new manufacturing facility inaugurated in August
2007, is for soft Gelatin Encapsulation with an annual capacity of 36 Crore and
will not only make us almost self sufficient in soft gelatin manufacturing but will
unquestionably dedicated a bit of spare capacities for contract manufacturing as
well.

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

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

These new facilities will augment the company's efforts to tap the regulated
markets and strengthen the company's growing CRAMS business which is
expected to accounts for 30-40% of its bottom line over the next four years.
Company has been certified for ISO 9000:2001 also during the year.
Excellence in Manufacturing

A unique and unmatched excellence in pharmaceuticals manufacturing with

highest reliance of product quality attributes is our corporate strength. Ind swift's
multipurpose, multilocation manufacturing set-ups are spread across the lush-
green plains of northern Indian states viz Himachal Pradesh, Haryana and
Jammu and Kashmir. The locations are environmental pollution free and together
offer approx. 5,00,000 sq. ft of newly constructed plants with state of the art
facilities for manufacturing all types of dosage forms.

The facilities are built according to current guidelines of USFDA, MHRA, EU, and
WHO, and accreditations with ISO 14000 series standard.
INDUSTRY PROFILE

Real Estate Industry in India:

The size of the real estate industry in India is estimated by FICCI, to be around
US$ 12 billion. This figure is growing at a pace of 30% for the last few years.
Almost 80 % of real estate developed in India, is residential space and the rest
comprise office, shopping malls, hotels and hospitals. This double-digit growth is
mainly attributed to the off shoring business, including high-end technology
consulting, call centres and software programming houses which in 2003-04, is
estimated to have accounted for more than 10 million square feet of real estate
development. This is the ideal time to invest in the country as policy makers have
begun to emphasize on developing adequate infrastructure for the country. Real
estate companies would also do well to maximize their own performance and
operational efficiency.

The future of the real estate sector in India is going to be guided by two important
factors, namely suitable amendments in the Foreign Direct Investment (FDI)
guidelines in townships, housing, built-up infrastructure and construction –
development projects as well as abolition of Service Tax on the construction
industry especially the housing sector. Conversely, if the abolition per se is not
possible then drastic modifications in the existing Service Tax norms is the need
of the hour. This Sector is already overburdened with taxes; any further
imposition of taxes in any form would adversely affect the growth of this sector of
the economy.

The importance of the Real Estate sector, as an engine of the nation’s growth,
can be gauged from the fact that it is the second largest employer next only to
agriculture and its size is close to US $ 12 billion and grows at about 30% per
annum. Five per cent of the country’s GDP is contributed by the housing sector.
In the next three or four or five years this contribution to the GDP is expected to
rise to 6%. The Real Estate Industry has significant linkages with several other
sectors of the economy and over 250 associated industries.

One Rupee invested in this sector results in 78 paise being added to the GDP of
the State. A unit increase in expenditure in this sector has a multiplier effect and
the capacity to generate income as high as five times. If the economy grows at
the rate of 10% the housing sector has the capacity to grow at 14% and generate
3.2 million new jobs over a decade.

Furthermore, this sector has witnessed a spurt in demand not just in residential
property but also in commercial property. A fast growing area is the I.T. and I.T.-
enabled services along with the BPO boom. Estimates worked out show that 42
million sq. ft. of space will be required every year till 2008, only in I.T. and I.T. -
enabled services especially in the cities like Bangalore, Chennai, Hyderabad and
Pune, which is also now gradually shifting to North India.

The drop in interest rates from 11.5% to 9.25% combined with a reduction of
15% in real estate rates has resulted in an increase in purchasing power of 33%.
The same EMI would, at a lower interest rate provide for a higher loan. The
higher loan used to purchase a home at a lower price would enable the customer
to purchase more square feet.

Real estate involves then purchase, sale, and development of land, residential
and non-residential buildings. The main players in the real estate market are the
landlords, developers, builders, real estate agents, tenants, buyers etc. The
activities of the real estate sector encompass the housing and construction
sectors also.

Commercial Real Estate

The demand for new office space in India has grown from an estimated 3.9
million sq. ft in 1998 to over 16 million sq. ft in 2004-05. 70% of the demand for
office space in India is driven by over 7,000 Indian IT and ITES firms and 15% by
financial service providers and the pharmaceutical sector. Cumulative demand
for office space in India over the next two years (2006-08) is estimated to be in
excess of 45 million sq. ft. The industrial sector grew at the rate of 10.8 percent in
2006-07 out of which a growth of 11.8 percent was seen by the manufacturing
sector.

The Indian IT-ITES Industry, estimated at USD 36.3 billion in 2006 has grown at
a CAGR of 36% over the last decade and by 2008, is expected to account for
over 7% of India‘s GDP and 30% of foreign exchange inflows. In 2005 alone,
IT/ITES sector absorbed a total of approx 30 million sq. ft and is estimated to
generate a demand of 150 million sq. ft. of space across major cities by 2010.
South Indian cities like Bangalore, Chennai and Hyderabad along with NCR
(National Capital Region) continue to attract the major share of IT/ITES and
business investment. However, secondary cities, like Pune, Chandigarh, Indore,
Kochi and Kolkata are now emerging as the new preferred destinations for these
companies due to their cost and infrastructure advantages.

Residential Real Estate

The residential property market in India constitutes almost 75% of the real estate
market in terms of value. Low per capita housing stock, rising disposable income
coupled with easy availability of finance from the housing finance companies and
banks are driving demand in this sector. Also, Average age of housing loan
borrowers has decreased to 30- 35 years from 40- 45 years a few years ago,
indicating a younger buying threshold. The housing sector is currently growing at
30-35% per annum.

A proportion of demand is also being driven from investors who view housing as
an attractive investment option as compared to mutual funds and stocks. The
demand for housing is geographically widespread with townships being built in
both the metros and the tier II and III cities. In India, there is a housing shortage
of 19.4 million units out of which 6.7 millionaire in urban areas alone. This
translates into very high opportunities for investors in the residential sector.

Rental Trends in India

Recent trends of rental properties in
India are conspicuous by the
immense potential that is being
realized today. Rental values in cities
like Delhi and outskirts are witnessing
an increase of 20-25%. Real estate
agents are devoting themselves to
negotiations for rented homes than
ever. Though the interest rates on
home loans, continued tax
exemptions on such prompts people
to buy property, those with the ability
to buy a flat among the middle-class
are thinking twice.
In residential segment, the capital value or cost of flats has almost doubled in
cities like Gurgaon where prices went up to Rs. 45 lakhs from Rs. 15 lakhs a
couple of years back. The demand for more capital appreciation in the wake of
rising prices coupled with home loan rate hike has dampened the buying spirit.
This has in ways propelled demand for rental property in India. Increased
demand for independent houses or paying guests occurs mainly in the metros
like Delhi, Gurgaon, and Mumbai etc. where the corporate sectors rent
independent houses for their senior executives. A paying guest or PG
accommodation in India is a convenient arrangement. Even PG hostels and
working women’s hostels, are considered safe and can be availed of on an
individual or sharing basis mean big business.

The real estate rental trends in commercial sector are momentous as the key
tendency among the investors is to rent a commercial space instead of buying. It
will facilitate low risk and less worry on maintenance. Commercial rentals
including corporate office space, BPO spaces, mall space, shops and
showrooms are an integral part of the commercial rentals in India. Buying good
space in high quality development and leasing it to a good brand is a wise
investment decision. Usually, commercial lease agreements specify a 15%
escalation in the real estate rental in every three years which is a good enough
yield. For those considering regular rental returns rather than capital
appreciation, mall space 246 International Research Journal of Finance and
Economics - Issue 24 (2009) has the distinction to be an excellent option. It gives
returns higher than that received with office space and much higher than the
rental returns from residential space.

Retail Real Estate

The Retail industry in India continues to be dominated by individual small format

stores with floor space of less than 500 sq.ft. Total number of retail outlets is
estimated to be around 12 -15 million, indicating a retail density of 12-14 outlets
per 1,000 people, which is one of the highest in the world. Scope Of Real Estate
And Retail In Ahmedabad 16 Globsyn Business School – Ahmedabad.

The Indian retail market, which is the fifth largest retail destination globally, was
ranked second after Vietnam as the most attractive emerging market destination
for investment in the retail sector. Organised retail segment would see an
investment of USD 70 billion by 2010. By 2015, the retail sector is projected to
overtake the USD 650 billion mark, and organised retail will cross the USD 130
billion mark. The consumer spending in India has increased by an impressive 75
per cent in the last four years and will quadruple in the next 20 years. Of the 12
million retail outlets present in the country, nearly five million sell food and related
products. Mall space, from a meagre one million square feet in 2002, is expected
to touch an estimated 35 million square feet by end 2008 in the top seven cities
in India. At a time when the Indian consumer space is undergoing a
metamorphosis, with increasing spending power and changing purchase habits,
consumer space is getting slowly but surely better defined.
Hospitality Real Estate

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

Special Economic Zones

The upcoming realty trend in India after multiplexes and mega housing projects
are the Special Economic Zones (SEZ). Currently, 28 SEZs are operational in the
country, including those converted from Export Processing Zones (EPZ) to SEZ.
Approx. 189 proposals have already been granted approval since the SEZ Act,
2005 came into force. These include SEZs in various segments such as multi-
product, Information Technology, Bio-technology, Gems and Jewellery, Textiles
and technology intensive industries. Both developers and corporate have shown
tremendous interest in developing SEZs in the country. Reliance Industries, for
instance, is planning a 25,000 acre SEZ in Gurgaon and is also the main partner
in twin SEZs coming up at Navi Mumbai and Maha Mumbai, with a combined
size of 35,000 acres. The Adani group is also Scope Of Real Estate And Retail In
Ahmedabad 17 Globsyn Business School - Ahmedabad setting up an SEZ at
Mundra, covering 30,000-35,000 acres, and it proposes to invest Rs 7,300 core
on infrastructure. Other corporate who are in process of setting up SEZs include
TCG Refineries of the Chatterjee Group (SEZ refinery at Haldia in West Bengal),
Suzlon Infrastructure (hi-tech engineering products and services near
Coimbatore in Tamil Nadu, Udupi in Karnataka and Vadodara in Gujarat),
Hindalco (aluminium SEZ at Sambalpur in Orissa), Genpact (IT SEZ at
Bhubaneshwar in Orissa, Jaipur in Rajasthan and Bhopal in Madhya Pradesh),
Vedanta Alumina (aluminium SEZ at Orissa). Seeking the permission for SEZs is
also a number of real estate developers, including DLF, Ansals, Omaxe,
Parsvnath, Shipra Estate and Sunny Vista Realtors.
ECONOMIC
ENVIRONMENT
Current Scenario

The real estate sector in the country is one of great importance. According to the
report of the Technical Group on Estimation of Housing Shortage, an estimated
shortage of 26.53 million houses during the Eleventh Five Year Plan (2007-12)
provides a big investment opportunity.

India leads the pack of top real estate investment markets in Asia for 2010,
according to a study by PricewaterhouseCoopers (PwC) and Urban Land
Institute, a global non-profit education and research institute, released in
December 2009. The report, which provides an outlook on Asia-Pacific real
estate investment and development trends, points out that India, in particular
Mumbai and Delhi, are good real estate investment destinations. Residential
properties are viewed as more promising than other sectors. While, Mumbai,
Delhi and Bangalore top the pack in the hotel 'buy' prospects as well.

The study is based on the opinions of over 270 international real estate
professionals, including investors, developers, property company
representatives, lenders, brokers and consultants.
According to the data released by the Department of Industrial Policy and
Promotion (DIPP), housing and real estate sector including cineplex, multiplex,
integrated townships and commercial complexes etc, attracted a cumulative
foreign direct investment (FDI) worth US$ 8.4 billion from April 2000 to March
2010 wherein the real estate and the housing sector witnessed FDI amounting
US$ 2.8 billion in the fiscal year 2009-10.

Since the sales of residential properties are diminishing gradually these days, it is
expected that the real estate companies will experience decline in the first
quarter of financial year 2010-11. However, it cannot be ignored that the office
market is picking up with the economy.
As per the data collected by leading stock brokerages show, it is expected that in
the June quarter, the realty companies will undergo around a 20% growth in the
net profit and a growth of 38-40% in net sales. As per the data of last year, there
had been a net profit of over 80% which certainly brings the conclusion that
market has experienced a decline in sales and profit.

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

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

For instance, the gross margins of DLF were 49% and had a growth of only 4%.
Similarly, Unitech’s net profits had a growth of just 1%.

Future Scenario

Indian real estate companies have picked up really fast in the last few years. As
per recent Indian Real Estate research, the average growth rate returns is 30%,
which tells the tale of this booming industry. Latest Real estate research India
has estimated a revenue increase to $102 billion from $14 billion in the next
decade. As per real estate studies India, there has been an increase in the mass
consumption, the trends are changing the consumption pattern of luxury goods
and corporate houses with great purchasing power are also entering into the
retail field of real estate.

The real estate market in India is yet in a nascent stage and the scope is simply
unlimited. It does not resemble a bubble that will burst. An unhindered growth for
the next twenty years is almost sure. This is because the outsourcing business in
India is going in great guns and this entails a huge demand for commercial
buildings and urban housing besides improvement in infrastructure.
The organised retail market in India is also accelerating with players like
WalMart, Bharti, Reliance etc. looking forward to make a foray thus stepping up
the demand for real estate.

According to former Planning Commission Advisor Tarun Das, a price index for
the housing market to track price movement must be incorporated. The
government must ensure that there is no shortage of funds. Sebi's (Securities
Exchange Board of India) recent harbinger of permitting real estate mutual funds
in both private and public sector will go a long way in attracting funds from small
investors who emphasize on certain return. Another impediment that can be
eased on the discretion of government is the existing tax laws and other complex
regulations relating to multidimensional real estates such as industrial parks and
SEZs (Special Economic Zone). RITES (Real Estate Investment Trusts) of the
type introduced in U.S.,U.K. and Germany should be imitated and explored.

New Projects

• Shristi Infrastructure Development Corporation will invest US$ 444.7

million over the next three years in seven small cities in West Bengal,
Tripura and Rajasthan. The money would be used to build integrated
townships, healthcare facilities, hospitality and sports facilities, retail malls,
logistics hubs and commercial and residential complexes.
• Realty major Ansal Properties & Infrastructure Ltd plans to invest about
US$ 330.8 million over the next three years on expansion of its existing
integrated townships and to develop a group housing project in Haryana
• Integrated property development and asset management company, Vision
India Real Estate Pvt Ltd, is planning to develop logistics parks in
Bengaluru and Chennai, with an outlay of US$ 110 million
 • Tata Housing is planning to launch about 10 new residential projects in
both affordable and luxury segments in 2010-11, with an investment of
about US$ 268.9 million along with its partners
• Vision India Real Estate, a closely-held business group in the US, is
investing US$ 5 million in Gem Group’s upcoming residential project in
Chennai. This will be the first joint development project for the US
Company that is proposing to invest US$ 100 to US$ 200 million over the
next three years on projects, especially in the logistics arena.
• Real estate firm Supertech will invest US$ 880.5 million for developing 15
realty projects across North India in the next three years.

Conservative Real Estate Sector in a Growth Economy

With signs of economic stabilization and moderate global economic growth

forecasted for 2009-10 and beyond, property markets in India have exhibited
signs of revival from the second quarter of 2009. Attracted by correcting values,
investors and end-users alike have begun to reconsider the market, accelerating
activity in the Indian realty sector. With return of liquidity in recent months via
FDI, QIP’s, non-core asset sales and banks reconsidering lending to the realty
sector, cash flows of realty players have also improved. Most banks have gone
for aggressive interest rates to capture the market share. However, players are
still cautious in their approach and rightly so. Although overall demand for real
estate saw a decline in 2009, an improving economy backed by strong
fundamentals, suggests that the sector is likely to see a demand growth in the
long-term.

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

the continuing effect of the stimulus package unveiled by the government in the
latter half of 2008-2009. The current growth of real estate can be attributed to
comfortable interest rates and launch of many projects in the affordable segment
coupled with positive buyer sentiments. The price correction has been good for
the industry, and organizations are expected to manage tightly and efficiently.

There are ample signs to signify a more positive outcome for 2010. Experts
believe that real estate in India is one sector that is backed by so much internal
demand; it is not possible for it to slump entirely. The strategies adopted and
executed by real estate players would differentiate who would survive and
flourish.

REAL ESTATE IN CHANDIGARH

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

The dawn of 2010 was wrapped in the bright
hues of optimism and revival for the real
estate sector in the country. The ominous
clouds of slowdown of the past 18 months
were surely revealing their silver lining for this
sector. After the first quarter the residential
market seems to be recovering fast and there
is a flurry of activity in metros as well as in
Tier II and III cities all over the country among the buyers as well as developers.
Several new housing projects have been launched keeping the steep demand in
mind. Chandigarh has been amongst the first few planned cities of India and it is
also the state capital of both Punjab and Haryana. This has made this city a vital
area for expatriates, diplomats along with becoming a nucleus of NRI's. Since
Chandigarh had been a well planned city, all the constructions here had been at
par with environmental norms. Apart from this pollution and unhygienic living
conditions are not entertained and all the builders here had to adhere to these
factors.
Chandigarh properties have been witnessing tremendous growth and this
happened in spite of restrictions on the construction here. Chandigarh real estate
is witnessing testing times. On one hand, there are more investments pouring in
the segment and on the other side property buyers and sellers are not very
enthusiastic about property transactions.

The overall, economic recession has caused stagnation in the country's real
estate segment. Chandigarh's property segment, too, is witnessing a similar
trend. Property brokers in Chandigarh say that real estate values have
stagnated. Property prices for plots in suburban areas like Baltana and Kharar
have stooped down to as much as Rs 100 - 200 per sq yard. This is almost 20%
decline in prices when compared to corresponding quarter last year.

Property sellers in Chandigarh see this as a temporary phase and are holding on
to their land assets. They hope that real estate prices will increase in next six
months and this is when they will make profits. Property buyers, however, say
that Chandigarh Property Prices are nominal still. They have few choices as
there are not many sellers in the markets as of now.

Recent developments in Chandigarh properties segment are worth noticing.

Delhi-based developer Parsvnath has bought 38% stake in Sabeer Bhatia's Nano
City Project. Nano City is a commercial and residential project in Chandigarh and
will be completed by 2010. Market sources say that Bhatia is already scouting IT
clients to open offices in his Nano City. This will bring more employment, and
thus many more property users and home seekers to Chandigarh.

The booming real estate sector here has provided for benefits for both potential
buyers and also for the property developers. The Chandigarh real estate market
is expected to grow with the rise of demands in the northern sector. Chandigarh
has also been the hub to some IT sectors and this industry is also expected to
grow here. The property rates for the commercial sectors are expected to grow, if
more multinational companies set up their bases here. Expansion of the city to
districts and other areas, have given more scope for expansion of the real estate
sector and more options for buyers.

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

other north-Indian cities. Like any other city, Chandigarh too is faced with the
constant expansion of the city limits. However, this expansion doesn't come at
the cost of present infrastructure. Hence the real estate prospects of the city
have never been affected by these developments. Now, the Union Territory is
bracing up its infrastructure to keep pace with the changing times.

The city has witnessed some promising projects from leading real estate
developers like DLF, Parsvnath, Omaxe, Ansals API and Emaar MGF. The
consumer base for most of the private builders is the urban-rich population or the
NRIs. However, this situation is changing now. The Chandigarh Housing Board
(CHB), the chief civic authority responsible for all the housing related activities in
the region, is concentrating on mass housing projects. This is in consortium with
the new housing policy which lays emphasis on providing affordable housing,
considering the middle-income group as the potential user base. The Board
recently announced the construction of around 13,000 new housing units under
different categories in the city. The CHB has started construction of 160
houses in Sector-26 East (Bapu Dham) for low-income households. About
8,000 houses will be built in Dhanas and Maloya-I for the middle income group.
Another 2,260 houses have been planned on 42 acres in Sector 63 under a
general housing scheme. Besides this, 4,700 houses have been announced on
90 acres of land in Sectors 53, 54 and 55.

Along with this, the government agencies are also promoting small time local
property developers to institute projects in the region. The Amarisis, Venus
group, Kwality buildtech are prominent among these players. Most of the
projects by such group are in affordable category. All in all, it seems that
Chandigarh will soon become a dream destination for the middle-income group.
The city promises affordable accommodation and a good quality of life to its
citizens. Withstanding to its reputation of India's first planned urban development;
the city of Chandigarh is popular as a sophisticated property market of the
northern India. This capital city of Punjab, a state which enjoys one of the highest
per capita incomes in the country, also holds the distinction of achieving a year-
on-year growth rate of 7.91 per cent since year 2000. The city has been
positioned at number four among the fastest growing cities in India, in the recent
report released by the International Institute for Environment and Development.

Definitely, the flourishing local economy of Chandigarh augurs well for nearly all
the segments of real estate i.e. residential, retail, and commercial, are witnessing
positive trends. Industry veterans also claim that Chandigarh real estate is largely
an investor driven market, and the segment is far more active than the end-user
segment. Decent connectivity, low operational costs, and sufficient availability of
land are some of the factors that make Chandigarh properties an attractive
Investment instrument.

Growth Engines:
Lately, Chandigarh real estate caught the attention of IT and ITeS
companies with the development of 375 acre Chandigarh Technology Park
(CTP) at Manimajra, north-east part of Chandigarh, and IT Park in Mohali. The
projects brought state-of-the-art infrastructure and facilities equivalent to those
available in the cyber cities of Bangalore and Hyderabad. Furthermore, DLF has
set up its Infocity within the CTP zone, in view of extending world-class facilities
to these techno-giants. Meanwhile, the capital values and rentals in the
commercial property segment have been consistently rising in the past 3-years,
though a bit of slowdown is noticed in the residential real estate, due to
oversupply.
Property Values and Rentals:
With the foray of IT and ITeS majors in Chandigarh, commercial properties
offering Grade A office space to the clients are in demand. At present, rentals
at Sector 19 are floating at Rs 90 per sq. ft a month, while the same hovers
from Rs 20 to Rs 35 at Sector no. 17 and 22. The capital values at Sector 17
and 19 are recorded at Rs 10-11,000 per sq. ft. the same, however, are quite
moderate at Rs 6-7 per sq. ft, at Sector 22.

Rental & Capital Values

Knight Frank reports that the prime residential locations in Chandigarh, which
include sectors 4 to 10, command the highest values, ranging between Rs.5,000-
7,750/sq.ft. Other sectors command a price of Rs.3,300-4,400/sq.ft. With
developments on a fast growth trajectory, the demand for housing is expected to
rise in the region. Currently, Zirakpur has a price range of Rs.2,200 -2,750/sq.ft.
for plots and Rs.2,300-2,700/sq.ft. for flats while residential developments in
Dera Bassi have capital values of Rs.1,300-2,000 /sq.ft.
Retail space supply in Chandigarh is restricted due to strict building bye-laws.
Quoted lease rentals are around Rs.120-180/sq.ft. per month for the ground floor
and Rs.25-40/sq.ft. per month for first floor. Within Chandigarh, two new projects
are under construction currently; a mall-cum-multiplex in Sector-17 and another
with a built up area of around 150,000 sq.ft. in the industrial area. Grade-A
developments comprising malls are coming up in Zirakpur, Dera Bassi and
Mohali, under mega projects scheme. These projects offer retail space at a rate
of Rs.90-180/sq.ft. per month. However, with changing trends, a number of
hotels in mall developments are also in the pipeline.
On the commercial front, all the sectors in Chandigarh have common SCO
format commanding a capital value of around Rs.6,500-10,000/sq.ft. And with
lease rentals of Rs.25-35/sq.ft. per month. The only exception is Sector-9, the
centre for banking, financial and telecom services. The rentals here average to
about Rs.90/sq.ft. per month while the capital values are approximately
Rs.9,750/sq.ft.
In the last six months, there has been a correction in the residential property
market in Chandigarh. With correction in the market, stabilization is envisaged
which will encourage transaction rate.

MAJOR PLAYERS
DLF

The DLF Group was founded in 1946. We developed some of the first residential
colonies in Delhi such as Krishna Nagar in East Delhi, which was completed in
1949. It has a 62-year track record of sustained growth. Since then we have
been responsible for the development of many of Delhi’s other well known urban
colonies, including South Extension, Greater Kailash, Kailash Colony and Hauz
Khas. The first and foremost project of DLF was the late 1940s project of the
development of 21 urban colonies in and around Delhi.

DLF City is spread over 3,000 acres in Gurgaon. The company has
approximately 238 msf of completed development and 423 msf of planned
projects, and has pan India presence across 30 cities. DLF has 216 msf of
developed area under homes and residential plots. The development business at
present has 391 msf of development potential with 25 msf of projects under
construction. The company has land resource of 92 msf for office and retail
development, with 17 msf of projects under construction. it has a development
potential of 12 msf for its hotel business.
Other business
Wind Power Projects by DLF

DLF group is the largest owner of wind power plants in India with an installed
capacity of 228.7 MW. DLF has initiated its wind power portfolio in March 2008.
Currently the group owns wind farms in the states of Gujarat (150 MW),
Rajasthan (34.5 MW), Tamil nadu (33MW), and Karnataka (11.2 MW). These
projects reduce about 4.7 tonne of CO2 emissions on annual basis. The wind
power projects in the states of Gujarat and Karnataka are already registered for
carbon credits at UNFCCC and generating over 3 Lakh CERs (Certified Emission
Reductions) annually.

Project Locations

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

2. 11.2 MW wind power project in Gadag, Karnataka.
3. 33 MW wind power project in Osisan and Ratan Ka Baas, Rajasthan.
4. 34.5 MW wind power project in Elavanthi and Panapatti, Tamilnadu.

K. RAHEJA
Established in 1956, the Mumbai-based K. Raheja Corp. has made a successful
transition from a real estate company to a business corporation, with a diverse
product portfolio. C. L. Raheja is the Chairperson of K. Raheja Corp.

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

conglomerate. The group has been in its core business of construction and
property development for over 5 decades now. K.Raheja Constructions has
successfully completed about 2000 projects within India of Residential, Industrial
and Commercial kind. Over its 40 plus years of experience in this fields, the
group has also pioneered the concept of self-sufficient, self contained 'township
development'. Amongst all its activities, the Group has never left the society out
of focus, to which it belongs. It has shouldered the responsibility to provide
education and improve health standards of members of the society through
Educational Institutes and Hospitals.

The Group has also joined hands with APIIC, to develop an IT Park at
Cyberabad, Hyderabad. The upcoming facility with built up area of 4.5 million sq.
ft. will house the IT and ITES industry.
K.Raheja Corp a leading real estate developer in the country has chosen to be at
the forefront of being environmentally responsible albeit volantarily, thereby
paving a way for others to follow. The company has decided to have their
projects as LEED [Leadership in Energy and Environmental Design ] certified
GREEN BUILDINGS. This in turn would bring down the annual energy
consumption of any building by 15-20%.

Parsvnath

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

India. Parsvnath Developers Limited is also the first real estate developer to be
certified to Integrated Management Systems (IMS) comprising of ISO 9001:2000,
ISO 14001:2004 and OHSAS 18001:1999 certification by the Italy-based, Global
Certification Organization, RINA group.

Business Areas

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

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

Major Projects

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

townships, group housing, shopping malls, it parks, commercial complexes,
hotels and SEZ projects across all industry verticals in India. The projects are
estimated to cover over 200 million square feet across all real estate verticals of
India.

Omaxe

Established in 1987 as Omaxe Builders to undertake civil construction and

contracting business.

Business Areas

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

townships, group housing, shopping malls, multiplexes, hotels, resorts, IT parks,
biotech parks and SEZs. Some of Omaxe Group's major commercial ventures
include Omaxe Plaza, wedding mall and House 2 Home (Gurgaon), wedding mall
(Patiala), Omaxe Plaza (Ludhiana), Omaxe Arcade and NRI City Centre (Greater
Noida), Park Plaza
(Indirapuram), wedding mall (Agra), and Citadel and Pearls Omaxe (Delhi).

Major Projects

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

residential and 2 commercial, covering approximately 4.2 million square feet of
area, valued at Rs.360 Crore, with all on time deliveries. At present, the company
has over 100 million square feet of area under development, with projects
spreading across 30 towns in nine states of India.

TECHNOLOGICAL
ENVIRONMENT
Issues Concerning to the Real Estate Sector
With the rapid growth in real estate, some challenges may emerge in the way of
taking India to the higher growth trajectory.

 Regional reach of existing players

Most of the real estate developers in India have regional focus where the
conditions are most suitable to them. There are very few players in the country
having a pan-India presence. The challenge for real estate developers is to move
ahead in the value chain and expand in other areas of the country as the boom in
the real estate encompasses almost the entire country.

 Mushrooming of smaller players

The recent real estate boom has seen players without track record and
credibility. In the absence of regulatory framework, these new comers are
mushrooming and affecting the credibility and reliability of the system. In
expectations of higher profits in short run, most of the developers are coming
forth with significant expansion plans irrespective of their historical performances
and size of the projects undertaken. Under the circumstances, the strengths of
the concerned company to manage the increased size and geographical spread,
their ability to execute projects within time and cost and ability to arrange capital
are the important issues which need to be addressed

 Majority of market belonging to unorganised segment

The Indian real estate sector is highly fragmented with the unorganised segment
comprising of small builders and contractors accounting for a majority of the
housing units constructed. As a result, there is not a large degree of
transparency in sharing of data across the industry.

 Soaring land prices

Soaring land prices and price resistance from buyers are narrowing investors’
margins significantly. The land prices have risen tremendously since the past two
years forcing many real estate developers to change their strategy of rapid
expansion to other geographies. For example, around two years back, land cost
as a percentage of total project cost was around 25-30% in tier I cities, which has
now increased to around 60-65% in recent times.

 Increasing raw material prices

Construction activities are often funded by the client, which makes cash
advances at different stages of construction. In other words, the total amount of
revenue from a project is predetermined and the realisation of this revenue is
scattered across the period of construction. A significant challenge that real
estate developers face is dealing with adverse movements in costs. The real
estate sector is dependent on a number of raw materials, such as cement, steel,
bricks, wood, sand, gravel and paints. As the revenues from sale of units are
predetermined, adverse price changes in any of the raw materials directly affect
the bottom lines of developers.

 Appreciating Rupee

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

rupee severely hurts exporters and IT companies. Further appreciation of rupee
from the current levels will see topline as well as bottomline of IT companies
nosedive sharply. These might force IT companies to put on hold their expansion
plans thus putting pressure on demand for commercial as well as residential
space.

 Interest rates

One of the main drivers of the growth in demand for housing units is the
availability of financing at low rates. Interest rates however have shown signs of
increasing in recent months and most of the leading financial institutions have
recently raised interest rates on housing loans. This trend of rising interest rates
could dampen growth in demand for housing units. Rising interest rates have
impacted the installment to income ratio in a big way especially the advances
which were floated about a year back. After the recent hikes in home loan rates,
financing institutions are devising ways for smooth recoveries of passed-on
costs. This, inter alia, includes increasing the tenure of Equated Monthly
Installments for existing customers, acombination of prepayment and staggered
differential payments, etc. Though few banks have reduced their rates on
housing loans in the past one month the rates are still higher to have any
substantial positive impact on the real estate sector. The Government is working
on a plan to offer housing loan to urban poor at a subsidized rate of around 7%
per annum. The Government may offer subsidized rate for loans up to
Rs150,000 for 5-7 year period. The Government may consider an easy financing
scheme for the rural population as well at a later stage.

 Regulatory opaqueness

Real estate demand in India is good however several regulatory hurdles exist.
For example the Land Ceiling Act in various states lead to problems in
consolidation of land banks and this in turn leads to routing of numerous
transactions through shell companies. Significant Stamp Duty, Registration
Charges and Capital Gain Taxes lead to high incidence of cash transactions.
Similarly, there are ownership issues because of too little computerization of land
titles. This has lead to transparency and disclosures related issues as also
corporate governance issues by the real estate companies as well as the
financers. Improvement in regulatory framework is required with respect to
modifications in antiquated land laws, duty rationalization, single window
clearance and computerization of land records, setting up of minimum quality
standards of registration of builders, setting up of reliable industry wide database,
adoption of uniform valuation practices and improvement in accounting quality.
All these issues will go a long way in building mutual trusts amongst the real
estate community. The concerns continue to run high about the regulatory
opaqueness for real estate ventures, bureaucratic red tape and the absence of
title insurance, in addition to a host of other issues. All of these factors are
tempering investors’ appetites for Indian real estate.

POLITICAL
ENVIRONMENT
Government Initiatives

The government has introduced many progressive measures to unlock the

potential of the sector and also to meet the increasing demand levels.
 • 100 per cent FDI allowed in townships, housing, built-up infrastructure and
construction development projects through the automatic route, subject to
guidelines as prescribed by DIPP
• 100 per cent FDI is allowed under the automatic route in development of
Special Economic Zones (SEZ), subject to the provisions of Special
Economic Zones Act 2005 and the SEZ Policy of the Department of
Commerce
• FDI is not allowed in Real Estate Business

In the Union Budget 2010-11, the Finance Minister made the following
announcements with regard to the real estate sector:

• Allocation for urban development were increased by more than 75 per

cent from US$ 660.3 million to US$ 1.17 billion in 2010-11
• Allocation for housing and urban poverty alleviation were raised from US$
183.4 million to US$ 215.8 million in 2010-11
• Scheme of 1 per cent interest subvention on housing loan up to US$
21,576 where the cost of the house does not exceed US$ 43,153
announced in the last Budget has been extended up to March 31, 2011
and US$ 151 million has been earmarked for this scheme for 2010-11
• US$ 274 million has been allocated for Rajiv Awas Yojna, as compared to
US$ 32.4 million last year

Road Ahead

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

(CREDAI), the affordable housing segment is set to play an important role in
India's real estate sector in 2010 on the back of substantial demand.

"Affordable housing will be a key factor in driving the sector and we have already
started working on progressive solutions in this area for effective and customised
implementation of such projects," Confederation of Real Estate Developers'
Associations of India (CREDAI) Chairman Kumar Gera said in January 2010.
Moreover, 2010 is expected to be a positive year for the real estate sector. The
revival is expected to be driven by infrastructure growth, which in turn, can
accelerate real estate activities both in the residential as well as commercial
spaces.

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

IDS National Institute of Real Estate Management (IDS NIREM) believes that
contrary to the popular demand of and expectation for huge impetus to the
housing and real estate sector, the India budget 2010-11 has brought a mixed
bag for this sector.

IDS National Institute of Real Estate Management (IDS NIREM) believes that
contrary to the popular demand of and expectation for huge impetus to the
housing and real estate sector, the India budget 2010-11 has brought a mixed
bag for this sector. Though, some benefits have been extended to housing and
real estate sector, the burden imposed will definitely undermine the benefits. The
burdens and benefits for the real estate sector are as follows:

The burden:

o Widening of Service Tax net:

Real Estate Developers will have to pay service tax on transactions where
consideration is collected from prospective buyers prior to completion of
construction. However, it seems service tax will not be applicable if the full
payment is made after completion of the construction.

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

providing preferential location or external or internal development charges
(excluding vehicle-parking space) etc. shall also be covered.
Renting of immovable properties is also under service tax net and the definition
of 'renting of immovable property service' has been clarified as well as widened
to cover rent of vacant land under contract for undertaking construction of
buildings or structures for business purposes. This may have negative effect on
to the properties bought or to be bought solely for investment purpose.

Excise Duty on Cement:

Excise duty ion cement has been increased which will increase the cost of
construction and it is expected that per unit cost for prospective buyers will also
increase.

The benefits:

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

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

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

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

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

and where the cost of the property is under Rs. 20 Lakhs. This along with
along with increase in the tax slab rates for individuals should provide the
necessary demand boost for low-cost housing.

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

establishments in such eligible housing projects and

o Increased budgetary allocations for urban development and housing

schemes.

o extension of investment linked deduction benefit to convention centres

located in the NCR of Delhi extended from the present 31st March, 2010 to
 31st July, 2010 (for purposes of deduction u/s Section 80-ID of the Income-
tax Act).

Overall, this budget will have mixed affect on the Indian real estate sector.
However, looking at the overall economic scenario, we also need to consider that
the budget was presented against mutually conflicting objectives, where-in it is
not possible to meet the demands of each individual sector. Another important
aspect is that very clearly the Finance Minister took pragmatic approach instead
of populist measures, which is a good sign of a growth orientated government.

Real Estate market in India has developed remarkably in the past few years. The
potential of the Indian property is proved by the growth of the major real estate
companies of India.

Infrastructure development, commercial real estate, residential complex, retail

space development market is continuously booming with various activities. In the
India real estate sector,the Indian government has approved a FDI of 100%
which has given a boost to the Real Estate Companies. People from all parts of
the globe are interested in buying the Indian property. The list below provides the
name of the best Real estate Companies in India.

Role of Government in India Real Estate Investment:

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

Associations of India (CREDAI) is the umbrella organization for the organized
real estate developers/builders in India. CREDAI's member roster comprises 20
state/city level associations spread over across 18 states of India, representing
over 60% of the organized private state/cities in the country. The states included
in the CREDAI membership are Andhra Pradesh, Chattisgarh, Delhi-NCR, Goa,
Gujrat, Himachal Pradesh, Jharkhand, Karnataka, Kerala, Madhya Pradesh,
Maharastra, Orissa, Punjab, Rajasthan, Tamilnadu, Uttar Pradesh and West
Bengal.
Moreover, on behalf of developers/builders across India, CREDAI lobbies with
the government authorities in order to ensure formulation of constructive policies,
some of which are:

• Abolishment of the ULC Act.

• The organization solicited income tax concession to the property
purchasers, seeking the housing finance/home loans, and to the
builders/developers, undertaking the residential housing projects.
• Encouraged the adoption of fast track mechanism by the local government
authorities.
• Initiated proactive policies for the IT and IT based services, in the form of
property tax concessions, etc.
• Opened the FDI market in the real estate sector, enabling slum
rehabilitation and low income/low cost housing.
• Introduced URIF ULIF funds to persuade the state government and cities
to draw out effective reforms in the real estate infrastructure.

The Indian government has been playing a proactive role in the India Real Estate
Investment and thereby promoting investors to invest in Indian real estate
market. The different laws governing real estate are -

1. Indian Transfer of Property Act

2. Indian Registration Act, 1908
3. Indian Urban Land (Ceiling And Regulation) Act, 1976
4. Stamp Duty
5. Rent Control Acts
6. Property Tax
7. Foreign Exchange Regulation Act, 1973
• Foreign Role in India Real Estate Investment:

The liberal government policies have facilitated the expansion of the foreign
involvement in the India Real Estate Investment sector. At present, the non-
resident Indians have played a very important role in transforming the Indian real
estate market. Some of the important foreign investors in the Indian real estate
market are like-
• Emmar Properties
• Laing O'Rourke (LOR)
• Morgan-Stanley Real Estate
• Vancouver-based Royal Indian Raj International Corporation (RIRIC)
• Indonesia-based Siputra Selim group
• US-based Warburg Pincus
• Blackstone Group
• Broadstreet
• Columbia Endowment Fund
• California Public Employees' Retirement System (CalPERS)

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