Presented By: Gunjan Masand Ritul Jain Saurab Vats Shanky Singhal Shubhomita Sengupta Shweta Datta REAL ESTATE
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Presented By:
Gunjan Masand Ritul Jain Saurab Vats Shanky Singhal Shubhomita Sengupta Shweta Datta
REAL ESTATE
• What relevance does Real Estate And construction hold in our economy?
• Why has infrastructure getting the prime focus in the recent budget?
• What has actually changed the face of Realty and Real Estate?
• Who are the names behind this change?
INTRODUCTION
• The strong fundamentals of the Indian economy are having a favorable impact on all asset classes of Indian real estate viz. housing, commercial – office space and retail and hospitality.
• In recent years, the growth has spread out to tier-II and III cities as well.
• High growth in services as well as manufacturing sector has resulted in high demand for commercial and industrial real estate.
• Further the economic growth has trickled down to the large Indian middle class increasing affordability and affluence. Improving living standards are driving the demand for better quality housing and urban infrastructure.
INTRODUCTION
Drivers for Growth of Real Estate & Construction
Real Estate
Rising Tourism
Decline of Joint
Families
Easy Availabilit
y of Finance
Rise Of Middle Class
Real Estate
Fiscal Policy
Strong Demograp
hics
Rise of Middle Class
Rising FDI
Real Estate
First Time
Buyers
International
Tourism
Development of
new Stream of Business
Medical Tourism
Overview of India Infrastructure
OBJECTIVES
Generation of additional economic activities.
Promotion of investments from domestic and foreign sources.
Creation of employment opportunities.
Development of infrastructure facilities in the country.
Special Economic Zones
There has been a drastic
curtailment in restrictive
policies such as the Urban Land
Ceiling and Regulation Act.
Reforms in the Integrated Township
Policy.
Liberalization of FDI rules
and the emergence of
real estate funds.
Range of Government benefits & incentives including
residential tax breaks and the
Special Economic
Zones.
Govt. Initiatives and Policy
Major Players in Real Estate
DLF Group
Ansals
Parsavnath Developers
Unitech Group
K. Raheja
DLF Group
Founded in 1946 DLF Group is one of the biggest real estate giants Built many high-quality buildings across the country, specifically
in Gurgaon Tied up with Hilton Group to build whopping 100 hotels in India
over the next few years. In current expansion plans, DLF has over 425 million sq. ft. of
development across its businesses, including developed, on-going and planned projects.
Spread over 32 cities, mostly in metros and key urban areas across India
DLF Group
ANSALS
Founded by Lala Chiranji Lal Ansal By far most dominant activity of Ansals has been Real Estate
Promotion & Development company has several landmark high-rise commercial building
like Statesman House, Ambadeep, Antriksh Bhawan, Tolstoy House, Indra Prakash, Navrang House and Ansal Bhawan
Ansals have also completed several residential buildings like Gauri Sadan, Upasana at Hailey Road & Dhawan Deep at Jantar Mantar road, all in the heart of New Delhi at Connaught Place.
Ansals
There is the most prestigious “Ansal Plaza” Shopping Mall associated with its work
Also it has made elite townships, Sushant Lok and Palam Vihar in Gurgaon and several other places all over the country.
It was incorporated on July 24, 1990 under the Companies Act, 1956 as Parsvnath Developers Limited.
With more than two decades of experience in its repertoire, the group has already stamped its presence already in seventeen states and going Pan – India.
It has made various developments in areas like GURGAON, Noida, South Delhi.
Parsavnath Developers
Plans to invest US$ 720 million in building hotels in the country
Its partner for this venture is Marriott International. Carved a niche for itself in India with its sprawling properties
and projects in Bangalore, Gurgaon, Noida, Greater Noida and Kolkata
Unitech Group took over projects in International areas as well. Actively involved in construction projects of power plants,
expressways, highways, transmission lines, classrooms, amusement parks.
Unitech Group
Radisson Hotel, New Delhi has won accolades for its wonderful infrastructure, astounding interiors, ideal location and extra ordinary facilities for the distinguished customers.
Rohini Amusement Park is also a creation of Unitech Group.
The commercial complexes like Global Business Park, Signature Towers, Unitech Business Park and Unitech Trade Center and the launch of Millennium Plaza & Infocenter in Gurgaon have made Unitech Builder earn a good reputation in the industry.
Financials Of DLF DLF is the market leader in this sector with net profit
of 1547 cr. It was way lower than its last year profit by more
than 1000 cr. It was well supported by the timely launch of IPL. The share of this co. touched the all time high of
1227 in dec. 2007 which was just 6 months after its issue and now trading at 337.
Financials Of Ansals API Their profit declined by 81.24% in the last financial
year over the last year. This is one of the badly hit company by the economic
slowdown. 569 is the all time high of this company in 2006 and
now trading at just 10% of its all time high.
SUBPRIME CRISIS
Investment in Real Estate by PE Firms
The Housing Bubble Burst
Bankruptcy Of Investment Banks and Crash of US Economy
DEVELOPMENT OF REAL ESTATE IN INDIA
•IT Infrastructure – Temples of Modern India
•Townships
•Programming Houses
•Green Buildings
Skill Shortage.
Non Availability of Statistics.
Overvaluation of Property.
Highly Fragmented.
Lack of Transparency.
BARRIERS IN GROWTH OF REAL ESTATE
CONSTRUCTION COST
Labour Rates Escalated to 5-
10 %
Bricks Prices Increase by
30-35 %High Interest Rates
Rising Prices
Decreasing Demand
FALL OF SENSEX AND REAL ESTATE STOCKS
DLF
UNITECH
PARSAVNATH
IMPACT OF RECESSION ON REAL ESTATE
KEY ISSUES
Incompletion of
previous projects.
Bad Debts.Less
demand in all
segments.
Cash starvation.
MEASURES TAKEN BY DLF
Launched affordable housing project.
Payment of short
term debt by raising long term
debt.
Terminated projects with long gestation period.
Sale of properties
for liquidity
preservation.
Cost reduction through
tight cash flow.
MEASURES TAKEN BY UNITECH
QIP issuance to reduce debt.
Reduced promoter’s stake from 64% to
51%.Increased confidence
with customers on project delivery.Major Strategic restructuring.
Key Focus Areas Before Now
1. Residential Segment Primarily target luxury/upper middle income housing segment
More focus on mid and affordable housing segment.
2. Assets and Land bank Buy predominantly agricultural land and build land bank for projects across all segments.
Sell assets selectively and acquire land only for mid/low income housing projects.
3. Debt Short Term maturities. Restructured to longer maturities.
Higher proportion of expensive unsecured loans.
Cheaper Collateralized loans.
Increasing debt with more projects.
Reduced leverage.
SHIFT IN STRATEGY
Overall Impact considered to be marginally positive. Infrastructure investment to be raised over 9% of GDP. Funding pressure on construction companies to be
eased by PPP. PPP infrastructure projects to be refinanced upto 60%
through IIFCL. Rs 39.7 billion allocated for rural housing schemes. Focus on providing housing to people of economic
weaker section & lower income group.
IMPACT OF BUDGET
FUTURE PREDICTIONS Close to $7 billion to $8 billion of venture capital
expected to flow into Indian real estate market. A significant increase in project execution through
Public- Private-Partnerships. More demand for office and industrial space. Current levels of investments in infrastructure are not
sufficient to bridge the gap between demand and supply.
THANK YOU
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