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Acknowledgement
The project title Motivation of Seler Icon In Real Estate In Kanchal Group has been
conducted by me during 14th may and 9th July 2012 at Ansal Properties & Infrastructure Ltd. I
have completed this project, based on the primary research under the guidance of Mr. Alok
Agnihotri (General Manager, Marketing) and Mr. Vipin Sheoran (Assistant Manager,
Marketing).
I owe enormous intellectual debt towards my guides Mr. Alok Agnihotri (General Manager,
Marketing) and Mr. Vipin Sheoran (Assistant Manager, Marketing), who have augmented my
knowledge in the field of Marketing. They have helped me learn about the process and giving me
valuable insight to understand how I can suggest new and innovative ways. They have provided
me a true learning platform, and have been the perfect mentors, in giving me the necessary
guidance regarding my project.
I would like to thank them in enriching my thoughts in this field from different perspectives.
I would like to thank all the respondents without whose co-operation my project would not have
been complete.
I feel indebted to all those persons and organizations that have provided help directly or
indirectly in successful completion of this study.
At the end, KANCHAL GROUP, was a great experience to work in, where I feel, the dedication
of its employees is one of the vital factors of its success.
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EXECUTIVE SUMMARY
Summary
Kanchhal Group has earned a strong reputation in the real estate industry as we strongly work for
the Best Services and satisfaction of our customers. Its our efficient and effective solution that
has given us domestic and global satisfied CLIENTS. As REAL Estate Company we have been
redefining the standards of real estate and with our years of EXPERIENCE, we offer a wide
range of services to fulfill our clients NEEDS.
Just living is not enough. As we move with the changing times, the quality of life becomes more
and more important. The concept of buying space, be it for residential or commercial purposes,
has changed to include much more than just the land or building. It now includes pre and post
sales service and the need for simplification of the entire process of buying a property.
The entire experience of a real estate transaction, therefore, has become the deciding factor for
the discerning, intelligent customer for the selection of a real estate consultant and company.
We make it our business to understand your financial REQUIREMENT. We have more than 4
years of collective experience in this industry. OUR EXPERTISE is to make your money work
for you and manage your investment PORTFOLIO. Our motto is customer satisfaction at any
cost.
The reason behind our success is our huge bouquet of options that you can choose from, along
with purchases customised to each individuals need and hassle-free home loan solutions with
multiple banks. Our single-window, end-to-end solutions ensure that your every need is taken
care of and the entire process made smooth and transparent. Also, our passion for real estate
makes us one of the leading managers of real estate portfolios for high value investors.
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TABLE OF CONTENTS
1. Company Profile
2. Product Portfolio
3. Introduction to Real Estate
4. Real Estate as an Investment Option
5. Research Methodology
6. Findings & Analysis
7. Conclusions & Suggestions
Bibliography
Questionnaire
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CHAPTER-I
INTRODUCTION
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INTRODUCTION TO REAL ESTATE
Real estate is a 12$ billion (revenue) industry in India. There has been a rapid growth in the
industry in the past few years.100% FDI is allowed in real estate development subject to
minimum scale norms of either: 25 acres in case of serviced plots or integrated townships; or
50,000 sq. mtrs. of built-up area for construction development projects.
Commercial and office complexes mushrooming in major Indian metros present a minefield of
opportunities. Over 20 million new housing units required in the next 5 years. The real estate
market is projected to grow to $50 billion by 2010 CAGR of over 30% p.a. is expected over the
next five years. Increasing demand for commercial and office space especially from the rapidly
growing Retail, IT and Hospitality sectors and the Urban Infrastructure Renewal mission is
expected to give a boost to the sector.
Other factors include:
$11.5 billion earmarked over the next five years for 60 cities.
Investment opportunities exist in almost every segment business ; About 20 million new
units expected to be built in five years in office space for IT and five-fold increase in
office space requirement over the next 3 years.
Commercial space for organized retailing: 200 million sq. ft. by 2010.
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Hotels and hospitality: Over 50,000 new rooms in the next 5 years; Investment
opportunity of over $50 billion in the next five years.
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Various Real Investment Options are:
AGRICULTURE LAND
Agriculture Land in India is the most protected area by the State and Central Govt. Identification
of Agricultural Land requires a bit of analysis about the rate and assessment of future
development in the nearby area. Due to fast growing urbanization and development of
infrastructure the price of agriculture land zooms quickly. Agricultural land can be given on
contract to cultivators with sharing of crop model, to make small but regular tax-free earnings.
Rural agriculture land is completely free from capital gains tax and income from lease out or sale
of crop is also exempt as per the provision of IT Act, 1961.
Real EstateInvestment Options
Agriculture Land
Residential/Plotteddevelopment
Apartments/Villas
Commercial Spaces
Farm Houses
Real Estate MutualFunds
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RESIDENTIAL PLOTTED DEVELOPMENT
Most state governments have loosened their fists and have implemented land reforms that make
the conversion of agricultural land into residential land much easier. The process of township
development takes a period of about 5 to 10 years. Initially, the prices of plotted development are
quite low which rapidly increases with the pace of development and with the rise in inflation
factor.
APARTMENTS/VILLAS
As per the assessment made in the Indian Habitat Policy 1998, the demand for houses in urban
area is to the tune of 22 million houses. The gap in demand and supply in housing stock has
thrown big investment opportunities. Booking at the launching stage and getting the exit at the
completion stage ca offer shining returns on investments. In this process the stamp duty and
other taxes can be legally avoided.
COMMERCIAL/RETAIL SPACES
The retail boom in India has fueled huge demand for commercial/shopping spaces. Many MNCs
and big corporate retailers prefer to take prime commercial properties on long-term lease basis.
The option offers regular returns besides appreciation in capital value, taking both the returns
together gives handsome return and a wonderful combination of regular and a wonderful
combination of regular and long-term returns.
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FARM HOUSES/SECOND HOMES
Many developers are offering lifestyle with smart returns through farm houses/second homes.
The offer comprises of sale of farm houses at affordable rates with professional property
management giving lifestyle and capital appreciation together.
REAL ESTATE MUTUAL FUNDS
Securities Exchange Board of India (SEBI) has recently allowed the launch of mutual funds
which can invest in physical property. Many corporates such as HDFC and IDBI are in the
process of launching real estate mutual funds.
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FACTS AND FIGURES
In India Construction is the second largest economic activity after Agriculture. Investment in
construction accounts for 11 percent of Indias Gross Domestic Product (GDP) and nearly 50
percent of Gross Fixed Capital Formation (GFCF). Construction accounts for nearly 65 percent
of total investment in infrastructure and is expected to be the biggest beneficiary of the surge in
Infrastructure Investment over the next five years. According to the Economic Survey, India has
the potential to absorb US$ 150 Billion of Foreign Direct Investment in the next five years in the
Infrastructure sector. The sector is expected to grow at a CAGR of 15 percent over the next few
years.
The sustained growth and positive outlook for the future has increased focus on Infrastructure
development. Opening of the Infrastructure development to private players, FDI and increased
investment commitments from the govt. has thrown a host of opportunities for companies in the
infrastructure development sector, innovative projects like the metro Rail and Sky Bus, along
with the proposed SEZ projects have provided additional opportunities for th e SMEs in the
sector. While majority of the infrastructure development projects are given out by the
government Agencies, the private sector is also actively participating through development
projects like SEZs and commercial construction.
Along with the government bodies and funding agency, various infrastructure development
companies, machinery and materials suppliers, ancillary suppliers and allied support industries
would play an important role in meeting in demand the for infrastructure development.
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The Indian Infrastructure Sector is currently going through a vast transformation. The
Governments decision to throw open the construction of roads, Bridges Airports and ports to the
private sector and allowing 100 percent Foreign Investment in real Estate Projects has provided a
boost to the construction Industry as well as generate demand for construction machinery.
Housing and Infrastructure Projects like Roads, Bridges and Ports are expected to grow about 20
percent per annum for the next 15 years.
The new and expanding housing and infrastructure construction ventures have generated
substantial demand for construction machinery manufacturing and servicing, including erection,
commissioning and maintenance. Several multi national firms are already present in the country.
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REAL ESTATE AS AN INVESTMENT
OPTION
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Is Real Estate A Good Investment Option?
Are you fatigued by the diminishing income and risk-factors associated with main-stream
investment avenues fixed deposits, stocks, mutual funds, etc.? Think `real estate': a lesser
explored investment option.
Why real estate investment stands out?
Quantum of investment required is high
Investment horizon is long
Dual returns are available in form of rental income and capital
Appreciation
What are the promising avenues of real estate investment?
Offices
Shopping malls
Retail outlets
Industrial warehouses
What is the current Indian real estate scenario?
Periodic returns on commercial property ranges from 10 to 13 percent
Per year
The Indian real estate industry has a growth rate of 35 to 40 percent
Annually
The demand for real estate is picking up as the IT industries set up their
Base in India or look for expansion in these cities.
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Top financial companies have recognized the advantage of India as a
Business process outsourcing destination and had started expanding
their business.
Companies are increasingly switching over to renting office premises.
This offers flexibility in operations and avoids locking capital.
Companies operating in automobile design, auto components
Manufacturing, computer aided design and drawing are also entering
India in search of acquisition of space preferably as ready-to-occupy
premises.
Real estate developers are offering premises on long lease to the
companies.
Individual investors are benefiting from the developing commercial real
Estate market in India by investing in pre-leased properties.
Norris / Pies are investing in real estate as the rental income and capital
Used to purchase the property is easily reparable .
What are funding sources supporting investment in real estate?
Banks
Financial institutions
High net worth individuals
Real Estate Mutual Funds
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hat are the procedures to be followed before investing in real estate?
Find out credibility of the developer.
Check out the attractiveness of property to tenants/ buyers
Weigh future value potential
Get to know thechances of project completion (in case its under
Construction)
Investigate the quality of project
Explore the availability of financing option
Take advice from a reputed and a credible real estate consultant.
Consult a reputed financial institution
Selecting a right option to invest hard earned-money is always a matter of big confusion. The
decision making process requires in depth analysis of available options which suits the needs
of a particular person or organization. A complete analysis and overview of investment
decision making with innovative solutions are given hereafter.
INVESTMENT NEEDS
The investment needs depend on the requirements of a particular person about the liquidity
of funds and his capacity and temperament bear risk. The tax implication on return of
investment to the investor is always a crucial matter for choosing the right option.
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FACTORS AFFECTING INVESTMENT DECISION MAKING
After Tax
ROI
Tax
Implication
Convenience
To Invest
Safety
Liquidity
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INVESTMENT OPTIONS:
The following are the major options available to the investors:
PO/Bank/Govt.Securities
Bonds/Debentures
Bullion (Gold/Silver)
Shares/Mutual Funds
Real Estate
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All the options have different features with respect to various factors having implication on
investment decision making. The following Chart depicts the analysis of features of various
options at a glance:
*based on prevailing market rates
**based on last 25 years track record
Features Liquidity Safety Convenience Tax Approx.
Comparative Features of
Investment Options
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Options Options Benefits ROI
P.O/Bank/Got.
Securities
Reasonable Good Good Good 6-8%*
Bonds/Debentures Reasonable Reasonable Reasonable NIL 8-10%*
Shares/Mutual
Funds
Good High Risk Reasonable Reasonable 12-15*
{With high
level of
uncertainty}
Bullion[Gold and
Silver]
Good Good Good Reasonable 5-7%**
Real Estate Reasonable Reasonable Not so
Convenient
Good 14-24%
{High
Returns}
GRAPH ON RETURN ON DIFFERENT INVESTMENT
OPTIONS
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0
5
1015
20
25
30
PO/Bank/govt.se
c.
Bond/Deb.
Shares/Mutual
Fund
Bullion(Gold/
silver)
RealEstate
% from
% to
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REAL ESTATE AS AN INVESTMENT TOOL WITH SPECIFIC
REFERENCE TO RAJASTHAN
Population (2001 Census)
5,65,07,188
Urban population
23.38%
Literacy rate - 61.03%
Male - 75.7%
Female - 43.9%
Major industries
Mineral based
Agro based
Heritage based
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Rajasthan at a glance
Abundant availability of minerals.
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Open & responsive Government
Proximity to Gurgaon & Delhi, which are now getting saturated.
Relatively better law & order scenario as compared to many other States in North India.
Very good living conditions
Good civic infrastructure
Residential, Educational and Medical facilities.
Road, Power and Water.
Avenues for re-creation and tourism.
Recent emphasis on technical manpower will yield results in near future.
Easy accessInternational Airport (Direct flights to Thailand,Singapore, Dubai).
Continuously improving telecommunication infrastructure as a result of Free Right of
Way facility.
Strong focus now on Knowledge Sector at the highest level in State Government.
Jaipur: A Magnificent Metropolis in Making
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Salient Features of Jaipur Master Development Plan-2011:
Master Development Plan 2011 has been prepared not only to meet the future
requirement of the city and the region but also to tackle the day to day
problems of the city.
Jaipur is a fast developing city. By 2011 population of Jaipur is expected to
reach about 42 Lacs. The plan has been prepared to accommodate about 35
Lacs in the city & the remaining seven lacs in the satellite towns of Chomu,
Bagru, Bassi, Achrol, Shivdaspura, Goner, Balawala, Jamwaramgarh, Kanota
and Kakus etc.
Jaipur is a tourist city. The plan provides for conservation and preservation of
its architectural heritage and to augment tourist facilities.
The land use plan along with the land use zoning code facilitates easy
implementation of the master plan proposals.
Mega Projects in Pipeline :
Mahendra City (S.E.Z) on Ajmer Road3000 Acres
World Trade Park
Film City
IT City
Knowledge Corridor
Ring Road
Gems and Jewelry Market
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Rope-Way
Medi-Tech City
Proposed Projects:
International Convention Centre
Sports City
Green field Airport
International Golf Course
DYNAMICS OF REAL ESTATE PRICING
The Interest rate factor has a direct relationship with the pricing of the immovable property.
Future properties are discounted by the market at a particular rate of discounting factor to
calculate the present market value, when the discounting factor reduces by few points, the prices
of immovable property increases many fold as the present value of the future property gets
increased.
The following chart shows the present value of Rs.1000 after 1 to 15 years. The chart clearly
shows that present value of Rs.1000 after 15 years discounted @ 20% is Rs. 65, while if the
same is discounted @ 10% the present value comes to Rs. 239, it is amazing to note that 50%
(from 20% to 10%) curtailment in interest rates increases the present value from Rs. 65 to Rs.
239 reflecting a jump of 267%. This dynamic works in future property pricing.
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CASE STUDY TO UNDERSTAND THE DYNAMICS OF REAL ESTATE
PRICING
Year 2000
Belief: Agriculture Land in Shivdaspura is a future property of 2015 and at time the price level
shall be Rs. 50.00 lakh per bigha.
Discounting factor: 20%
Present Value (PV) in the year 2000, of Rs. 50.00 lacs in years 2015 was 50.00 lacs0.065* =
3.25 lacs ** approx
*
*Discounting factor of Rs.1 after 15 years @20% p.a.
**The same was the approx. then prevailing price.
Belief: Agriculture Land in Shivdaspura is a future property of 2015 and at time the price level
shall be Rs. 50.00 lack per bigha.
Discounting factor: 10%
Present Value (PV) in the year 2006, of Rs. 50.00 laces in years 2015 was 50.00 lacs0.424* =
21.20 laces ** approx
*Discounting factor of Rs.1 after 9 years @ 10% p.a.
**The present prevailing price is more than that which is pushed by other driving forces.
%/ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15Nyrs.10% 909 826 751 683 621 564 513 467 424 386 350 319 290 263 23920% 833 694 579 482 402 335 279 233 194 162 135 112 093 078 065
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REAL ESTATE IN WORLD
A real estate bubble or property bubble (or housing bubble for residential markets) is a type
ofeconomic bubble that occurs periodically in local or global real estate markets. It is
characterized by rapid increases in valuations ofreal property such as housinguntil they reach
unsustainable levels and then decline.
The questions of whether real estate bubbles can be identified and prevented, and whether they
have broadermacroeconomicsignificance are answered differently by schools of economic
thought, as detailed below. The financial crisis of 20072010 was related to the bursting of real
estate bubbles around the world, which had begun during the 2000s
Identification and prevention
As with all types ofeconomic bubbles, whether real estate bubbles can be identified or prevented
is contentious. Bubbles are generally not contentious in hindsight, after a peak and crash.
Within mainstream economics, some argue that real estate bubbles cannot be identified as they
occur and cannot or should not be prevented, with government and central bank policy rather
cleaning up after the bubble bursts.
Others, such as American economist Robert Shillerof the Case-Shiller Home Price Index of
home prices in 20 metro cities across the United States, indicated in May 31, 2011 that a "Home
Price Double Dip Confirmed"[3]and British magazine The Economist, argue that housing market
indicators can be used to identify real estate bubbles. Some argue further that governments and
central banks can and should take action to prevent bubbles from forming, or to deflate existing
bubbles
http://en.wikipedia.org/wiki/Economic_bubblehttp://en.wikipedia.org/wiki/Real_estatehttp://en.wikipedia.org/wiki/Real_estate_appraisalhttp://en.wikipedia.org/wiki/Real_propertyhttp://en.wikipedia.org/wiki/Househttp://en.wikipedia.org/wiki/Macroeconomichttp://en.wikipedia.org/wiki/Schools_of_economic_thoughthttp://en.wikipedia.org/wiki/Schools_of_economic_thoughthttp://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932010http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932010http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932010http://en.wikipedia.org/wiki/Economic_bubblehttp://en.wikipedia.org/wiki/Hindsighthttp://en.wikipedia.org/wiki/Mainstream_economicshttp://en.wikipedia.org/wiki/Robert_Shillerhttp://en.wikipedia.org/wiki/Real_estate_bubble#cite_note-2http://en.wikipedia.org/wiki/Real_estate_bubble#cite_note-2http://en.wikipedia.org/wiki/Real_estate_bubble#cite_note-2http://en.wikipedia.org/wiki/The_Economisthttp://en.wikipedia.org/wiki/Real_estate_bubble#Housing_market_indicatorshttp://en.wikipedia.org/wiki/Real_estate_bubble#Housing_market_indicatorshttp://en.wikipedia.org/wiki/Real_estate_bubble#Housing_market_indicatorshttp://en.wikipedia.org/wiki/Real_estate_bubble#Housing_market_indicatorshttp://en.wikipedia.org/wiki/The_Economisthttp://en.wikipedia.org/wiki/Real_estate_bubble#cite_note-2http://en.wikipedia.org/wiki/Robert_Shillerhttp://en.wikipedia.org/wiki/Mainstream_economicshttp://en.wikipedia.org/wiki/Hindsighthttp://en.wikipedia.org/wiki/Economic_bubblehttp://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932010http://en.wikipedia.org/wiki/Schools_of_economic_thoughthttp://en.wikipedia.org/wiki/Schools_of_economic_thoughthttp://en.wikipedia.org/wiki/Macroeconomichttp://en.wikipedia.org/wiki/Househttp://en.wikipedia.org/wiki/Real_propertyhttp://en.wikipedia.org/wiki/Real_estate_appraisalhttp://en.wikipedia.org/wiki/Real_estatehttp://en.wikipedia.org/wiki/Economic_bubble7/27/2019 Motivation of Sales Icon in Real State in Kanchal Group
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Macroeconomic significance
Within mainstream economics, economic bubbles, and in particular real estate bubbles, are not
considered major concerns.[dubiousdiscuss] Within some schools ofheterodox economics, by
contrast, real estate bubbles are considered of critical importance and a fundamental cause
offinancial crises and ensuing economic crises.
The mainstream economic view is that economic bubbles bring about a temporary boost in
wealth and a redistribution of wealth. When prices increase, there is a positive wealth
effect (property owners feel richer and spend more), and when they decline, there is a negative
wealth effect (property owners feel poorer and spend less). These effects, it is argued, can be
smoothed by counter-cyclicalmonetary and fiscal policies. The ultimate effect on owners who
bought before the bubble formed and did not sell is zero. Those who bought when low and sold
high profited, while those who bought high and sold low (after the bubble has burst) or held until
the price fell lost money. This redistribution of wealth, it is also argued, is of little
macroeconomic significance.
In some schools of heterodox economics, notably Austrian economics and Post-Keynesian
economics, real estate bubbles are seen as an example ofcredit bubbles (pejoratively, speculative
bubbles), because property owners generally use borrowed money to purchase property, in the
form ofmortgages. These are then argued to cause financial and hence economic crises. This is
first argued empiricallynumerous real estate bubbles have been followed by economic slumps,
and it is argued that there is a cause-effect relationship between these.
The Post-Keynesian theory ofdebt deflation takes a demand-side view, arguing that property
owners not only feel richer but borrow to (i) consume against the increased value of their
http://en.wikipedia.org/wiki/Mainstream_economicshttp://en.wikipedia.org/wiki/Wikipedia:Disputed_statementhttp://en.wikipedia.org/wiki/Talk:Real_estate_bubble#Dubioushttp://en.wikipedia.org/wiki/Heterodox_economicshttp://en.wikipedia.org/wiki/Financial_criseshttp://en.wikipedia.org/wiki/Economic_criseshttp://en.wikipedia.org/wiki/Wealth_effecthttp://en.wikipedia.org/wiki/Wealth_effecthttp://en.wikipedia.org/wiki/Counter-cyclicalhttp://en.wikipedia.org/wiki/Austrian_economicshttp://en.wikipedia.org/wiki/Post-Keynesian_economicshttp://en.wikipedia.org/wiki/Post-Keynesian_economicshttp://en.wikipedia.org/wiki/Credit_bubblehttp://en.wikipedia.org/wiki/Speculative_bubblehttp://en.wikipedia.org/wiki/Speculative_bubblehttp://en.wikipedia.org/wiki/Mortgage_loanhttp://en.wikipedia.org/wiki/Debt_deflationhttp://en.wikipedia.org/wiki/Debt_deflationhttp://en.wikipedia.org/wiki/Mortgage_loanhttp://en.wikipedia.org/wiki/Speculative_bubblehttp://en.wikipedia.org/wiki/Speculative_bubblehttp://en.wikipedia.org/wiki/Credit_bubblehttp://en.wikipedia.org/wiki/Post-Keynesian_economicshttp://en.wikipedia.org/wiki/Post-Keynesian_economicshttp://en.wikipedia.org/wiki/Austrian_economicshttp://en.wikipedia.org/wiki/Counter-cyclicalhttp://en.wikipedia.org/wiki/Wealth_effecthttp://en.wikipedia.org/wiki/Wealth_effecthttp://en.wikipedia.org/wiki/Economic_criseshttp://en.wikipedia.org/wiki/Financial_criseshttp://en.wikipedia.org/wiki/Heterodox_economicshttp://en.wikipedia.org/wiki/Talk:Real_estate_bubble#Dubioushttp://en.wikipedia.org/wiki/Wikipedia:Disputed_statementhttp://en.wikipedia.org/wiki/Mainstream_economics7/27/2019 Motivation of Sales Icon in Real State in Kanchal Group
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property --- by taking out a home equity line of credit), for instance; or (ii) speculate by buying
property with borrowed money in the expectation that it will rise in value. When the bubble
bursts, the value of the property decreases but not the level of debt. The burden of repaying or
defaulting on the loan depresses aggregate demand, it is argued, and constitutes the proximate
cause of the subsequent economic slump.
Melbourne House Prices and Wages 1965 to 2010
Recent real estate bubbles
1990: Japan
The crash of the Japanese asset price bubble from 1990 on has been very damaging to
theJapanese economy,[4]. The crash in 2005 affected Shanghai, China's largest city.[5]In
comparison to the stock market bubbles, real estate bubbles take longer to deflate: prices decline
slower because the real estate market is less liquid. Commercial real estate generally moves in
tandem with the residential properties, since both are affected by many of same factors (e.g.,
interest rates) and share the "wealth effect" of booms. Therefore this article focuses on housing
bubbles and mentions other sectors only when their situation differs.
2007: many countries
As of 2007, real estate bubbles had existed in the recent past or were widely believed to still exist
in many parts of the world,[6]especially in the United
States, Argentina,[7] Britain, Netherlands, Italy, Australia, Canada, New
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Zealand, Ireland, Spain, Lebanon,France, Poland,[8] South
Africa, Israel, Greece, Bulgaria, Croatia,[9] Norway, Singapore, South Korea, Sweden, Baltic
states, India,Romania, Russia, Ukraine and China.[10]Then U.S. Federal Reserve Chairman Alan
Greenspan said in mid-2005 that "at a minimum, there's a little 'froth' (in the U.S. housing
market) it's hard not to see that there are a lot of local bubbles."[11]The Economistmagazine,
writing at the same time, went further, saying "the worldwide rise in house prices is the biggest
bubble in history".[12]Real estate bubbles are invariably followed by severe price decreases (also
known as a house price crash) that can result in many owners holding mortgages that exceed the
value of their homes. As of the end of 2010, 11.1 million residential properties, or 23.1% of all
U.S. homes, were in negative equity at Dec. 31, 2010.[13]Commercial property values remain
around 35% below their mid-2007 peak in the United Kingdom.[14]As a result, banks have
become less willing to hold large amounts of property backed debt, a likely key issue in affecting
a recovery worldwide in the near term.
Housing market indicators
UK house prices between 1975 and 2006 adjusted for inflation.
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Robert Shiller's plot of U.S. home prices, population, building costs, and bond yields,
from Irrational Exuberance, 2d ed. Shiller shows that inflation adjusted U.S. home prices
increased 0.4% per year from 18902004, and 0.7% per year from 19402004, whereas U.S.
census data from 19402004 shows that the self-assessed value increased 2% per year.
In attempting to identify bubbles before they burst, economists have developed a number
offinancial ratios and economic indicators that can be used to evaluate whether homes in a given
area are fairly valued. By comparing current levels to previous levels that have proven
unsustainable in the past (i.e. led to or at least accompanied crashes), one can make an educated
guess as to whether a given real estate market is experiencing a bubble. Indicators describe two
interwoven aspects of housing bubble: a valuation component and a debt (or leverage)
component. The valuation component measures how expensive houses are relative to what most
people can afford, and the debt component measures how indebted households become in buying
them for home or profit (and also how much exposure the banks accumulate by lending for
them). A basic summary of the progress of housing indicators for U.S. cities is provided
by Business Week.[15]See also: real estate economicsand real estate trends.
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Housing affordability measures
The price to income ratio is the basic affordability measure for housing in a given area. It is
generally the ratio ofmedian house prices to median familial disposable incomes, expressed
as a percentage or as years of income. It is sometimes compiled separately for first time
buyers and termed attainability.[citation needed] This ratio, applied to individuals, is a basic
component of mortgage lending decisions.[citation needed] According to a back-of-the-envelope
calculation by Goldman Sachs, a comparison of median home prices to median household
income suggests that U.S. housing in 2005 is overvalued by 10%. "However, this estimate is
based on an average mortgage rate of about 6%, and we expect rates to rise," the firm's
economics team wrote in a recent report.[16]According to Goldman's figures, a one-
percentage-point rise in mortgage rates would reduce the fair value of home prices by
8%.[citation needed]
The deposit to income ratio is the minimum required downpayment for a typical
mortgage[specify], expressed in months or years of income. It is especially important for first-
time buyers without existing home equity; if the downpayment becomes too high then those
buyers may find themselves "priced out" of the market. For example, as of 2004 this ratio
was equal to one year of income in the UK.[17]
Another variant is what the United States's National Association of Realtors calls the
"housing affordability index" in its publications.[18](The NAR's methodology was criticized
by some analysts as it does not account for inflation.[19]Other analysts, however, consider
the measure appropriate, because both the income and housing cost data is expressed in
terms that include inflation and, all things being equal, the index implicitly includes
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inflation). In either case, the usefulness of this ratio in identifying a bubble is debatable;
while downpayments normally increase with house valuations, bank lending becomes
increasingly lax during a bubble and mortgages are offered to borrowers who would not
normally qualify for them (see Housing debt measures, below).
The Affordability Index measures the ratio of the actual monthly cost of the mortgage to
take-home income. It is used more in the United Kingdom where nearly all mortgages are
variable and pegged to bank lending rates. It offers a much more realistic measure of the
ability of households to afford housing than the crude price to income ratio. However it is
more difficult to calculate, and hence the price to income ratio is still more commonly used
by pundits. In recent years, lending practices have relaxed, allowing greater multiples of
income to be borrowed. Some speculate that this practice in the longterm cannot be sustained
and may ultimately lead to unaffordable mortgage payments, and repossession for
many.[citation needed]
The Median Multiple measures the ratio of the median house price to the median annual
household income. This measure has historically hovered around a value of 3.0 or less, but in
recent years has risen dramatically, especially in markets with severe public policy
constraints on land and development.[citation needed]
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Inflation-adjusted home prices in Japan(19802005) compared to home price appreciation in
the United States, Britain, andAustralia (19952005).
[edit]Housing debt measures
The housing debt to income ratio or debt-service ratio is the ratio of mortgage payments to
disposable income. When the ratio gets too high, households become increasingly dependent
on rising property values to service their debt. A variant of this indicator measures total
home ownership costs, including mortgage payments, utilities and property taxes, as a
percentage of a typical household's monthly pre-tax income; for example
see RBC Economics' reports for the Canadian markets.[20]
The housing debt to equity ratio (not to be confused with the corporate debt to equity ratio),
also called loan to value, is the ratio of the mortgage debt to the value of the underlying
property; it measures financial leverage. This ratio increases when the homeowner takes
a second mortgage orhome equity loan using the accumulated equity as collateral. A ratio
greater higher than 1 implies that owner's equity is negative.
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[edit]Housing ownership and rent measures
The ownership ratio is the proportion of households who own their homes as opposed
torenting. It tends to rise steadily with incomes. Also, governments often enact measures
such as tax cuts or subsidized financing to encourage and facilitate home ownership. If a rise
in ownership is not supported by a rise in incomes, it can mean either that buyers are taking
advantage of low interest rates(which must eventually rise again as the economy heats up) or
that home loans are awarded more liberally, to borrowers with poor credit. Therefore a high
ownership ratio combined with an increased rate ofsubprime lending may signal higher debt
levels associated with bubbles.
The price-to-earnings ratio orP/E ratio is the common metric used to assess the relative
valuation ofequities. To compute the P/E ratio for the case of a rented house, divide
the price of the house by its potential earnings ornet income, which is the market
annualrent of the house minus expenses, which include maintenance and property taxes. This
formula is:
The house price-to-earnings ratioprovides a direct comparison to P/E ratios used to
analyze other uses of the money tied up in a home. Compare this ratio to the simpler but
less accurate price-rent ratio below.
The price-rent ratio is the average cost of ownership divided by the received rent
income (if buying to let) or the estimated rent that would be paid if renting (if buying
to reside):
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The latter is often measured using the "owner's equivalent rent" numbers published by
the Bureau of Labor Statistics. It can be viewed as the real estate equivalent of
stocks' price-earnings ratio; in other terms it measures how much the buyer is paying for
each dollar of received rent income (or dollar saved from rent spending). Rents, just like
corporate and personal incomes, are generally tied very closely to supply and
demand fundamentals; one rarely sees an unsustainable "rent bubble" (or "income
bubble" for that matter). Therefore a rapid increase of home prices combined with a flat
renting market can signal the onset of a bubble. The U.S. price-rent ratio was 18% higher
than its long-run average as of October 2004.[21]
The gross rental yield, a measure used in the United Kingdom, is the total
yearly gross rent divided by the house price and expressed as a percentage:
This is the reciprocal of the house price-rent ratio. The net rental yield deducts the
landlord's expenses (and sometimes estimated rental voids) from the gross rent before
doing the above calculation; this is the reciprocal of the house P/E ratio.
Because rents are received throughout the year rather than at its end, both the gross and
net rental yields calculated by the above are somewhat less than the true rental yields
obtained when taking into account the monthly nature of rental payments.
The occupancy rate (opposite: vacancy rate) is essentially the
number of occupied units divided by the total number of units in
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a given region (in commercial real estate, it is usually expressed
in terms of area such as square meters for different grades of
buildings). A low occupancy rate means that the market is in a
state ofoversupplybrought about by speculative construction
and purchase. In this context, supply-and-demand numbers can
be misleading: sales demand exceeds supply, but rent demand
does not.
[edit]Housing price indices
Main article: House price index
The CaseShiller index (national, quarterly) 19872008, showing a
housing bubble peaking in 2006.
Measures of house price are also used in identifying housing
bubbles; these are known ashouse price indices (HPIs).
A noted series of HPIs for the United States are the CaseShiller
indices, devised by American economists Karl Case, Robert J.
Shiller, and Allan Weiss. As measured by the CaseShiller index, the
US experienced a housing bubble peaking in the second quarter of
2006 (2006 Q2).
http://en.wikipedia.org/wiki/Oversupplyhttp://en.wikipedia.org/w/index.php?title=Real_estate_bubble&action=edit§ion=10http://en.wikipedia.org/w/index.php?title=Real_estate_bubble&action=edit§ion=10http://en.wikipedia.org/w/index.php?title=Real_estate_bubble&action=edit§ion=10http://en.wikipedia.org/wiki/House_price_indexhttp://en.wikipedia.org/wiki/House_price_indexhttp://en.wikipedia.org/wiki/Case%E2%80%93Shiller_indexhttp://en.wikipedia.org/wiki/Case%E2%80%93Shiller_indexhttp://en.wikipedia.org/wiki/Case%E2%80%93Shiller_indexhttp://en.wikipedia.org/wiki/Case%E2%80%93Shiller_indexhttp://en.wikipedia.org/wiki/Karl_Casehttp://en.wikipedia.org/wiki/Robert_J._Shillerhttp://en.wikipedia.org/wiki/Robert_J._Shillerhttp://en.wikipedia.org/wiki/Allan_Weisshttp://en.wikipedia.org/wiki/File:Case-shiller-index-values.jpghttp://en.wikipedia.org/wiki/File:Case-shiller-index-values.jpghttp://en.wikipedia.org/wiki/File:Case-shiller-index-values.jpghttp://en.wikipedia.org/wiki/File:Case-shiller-index-values.jpghttp://en.wikipedia.org/wiki/Allan_Weisshttp://en.wikipedia.org/wiki/Robert_J._Shillerhttp://en.wikipedia.org/wiki/Robert_J._Shillerhttp://en.wikipedia.org/wiki/Karl_Casehttp://en.wikipedia.org/wiki/Case%E2%80%93Shiller_indexhttp://en.wikipedia.org/wiki/Case%E2%80%93Shiller_indexhttp://en.wikipedia.org/wiki/House_price_indexhttp://en.wikipedia.org/wiki/House_price_indexhttp://en.wikipedia.org/w/index.php?title=Real_estate_bubble&action=edit§ion=10http://en.wikipedia.org/wiki/Oversupply7/27/2019 Motivation of Sales Icon in Real State in Kanchal Group
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[edit]Real estate bubbles in the 2000s
By 2006, several areas of the world were thought to be in a bubble
state, although this contention was not without controversy. This
hypothesis was based on observation of similar patterns in real estate
markets of a wide variety of countries.[22]This includes similar
patterns of overvaluation and excessive borrowing based on those
overvaluations.
The subprime mortgage crisis, with its accompanying impacts and
effects on economies in various nations, has given some credence to
the idea that these trends might have some common characteristics.
http://en.wikipedia.org/w/index.php?title=Real_estate_bubble&action=edit§ion=11http://en.wikipedia.org/w/index.php?title=Real_estate_bubble&action=edit§ion=11http://en.wikipedia.org/w/index.php?title=Real_estate_bubble&action=edit§ion=11http://en.wikipedia.org/wiki/Real_estate_bubble#cite_note-21http://en.wikipedia.org/wiki/Real_estate_bubble#cite_note-21http://en.wikipedia.org/wiki/Real_estate_bubble#cite_note-21http://en.wikipedia.org/wiki/Subprime_mortgage_crisishttp://en.wikipedia.org/wiki/Subprime_mortgage_crisishttp://en.wikipedia.org/wiki/Real_estate_bubble#cite_note-21http://en.wikipedia.org/w/index.php?title=Real_estate_bubble&action=edit§ion=117/27/2019 Motivation of Sales Icon in Real State in Kanchal Group
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INDIA: REAL ESTATE SCENARIO
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GROWTH ACROSS GEOGRAPHIES
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Indias Property Sector: Credit Strengths
In the residential sector, a growing middle class is enjoying rising income levels. Combined with
smaller household sizes, this demographic change has boosted demand for more modern housing
and home loans. Meanwhile, increasing consumer spending power has encouraged growth in
organized in organized retailingboth feeding off and contributing to the spear of mall culture
and the popularity of other large-scale retail property developments.
In the commercial property segment, strong growth in the services sectorparticularly in the IT
and ITES sectors and corporates growing scale of operations have led to greater demand for
commercial space, including modern offices, warehouses and lodging space.
Many Developers have substantial plans to increase both their size and geographical spread.
They are also expanding into different kinds of properties, which can boost the firms franchise
values and reduce concentration risks. However, managing and financing such activities can be a
challenge, and puts a premium on financial flexibility, capital access and operational
infrastructure.
The property industry is also wrestling with oversupply in certain areas, such as in Indias
commercial property sector, which may lead to rent reductions and value drops. Meanwhile,
property firms must also cope with a reduction in customer advances on new construction,
increasing land values (making acquisition and development deals tougher), rising interest rates
since 2005, and increased difficulty in arranging capital. The latter is exacerbated by rising
interest rates and property prices, which have encouraged banks to become more selective in
granting loans as they try to preserve asset quality.
Moreover, the Reserve Bank of India (RBI) has increased risk weighting for real estate exposure,
which has served to curtail direct lending to this sector.
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The property business in India also faces political risks. These risks may come in various forms,
but include the stalling of decisions over acquisitions or planning permission during elections,
while some approvals have even been rescinded following elections and changes to state
governments.
Property financing remains largely conducted through conventional mortgages, with the volume
of more modern, transparent and liquid products-such as shares in public property firms and
CMBS-still negligible. This is partly due to high registration charges and transaction costs and
structural impediments in the securitization legal framework.
Furthermore, mutual funds lack the appetite of long-tenure deals, and mostly invest in high
quality debt, while pension funds and insurance companies have yet to invest in structured paper
either.
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COMPANY PROFILE
VISION OF KANCHAL GROUP
To fulfill growing aspirations of our customers by:
Building world class real estate solutions
Redefining lifestyle standards.
IDENTITY
The color Red stands for RAJA/REGAL. It stands for passion, heat, energy, dynamism &
purity. It exhibits groups rich heritage.
Black occurs when an object absorbs all the other colors. Black is significant to the group
as it represents the proposed amalgamation of all group companies into KANCHAL
GROUP, thereby creating the new and vibrant Sushil Ansal Group.
The Slogan, Building Lifestyle since 1967, encapsulates the Groups heritage and vision in
creating a better life for Indians in various sphere like- homes, offices, places of entertainment,
hotels, shopping malls & educational institutions.
KANCHAL GROUP was established as a result of a dream, shared by its visionary founders. A
dream that was to, radically improve the lifestyle standards of the citizens by building world
class real estate solutions.
After four decades of spectacular growth KANCHAL GROUP is at a stage where the company
has acquired immense experience, consolidated and established assets- physical and intellectual
and at the same time retained youthful energy & zeal. With foundations entrenched in the solid
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bedrock of technical expertise and financial stability its pinnacles are rising new heights with
foresight and innovations for future requirements of resurgent India.
KANCHAL GROUP as an organization can be best envisaged as a creator of man made social
infrastructure, where modern life blooms, in collaboration with the environment. The ascent of
KANCHAL GROUP to the top of the Real Estate acme is a direct product of Mr.Sushil Ansal's
foresight and his dynamic leadership. KANCHAL GROUP, the corporate manned by
professionals at all levels with its strong base and lineage is now in a state of renaissance; all the
companies of Sushil Ansal Group will now be under one banner i.e. the KANCHAL GROUP.
The new "KANCHAL GROUP" identity, is the first communicator of this phase ofresurgence,
excellence and modernity. The rectangular shape signifies solidity, cohesiveness and strength,
the red colour stands for passion, heat, energy, dynamism & purity and the black colour signifies
the proposed amalgamation of Ansal Township and Projects Limited into Ansal Properties and
Infrastructure Limited. The slogan, ' Buil ding li festyles since 1967', encapsulates their heritage
and vision in creating a better life for Indians in various spheres like - homes, offices, places of
entertainment, hotels, shopping malls and educational institutions.
KANCHAL GROUP is focusing on ushering in new lifestyle ventures in cities like- Greater
Noida, Gaziabadh. Meerut, Agra, Lucknow, Batindha, Mohali, Amritsar, Ludhiana, Jalandhar,
Jaipur, Jodhpur, Ajmer, Sonepat, Panipat, Karmal, Kurukshetra, Faridabad, Gurgaon to name a
few.
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It is said that actions speak louder than words and nothing highlights this adage better than
KANCHAL GROUP's effort to give something back to the society of which they are a part.
KANCHAL GROUP believes that today's children are tomorrow's leaders and in order to hone
their young minds, KANCHAL GROUP has forayed into the education sector with schools like
the Chiranjiv Bharati School at Palam Vihar and Sushant Lok, premier institutions like the Ansal
Institute of Technology and the Sushant Schools of Art and Architecture. KANCHAL GROUP
in its endeavour to fulfill its duties to payback in form of green cover for the society have created
manmade verdant ambiance at projects like the Aravali Retreat, Pushpanjali Farms, Satbari
Farms.
KANCHAL GROUP plans to create an ambiance of peace and tranquility for the people who
have served their duties and are now in their dusk of life to relax and enjoy their retirement by
building old age homes.
Touching every facet of modern lifestyle with its signature of excellence, KANCHAL GROUP
has changed the skyline of India with its versatile portfolio of residential complexes, educational
institutions, hotel and hospitality avenues, shopping malls, farmlands and IT parks amongst
others. With its deep-rooted foundation of ethics and values, KANCHAL GROUP continues to
conquer new horizons, thus pioneering and identifying new vistas of growth for the real estate
sector.
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PRODUCT PORTFOLIO
1. COMMERCIAL
2. TOWNSHIP & GROUP HOUSING
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3. RETAIL/MALLS
4. HOSPITALITY & ENTERTAINMENT
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5. IT PARKS/INDUSTRIAL PARKS/SEZs
6. EDUCATION
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7. FACILITIES MANAGEMENT
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RESEARCH METHODOLOGY
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Project Title:
Real Estate Investment trends in Northern India
Objectives of the Study
1. To identify the scope of investment in various states, especially outside NCR & Delhi.
2. To identify the current trend of Real Estate, in areas across Delhi, NCR, Rajasthan,
Punjab, U.P., Mariana.
3. To identify the reasons of investment in various states.
4. To identify the reasons of people for not investing in various states.
5. To identify the preferences of customers.
6. To evaluate the effectiveness of major real estate players.
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Type of Data
The data collected is Primary data and Secondary data which is both quantitative and qualitative
data, which was further analyzed in order to draw conclusions and suggestions.
Data Collection
Data was collected by visiting Real Estate Agents across Lucknow and getting the questionnaires
filled through them. Five areas of Delhi were covered, being, North, East, West, South and
Central Delhi. Areas covered in the NCR region were Gurgaon, Indripuram, Vaishali,
Vasundhra.
Limitations of the study
1. Biasness of the real estate agents towards a particular company.
2. Lack of knowledge of the agents about areas outside their scope.
3. Agents catering to a specific kind of market, tend to favor those options.
4. Some generalizations by the targeted agents.
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FINDINGS & ANALYSIS
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CONCLUSIONS & SUGGESTIONS
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What Cities Need To Do In Order To Attract Investments?
BESIDES FINANCIAL POLICY FRAMEWORKMANAGEMENT OF LAND IS A
PRECURSOR OF GROWTH FOR ANY REGION
ITS CONTRIBUTION IS MANIFOLD IN ALL SYNERGISTIC AREAS OF GROWTH
Give a different identity to each city
Have INTL. level Planning and infrastructurephysical and social
Antiquated Land Policies need to change
Effective implementation
Conducive policies
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Get an Image Makeover
13. SWOT ANALYSIS OF RELIANCE ENERGY LIMITED
STRENGTHS
1. Long experience in creation of world class assets at competitive schedules and costs
2. Experience in setting up of power projects and distribution of electricity to over 5 million
consumers
3. Strong project management and execution expertise
4. REL is ranked amongst Indias top 25 listed Private Co. in terms of financial parameters
including assets, sales, and profit and market capitalization.
5. Most valuable power company with a market capitalization of over Rs 10,000 crore
6. Group contributes nearly 16,000 million units of power to over 25 million consumers in
Mumbai, Delhi, Orissa and Goa across an area covering 1, 24,300 Sq. Kms.
7. Brand Equity and Brand name.
8. Governmental Supports through grants.
9. Internet usage drives down distribution costs.
WEAKNESSES
1. Financial losses.
2. Increase in wages and salaries.
3. Increase in debt to cover the operating expenses.
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4. The acquired distribution circle is in bad state in terms of technology, investments and
consumers.
OPPORTUNITIES
1. Northern region has looming power deficit due to which economic growth is hampered,
which discourages further investments by corporate and industrial investors.
2. The challenges for power reforms in distribution in various states are vast and the private
sector participation in distribution has huge potential. Even if one state in India opens up
this sector every year, this will be a value creating opportunity for the customer and the
state.
3. Decline in interest rates.
THREATS
1. Reliance has very little expertise in distribution.
2. The risk factor in the strategy is the timing of the state government in allocating new
distribution licenses.
3. The competition in this Industry is increasing very fast.
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CONCLUSIONS
1. Investors have a great amount hope from KANCHAL GROUP. Although, there are
delays in some ANSAL Projects, even then, investors feel secured in investing in
KANCHAL GROUP projects.
2. Clients often face problems with the company follow-up and allotment.
3. In the view of real estate agents, Unitech & DLF are the best service providers.
4. Circle rates of Plots must go up. Government should control the non-committed trend of
upcoming builders. With prices of property, infrastructure should also grow.
5. Bank Loan Interest rates must go low for the survival of real estate.
6. People are not too keen to invest outside NCR, and block their money for long term.
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7. There should be no hidden costs, and everything should be crystal clear, which poses a
great influence on building brand image.
8. Developers should come up with timely projects. Companies should keep constant
correspondence with its customers. There should be a commitment of prices by the
company.
9. Pre-Launching is a major problem, thereby customers feel cheated by the
Developers/Agents.
10. Tough for small developers, due to frauds by companies like OSB, etc.
11. Good Scope of agricultural land in Rajasthan.
12. As, in U.P. there is a problem of electricity, so developers should focus on issues like
these.
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13. It is observed that as far as Rajasthan is concerned, people are not aware of its scope as
an option, and have very limited information about the prevailing price hike and future
scope.
14. In Delhi, in some places like South Delhi, there is a high demand of floors, than its
supply.
15. A significant reason for people to not invest outside NCR, is that there are still good
options left in NCR.
16. It is noted that there is a good amount of scope on NH-8, as the foresight of the agents
see many colonies flourishing on the highway.
17. It is anticipated, Rajasthan will take a time period of around 10 years to see a boom.
18. It is seen that there is a great demand for 2 Bedroom Apartments in Gurgaon, but lack
supply.
19. People find a reason to invest in a particular city. In Rajasthan there is no such reason
except the tourism Industry. People come to Delhi for work and not Rajasthan.
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