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Introduction of EFASBrief Overview of Real Estate IndustryOpportunities for Real Estate Industry
Threats for Real Estate IndustryEFAS Analysis of DLF Pvt LtdEFAS Analysis of Shobha DevelopersConclusion
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Limitation of SWOT Analysis Uses only single level of analysis No weights to reflect priorities
Advantage of EFAS Two level of analysis
Study of Threats and OpportunitiesStudy of ability of the organization to respond toabove factors
EFAS provides weighted score
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ExternalStrategic Factors Weight Rating
WeightedScore Comments
1 2 3 4 5
1.00
Opportunities
Threats
Total Weighted Score
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Real estate contributes about 5 per cent toIndias GDP. The total revenue generated in FY11 stood atUSD 66.8 billion.The housing shortage in urban and rural Indiawill be around 21.7 and 19.7 million unitsrespectively in 2014 .
Real Estate Sector
Residential Commercial
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Scenario A localised, fragmented
market presentsopportunities for
consolidation There are few large, pan-
India players like DLF andUnitech
Key Drivers Rapid urbanisation Decreasing household
size Easy availability of home
loans
Trends Demand expected to
grow at a CAGR of 19 percent between 2010 and
2014 - Tier 1metropolitan cities areexpected to account forabout 40 per cent of this.
Demand-Supply gap ishighest in low and mid
income segments. Demand exceeds supply
3 to 4 fold in low andmid income segments.
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Scenario Few large developers
with a pan-Indiapresence dominate themarket
Key Drivers Rapid growth in services
sectors: IT/ITeS, BFSI andTelecom
Demand for office spacein Tier 2 cities
Increase in tourism
Trends The top three cities -
Mumbai, the NCR andBengaluru - account for46 per cent of totaldemand for office spacein India
Between 2010 and 2014,
demand growthprojected to be thehighest in cities likeKolkata and Chennai
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Opportunities Weight omments
Increased FDI Limit 0.15 Upto 100% FDI allowed withGovt. Permission FDI flows for the period2012-13 stood at USD 1,260
million Minimum 10 Hectares for Serice housing plots and 50,000sq. mts for other projects.
Increased Per capitaincome
0.1 Disposable income to investin real estate
Growing constantDemand
0.09 Urbanization Better Infrastructure
Government Initiatives 0.09 Allocation of USD 833 millionfor Rural Housing Fund Rajiv Awas Yojana JnNURM
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Threats Weight omments
High Inflation 0.05 Interest rate risk. Exchange rate risk. Low savings.
Land Acquisition bill 0.15 Increased cost of project. Deindustrialisation fear.
Direct Tax Code 0.15 No tax rebate on HRA. No tax rebate on home loaninterest. Increased tax on capital gain.
Liquidity Crunch 0.15 D/E ratio requirement ofbanks decreased to 3:7 from5:7. New loan disbursementguidelines from RBI to banks.
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Threats Weight omments
Political Instability 0.05 New government. Red Tape. Parties favouritism.
Non transparency ofpricing
0.02 No systematic way of pricing. No Regulator. Multiple brokers mark up.
Total 1
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DLF LTD
External Factors Weight RatingWeighted
Score Comments
Opportunities
Increased FDI Limit 0.15 4.00 0.60 NO FDI investment and higher allowed limits give opportunity to raise fund infuture
Increased per capita income andNRI customers interest 0.10 4.00 0.40
Popular in NRIs, High end residential projects will be good investmentopportunities for NRIs
Growing constant demand 0.09 4.00 0.36 Project over 53 MSF is under execution
Government initiative 0.09 4.00 0.36 Presence in all over india provide opportunity to
Threats
High Inflation 0.05 3.00 0.15 Interest rate risk, low tendency to spend money
Land acquisition bill 0.15 4.00 0.60 Land Bank is 314 MSF as on Sept 2013 in 10 major cities of India
Direct Tax code 0.15 3.00 0.45 Taxable home loans will discourage the investors
Liquidity crunch 0.15 1.00 0.15 Very High Debt, Debt/Equity Ratio is 7:1
political instability 0.05 3.00 0.15 Operational mostly in politically stable regions
Non transparency of pricing 0.02 3.00 0.06 Price based on built up area or super built up area are generally manipulated
Total Scores 1.00 3.28
x
5 4 3 2 1
Outstanding Average Poor
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Shobha Developers
External Factors Weight RatingWeighted
Score Comments
Opportunities
Increased FDI Limit 0.15 3.00 0.45100% of FDI subject to certain criterion but 60% already invested as per 12-13
AR
Increased per capita income andNRI customers interest 0.10 4.00 0.40
Popular in NRIs, High end residential projects will be good investmentopportunities for NRIs
Growing constant demand 0.09 4.00 0.36 45 Ongoing projects mainly in Southern regions & NCR
Government initiative 0.09 2.00 0.18
ThreatsHigh Inflation 0.05 3.00 0.15 Interest rate risk,exchange rate risk,low savings
Land acquisition bill 0.15 2.00 0.30 Increase cost of projects, Less Land bank
Direct Tax code 0.15 3.00 0.45 Taxable home loans will discourage the investors
Liquidity crunch 0.15 5.00 0.75 Good Debt/Equity ratio of 3:5. Required by banks 5:5 or 3:7
political instability 0.05 3.00 0.15 Operational mostly in politically stable regions
Non transparency of pricing 0.02 2.00 0.04 Prices are not transparent
Total Scores 1.00 3.23
x
5 4 3 2 1
Outstanding Average Poor
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EFAS score shows that both DLF and ShobhaDevelopers has average performance to thefactors in its external environment.
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Thank You