1.

1 ABOUT STUDY:
The most basic definition real estate is a piece of land, including the air above it and the ground
below it, and any buildings or structures on it. Real Estate can include business and/or residential
properties, and are generally sold either by a realtor or directly by the individual who owns the
property (for sale by owner). The Real Estate/property is considered to be the second largest
employment sector and the most emerging industry in India. The way people prefer to invest in
properties of different kinds and boom in construction activities all over the country is the matter
to be known. The trend in property market, kinds of investment in real estate, hotspots for
investment in various regions, Price fluctuations and growth rate of industry, etc. are the contents
to be studied. The study has been undertaken as the project work undertaking the growing
importance in the Investment matters and its contribution to the aspects of economy. The study
explains the importance of the real estate sector, its current trends and future prospects of
investments, its characteristics, advantages and disadvantages of investments. Also various
methods of finding out the investment values, considerations while investing in real estate
properties, government regulations, etc.
1.2 Current Scenario of the Real Estate Market in India
Commercial real estate sector is in boom in India. In the last fifteen years, post
liberalization of the economy, Indian real estate business has taken an upturn and is
expected to grow from the current USD 14 billion to a USD 102 billion in the next 10
years. This growth can be attributed to

favorable demographics, increasing purchasing

power, existence of
Customer friendly banks & housing finance companies, professionalism in real estate and
favorable reforms initiated by the government to attract global investors
Cause-Effect scenario leading to emergence of organized real estate market in India The property
market in India has traditionally been unorganized and fragmented. However, the recent
past has seen a consolidation of positions in the market as developers are stretching their
capacities to the maximum in order to meet the growing market demand, which in turn has
encouraged large projects with sourced financing. The IPOs by large real estate developers like
Sobha, Raheja and DLF have led to organization of the market in the Tier I cities, but the Tier
II and Tier III cities still demonstrate the traits of an unorganized market. Whilst the
Indian real estate market still lacks transparency and liquidity compared to more mature

real estate markets, the increasing requirements of multi national occupiers, as well as the
influx of international property consultancies has led to the introduction of greater availability
of market information, both in published and private form pushing the sector to an organized
market form.

1.3 Driving Forces

Stated below are the reasons that have led to the real estate boom in the country
Booming economy; accelerated GDP to 8% p.a.
Indias emergence as an attractive off shoring destination and availability of pool of
highly skilled technicians and engineers ; Development of large captive units of major
players include GE, Prudential, HSBC, Bank of
America, Standard Chartered and American Express
Rise in disposable income and growing middle class, increasing the demand for
quality residential real estate and real estate as an investment option.
Entry of professional players equipped with expertise in real estate development;
Relaxation of legal rulings and processes by the governing bodies encouraging
investments in real estate
Improvement in infrastructure facilities
1.4 Categorization
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. 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. This data clearly demonstrates the growth of the real estate sector in the
country. With reference to the availability of infrastructure facilities, following cities are
currently attracting MNCs/corporate/real estate developers:
Tier I cities, Mumbai (Commercial hub), Delhi (Political hub) and Bangalore
(Technological hub):

Preferred option for many new market entrants

Command the highest international profiles and significant proportion of

FDI

Offer qualified labor pool and the best infrastructure facilities

Exhibit development of sub-urban commercial real estate

Yield of 9.5 10%

Tier II cities,notably

Hyderabad,

Chennai,

Chandigarh,

Kochi,

Mangalore,

Mysore,

Thiruvananthapuram, Goa, Bhubaneshwar, Ahmedabad and Pune

Yield of 10.5-11.5%

Offer competitive business environments, human resources availability,

telecommunications connectivity, quality of urban infrastructure,

Attract high value IT, ITES and biotech corporate houses

Tier III cities, like Cuttack and Jaipur

Low liquidity and still highly unorganized.

Special Economic Zones:

28 operational SEZs in the country, including those converted from Export

Processing Zones (EPZ) to SEZ

Development of SEZs in various segments such as multi-product, Information
Technology, Bio-technology, Gems and Jewellery, Textiles and technology
intensive industries

Attract both developers and corporate houses (refer table for a list of
corporate that have shown interest in development of SEZs)

Corporate
Reliance Industries
Adani Group
TCG Refineries
Suzlon
Hindalco
Genpact
Vedanta

Location
Gurgaon, Mumbai/Navi Mumbai
Mundra
Haldia
Coimbatore, Udipi, Vadodara
Sambalpur
Bhubaneshwar, Jaipur, Bhopal
Orissa

1.5 Real Estate Investment Banking

Real Estate Investment Banking is an approach to real estate financing providing the
client a host of services including the structuring of real estate projects, legal advice,
operative management of real estate projects and support in marketing properties. The
banking focus in Real Estate Investment Banking is on structured financing products and
structuring of entire portfolios. Extending on similar lines is the importance of
syndication that forms the base line of larger-sized transactions.

Real estate investment banking focuses on the following target market as prospective client
base:
1.6 Real Estate Consultants
The increase in transparency and liquidity in the real estate market in India is attracting
international real estate consultants to India. These consultants offer end to end solutions for
their

clients

real

estate

needs.

These

services

include

strategic

consulting

to

developers, investors, advisors and lenders seeking assistance with existing assets,
potential acquisitions, new development projects and properties slated for disposition,
feasibility studies, concept testing,business planning exercises, investment advice, market
research and analysis, demand forecasting, financial modeling and

project structuring

exercises, portfolio optimization and re-engineering strategies, expansion and occupancy,

location and entry, brokerage services, legal documentation review, valuations etc.
Real estate consultants also ensure that the financing needs of the client are well taken care
of by liaising with banking/non banking institutions and providing them with investment
and

structured

finance

solutions

including

securitization

and

sale

& leasebacks,

structured finance facilitating equity/debt into development projects on behalf of private and
government sector clients, structuring

development financing, public - private -

partnerships, joint ventures, portfolio transactions and privatization exercises. The recent
players in the Indian market are Jones Lang Lasalle, Colliers, CBRichard Ellis, Frank
Knight and Trammell Crow Meghraj.

1.7 Developers and Construction Companies

With the opening up of the real estate sector in the country, the construction houses are

scaling up the commercial and residential constructions. An increasing number of

developers are offering IPOs for fund raising. AIM too is a sought after solution to meet the
fund requirements for these developers.
Group

Route/Market

Parsvanath

IPO

Sobha

IPO

Pyramid Saimira

IPO

DLF Universal

IPO

K Raheja Corp

AIM

Unitech

AIM

Hiranandani
Construction

AIM
As the land prices in the Tier I cities have always moved upward, land was regarded as a safe
investment which, regardless of how it was used, would produce capital gains far above the
inflation rate. It was

thus common for companies in the manufacturing and service

industries to acquire real estate even though they themselves were completely unrelated to
property rental or real estate investment, seeking collateral value and tax benefits from
depreciated assets, and expecting unrealized gains to absorb business risk. Acquisition of real
estate as an asset was further encouraged as part of a diversification strategy in the investment
portfolio of these corporate houses..As these real estate possessions are classified as fixed
assets held for the companys own business purposes, it becomes feasible recent moves to
increase real estate liquidity often involve the conversion of corporate real estate into
commercial use. The corporate houses in India are also demonstrating a shift from ownership
to leasing. With the advent of MNCs into the country, a growing number of companies
no longer see real estate ownership as an absolute necessity.From the perspective of
companies who want to sell off assets, securitization schemes provide a greater diversity of
alternatives to liquidate real estate.

Real estate sector in India is witnessing tremendous boom. Real estate industry in India is
presently worth $12 billion and is growing at the rate of 30 per cent per annum. The importance
of real estate sector in India can be gauged from the fact that it is the second largest employer next
only to agriculture. The real estate industry has significant linkages with several other sectors of
the economy and over 250 associated industries.

Indian real sector has seen an unprecedented boom in the last few years. This was ignited
and fueled by two main forces. First, the expanding industrial sector has created a surge in
demand for office-buildings and dwellings. 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. Second,
the liberalization policies of government have decreased the need for permissions and licenses
before taking up mega construction projects. Opening the doors to foreign investments is a further
step in this direction. The government has allowed FDI in the real estate sector since 2002. FDI
was deemed necessary in the view of making the sector more organized and increasing
professionalism farmers. The villages adjacent to the metro cities have experienced sky-rocketing
land prices. This has induced farmers to sell their land for good money.
Eighty percent share of the real estate market is garnered by residential sector and the rest is
comprised of offices, shopping malls, hotels and hospitals.
Real estate companies are coming up with various residential and commercial projects to fulfill
the demand for residential and office properties in Tier-II and Tier-III cities.
An estimated shortage of 26.53 million houses during the Eleventh Five Year Plan (2007-12)
provides a big investment opportunity.
in the year 2009-10 the total constructions sector size was Rs. 488,345 caror as per The Central
Statistical Organization.
Table: Growth Rate of Major Sectors in India:
Year
2001-02
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11

Agriculture
3.1
0.0
5.8
4.0
4.9
1.6
0.4
5.4

Industry
6.1
8.5
8.1
10.7
7.4
2.6
8.3
8.2

Construction
6.8
16.1
16.2
11.8
10.1
7.2
8.0
8.9

Services
4.2
9.1
10.6
11.2
10.9
9.7
10.1
9.6

GDP
3.9
7.5
9.5
9.7
9.0
6.7
8.0
8.6

1.7 Marketing in Real estate

The real estate industry today has changed so much that each sector needs special skills to make it
work efficiently. All over the world, prices are fluctuating. Global agencies monitor trends in the
top influential cities. With many foreign investments in India and NRIs returning, the Indian
property market watch is on the top most of every big agency.
Mumbai is the costliest city to live in Asia. To understand real estate marketing one should at least
have the minimum knowledge required to step into the complex industry. Out there, plenty of
smart operators are looking for suckers. They may not be dishonest but will technically confuse
you to pay higher price and outsmart you. Therefore, if you know your onions and the deep layers
beyond the skins it helps to get the best.
The purchasing power of the new generation of Indians has increased. They are investing in real
estate in a big way- in terms of investment and assets. People have acquired refined tastes in
housing needs and become professional in dealing with builders. Financial companies and banks
have given a boost to real estate marketing as well. To add to this the government has allowed
foreign investors also to test the market conditions here have helped. Every area of real estate be it
industrial, retail space, malls, office complexes, residential colonies, hospitals, clinics and other
healthcare units have a vast potential for growth.
As more opportunities grow for people to work they also wish to invest in places close by to live
in. Builders or developers in various regions are now separately marketing each space. Even home
loan companies and banks are independently marketing the properties they are giving loans. This
helps them to guide their dedicated clientele and ensure the marketing trends remain closely
monitored for future development.
They generally have customer relationship executives who are assigned (usually area wise) to
assist customers in making decisions. They do have good knowledge, are professionals on the job
and customers do benefit if they are not very familiar with various technicalities. Each company
has its own marketing device and portfolio to attract customers.

Various tie ups with groups in India and overseas have taken place this year with increase in FDI.
MGF Developments based in New Delhi and Emmar Properties based in Dubai have joined hands

in the first quarter of 2006 for investments within the country. Nowadays most of real estate focus
is on shopping malls and residential complexes. In some areas down south, the thrust is on IT
parks, and corporate offices and resorts.
However, on the other side everyone or every other executive does not feel the real estate sector
in India is being well marketed or managed. Yes, there are some gray areas, which need to be
covered up. For instance, foreigners who wish to invest or firms who are looking at Indian
partners are feeling the crunch of bureaucracy and familial ways of working. This obviously
makes it difficult for them to do business. The potential is there but it needs to be tapped wisely. A
proper way is to have real estate marketing with the right professionals. Everyone wants to cash
on the business. The Indian construction & real estate industry plays a vital role in overall
economic development of the country. The rapid growth in the construction and real estate sector
in past few years paved the ways for robust future growth. Construction & Real estate consulting
practice helps Indian and foreign real estate and finance companies, construction equipment
manufacturers, building material suppliers/manufacturer of iron rods, steel, and cements for
entering into India market, researching the Indian & global Construction & Real estate industry,
Marketing in India and Marketing strategy.
The Construction & Real Estate Marketing Consulting Services includes

Real Estate Marketing strategy

Implementation support for Real Estate Marketing strategy and plan

International Marketing of Building materials & Construction equipments

Real Estate Market Research in India and Global Market

Branding of Real Estate companies

India Entry Strategy

Performance Management and Management Training

Strategic marketing solutions helps real estate clients to meet the challenges posed by the
transformation of Indian construction & real estate industry and safe guards from the ripple
effects from the global real estate industry.

The real estate sector in India is 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.
According to a report Emerging trends in Real Estate in Asia Pacific 2011', released by
PricewaterhouseCoopers (PwC) and Urban Land Institute (ULI), India is the most viable
investment destination in real estate. 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 options for 2011. Residential properties maintain their growth
momentum and hence are viewed as more promising than other sectors. ULI is a global non-profit
education and research institute. Further, real estate companies are coming up with various
residential and commercial projects to fulfill the demand for residential and office properties in
Tier-II and Tier-III cities. For instance, Ansal Properties has several residential projects in cities
such as Jodhpur, Ajmer, Jaipur, Panipat, Kundli and Agra. Omaxe has also planned around 40
residential and integrated township projects in Tier-II and Tier-III cities, majority of them being in
Uttar Pradesh, Punjab, Madhya Pradesh, Rajasthan and Haryana. The growth in real estate in TierII and Tier-III cities is mainly due to increase in demand for organized realty and availability of
land at affordable prices in these cities. 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$ 9,405 million from April 2000 to January 2011 wherein the
sector witnessed FDI amounting US$ 1,048 million during April-January 2010-11.

2.1 ABOUT

Established in 1987, with a firm view of providing value for money solutions in real estate, the
Mohan Group today is a multi-faceted entity with projects that span the spectrum of the industry
verticals, ranging from construction of residential and commercial spaces to professional
consultancy services in project execution and marketing.
The Mohan Group has a strong presence in the Central Suburbs of Mumbai, Pune and Goa with
more than 55 Lacs square feet of developed area to their credit and a satisfied customer base of
more than 12,000 happy families. The group has a further 70 lacs square feet of ongoing and
planned development in commercial and residential spaces scheduled for completion.
In tune with evolving urban lifestyles, the Mohan Group has continuously sought to provide the
best solutions that cater fully to customer needs within affordable budgets without compromising
on design, quality and timely delivery.
Professional project management expertise and strict adherence to quality processes, including
ISO 9001:2008 and ISO 14001:2004 certification, has helped the group build a reputation for
excellence and reliability.

2.2 VISION & MISSION

VISION
We envisage the creation of a futuristic urban landscape inspired by evolving lifestyles, and built
using technologically advanced materials and innovative processes; urban spaces designed to
sustain not merely a high standard of living, but also the environment and society that surrounds
it.
MISSION
Our mission is to turn dreams into concrete reality. From concept to completion, at every step, in
every project we undertake, we are focused on exceeding our customers expectations. Our
commitment to quality drives us to use nothing but the best, be it equipment, materials or
manpower. At Mohan Group, we aren't just redefining skylines; we are building the future, one
home at a time.

COMPANY VISION
Vision as a global business gives everyone within the organization a clear direction and goals to
aim for. It underpins everything we do, and the principles are clear for us all:

To be the company of first choice for all stakeholders - customers, employees, suppliers,
trade contractors and the society in which we live

To challenge and change the poor image of construction in India

With leanness and agility adopt processes to compete with world-leading businesses

COMPANY VALUES
Customer Centric
Social Responsibility
Learning and Innovation
Performance Excellence
Collective Ownership

COMPANY CULTURE

At MOHAN GROUP work in a culture based on openness, trust and joint responsibility. They
encourage their people to question, to contribute because they believe that responsibilities are to
be shared and the best outcomes are arrived at through an open and questioning attitude.
They believe that success can only be attained if they manage to lead a team of committed people
as people are the most important asset of their company and every effort is put in to develop
professional, technical and management skills and motivate and involve each and every
employee.
They respect the diversity of individuals working in their organization and recognize that diverse
culture and background makes MOHAN GROUP great place to work.
COMPANY POLICIES

MOHAN GROUP holds customer satisfied, security & The Environment as core business values
and is committed to create a future free of incidents and injuries, where :

All stakeholders activity create safe environments;

Leadership, passion and commitment are present at all level;

Working Safely enhances Quality, improves Productivity and generates value;

Attitude and behaviour replaces statistics as a measure of success;

People are enabled to make safe choices about their own and their neighbors safety and to
challenge the environment in which they work;

Our business only welcomes those who support our vision and are willing to change - no
compromise on safety.

'We take pride in everyone returning home safely everyday'

The company recognizes the importance of discharging all its statutory obligations and duties.
The minimum health and safety obligations are those required by relevant legislation and

authoritative guidance. MOHAN GROUP will take appropriate steps to meet, and in many cases
enhance these requirements. To make MOHAN GROUP the company of first choice for all
stakeholders, to challenge and change the image of construction in India.
. The Board will ensure that the SMS is periodically reviewed to ensure its remains legally
complaint, achievable, relevant and credible.
Continual improvement will be achieved by effective implementation of the above. Everyone
working for MOHAN GROUP is required to support and promote this Policy

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COMPLETED PROJECTS

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2.4 Industry size and Growth of Construction Industry

1

The size of the Construction industry is around Rs. 2.1 trillion

in 2008. The Construction

sector in India is the second largest economic activity after agriculture and provides
employment to about 33 million people.

India's Construction industry has grown at a

Compounded Annual Growth Rate (CAGR) of about 11.1% over the last eight years on the
back of massive infrastructure investment and rapid rise in housing demand. Foreign Direct
Investment (FDI) inflow into the sector during 2007-08 is estimated to be around Rs. 240
billion. Spending on infrastructure sectors such as ports, power plants and roads is projected at
more than Rs. 2.5 trillion annually for the next six years, and will require 92 million man
2
years of labour .Construction investment accounts for around 52.4% of the Gross Fixed
Capital Formation in India. Investments in Construction have a positive domino effect on
supplier industries, thereby contributing immensely

to

economic development. The

Construction sector has strong linkages with various industries such as cement, steel,
chemicals, paints, tiles, fixtures and fittings. While in the short term it serves as a demand
booster, in the long term it contributes towards boosting the infrastructure capacity.

2.5 Industry Segmentation

Construction sector can be broadly classified into 2 sub-segments:
1) Real estate (Residential, Commercial/Corporate, Industrial and Special Economic Zones
(SEZs))
2) Infrastructure (Transportation, Urban development, Utilities)The Real Estate segment
contributes around 24% to the Construction GDP of India while
Infrastructure segment contributes around 76%.

2.6 Real Estate Sector

In terms of GDP contribution, Real Estate sector is estimated at around Rs. 504 billion in
2007-08. The market size of the Indian real estate sector is estimated to be around Rs. 2,643
billion in 2007-08. The sector has been growing at a CAGR of 12%. It is constituted of the
Residential, Commercial and real estate activities of Special Economic Zones.
2.7 Residential
At around Rs. 2,171 billion, the housing sector is estimated to grow at 12% in the long term.
Demand for housing is estimated to be around 4.8 million houses per year over the Eleventh
Five Year Plan period. In addition to the need for new housing tenements, the demand is also
likely to be fuelled by the housing shortages already prevalent in several states. The shortage
of housing across several states, as illustrated in the graph below, amounts to about 25
million houses in the period of the Eleventh Five Year Plan.
2.8 Demand drivers for Residential Sector
Favourable demographics - The demographics work strongly in favour of the Indian
Construction industry. India is the second highest populated country in the world after China.
India's estimated population as of March 2008 is 1.14 billion, while the average age of
Indians is 26 years. The demographic profile indicates that India's working population
forms around 61% of the total population. India is and will remain one of the youngest
countries in the world for some time. The strong economic growth led to sharp income
generation, which led to rise in middle class segment. India currently has around 260 million
persons in the middle class segment. This segment's rising purchasing power and propensity to
consume is expected to drive and support a robust growth rate of the economy in the coming
years. The middle class along with robust macro-economic scenario and changing
demographic profiles has a major role to play in the growth and emergence of the
Construction industry in India.Urbanisation and Migration - The decadal growth rate of urban
population (20% between 1991-2001) in India is higher than the rural population (18% during
the same period). Average annual rate of change (AARC) of the total population in India
during 2000-2005 is estimated at 1.41% with2.81% for urban and 0.82% for rural sectors.
AARC for urban areas by 2025 will increase to 2.25%whereas the AARC for rural population

3
will decline to -0.4% showing a clear shift of population fromrural to urban areas . The average
household size has been estimated by the National Sample SurveyOrganisation as being around
4.47 in urban areas and only 67% of the houses are pucca units.Though there is a slump in real
estate activity in the last one year, investment over the long term will be primarily led by
housing, which is expected to account for nearly 90% of the total real estate sector.
2.9 Commercial/Retail Construction
The

rapid growth of the Indian economy has had a significant impact on the demand for

commercial property to meet the needs of business, by way of offices, warehouses, hotels and
retail shopping centres. Growth in commercial office space requirement is led by the
burgeoning outsourcing and information technology (IT) industry and organised retail. For
example, IT and ITES alone is estimated to require 150 million square feet across urban India
by 2010. Similarly, the organised retail industry is likely to require an additional 220 million
4

square feet by 2010

Demand drivers for Commercial/Retail Sector

The following are some of the demand drivers in the Commercial/Retail
Sector:
Sharp growth in organised retailing Organised retail, which is expected to grow at over 25% in
the next few years, is likely to drive demand in the commercial real estate sector. Growth in
IT/ITES sector at 30% annually - The investments in commercial Construction are expected to
grow faster than investments in housing mainly due to the spurt in office space construction
driven by IT/ITES industry.
Special Economic Zones
Over the next five years, growth in investments in Indian Industry will be driven by strong
capacity additions, led by strong growth in demand and high existing operating rates. Special
Economic Zones (SEZs) will be at the forefront of this growth. About 315 SEZs which have
been notified as of now, of which about 202 belong to the IT/ITES Sector.
Infrastructure
With the government's focus on infrastructure development along with the active participation

of the private sector, this segment is growing rapidly. The Power, Irrigation, Transportation
including

Roadways,

Railways,

Airports

and

Ports,

Urban

Development

and

Communications sectors have witnessed investments of Rs. 6.9 trillion over the Tenth Five
Year Plan (10
th

(11

th

FYP) and will witnessaround Rs. 14.8 trillion in the Eleventh Five Year Plan

FYP). India's infrastructure is set to improve rapidly with an estimated CAGR of 15%.

Public spending would continue to dominate this sector. The Government of India projects
that for the economy to grow at 9% per annum over the Eleventh Plan period the Gross
5

Capital Formation

in the infrastructure should increase from 5% of GDP at the start of the

Tenth Plan to around 9% at the end of the Eleventh Plan. The central government would
contribute 37%, the state governments 32% and the private sector would contribute 31% of the
total investments in infrastructure for the next five years.

3.1 Objectives of the Study

The Report has been prepared with certain goals. The Following are the Main objective of study
of the report.
To analyze the investment in real estate.
Comprehensive study of overview and Trends in Real Estate sector Investment.
To study the advantages of investment in properties, prospects of investment.
3.2 Limitation Of the Study
If any work is to be carried out, it has its own some problems and limitations. This project work is
faced by the following major limitations:
1). For the preparation of this project report, it demand a quantum of time. The limited time
hassled in the completion of the project work.
2). The conclusions and finding derived here are as per my limited understandings and
knowledge.
3). There is lack of specific methods of calculation and proper statistical tools.
4). The project report is largely based on the secondary data.
Research can be defined as the search for knowledge, or systematic investigation for the purpose
of discovering, interpreting and concluding the subject. The research work is carried out in order
to find out solutions to the questions.
3.3 Research Design:
The research type undertaken in this project work is the Exploratory Research design. It is a type
of research conducted for deriving systematic solutions. It should draw definitive conclusions.
This research often relies on secondary research such as reviewing available literature and data, or
qualitative approaches such as informal discussion.

3.4 Data Sources:

Preparing the project report comprises the process of collecting and analyses data. The report is
prepared on the base of two types of data, primary data and secondary data.
Primary Data:
Primary data are those data that are collected by research. Such data are already exists. I have
collected such kind of data by asking questions and queries to the managers, personnel and
employees of the company. Such data are recorded in the books.
Secondary Data:
The project report is largely comprises the secondary type of data collection. Such type of data
are already exists that are collected previously by others. The sources of secondary data are
newspaper, magazine, websites, books, etc.

What is Investment...
In simple, Investment is putting money into something with expectation of profit. More
specifically, investment is the commitment of money or capital to the purchasing of financial
instruments or other physical assets so as to gain profitable returns in the form of interest,
dividend or appreciation of the value of the instrument. It is related to saving or deferring
consumption.
An investment involves choice by an individual or an organization to invest its money or
capital in following instrument,
Assets like vehicles, machinery, appliances
Property such as home, building, lands
Commodity
Stock market
Bond
Financial Derivatives like future & option
Foreign assets denominated in foreign currency
Investment comes with the risk of loss of the invested sum of money. The investment that has
not been thoroughly analyzed can be highly risky with respect to the investment owner
because the possibility of losing money is not within the owners control. The above listed all
the investment instruments possesses less or more chances of risk.

4.1 Classification of Properties:

Real estate has been broadly categories into 3 classes as follow
( T
y
p
e

A
R

e s
s
o

P
p P

)
.
e

n
i
f
r

a
t

l
r
e

o
y

o
p
e
r
t
y

(A). Residential Property:

The residential type of property is by far the most popular with both new and experienced
agents. Residential property offers a good investment avenue. People buy residential property for
two important reasons:

For staying

As an investment

Advantages of Investing in Residential Property

Expenses, including depreciation on the property and interest on your borrowings, are tax
deductible.

You make money as the value of the property increases.

You can leverage your investment.

You get rental income.

Risks of Investing in Residential Property

Interest rates could rise.

The property could be untenanted for a period of time.

You could get "bad" tenants.

It could take up a lot of your personal time.

House prices could remain static, or even fall.

The following are the type of Residential Property:

1.

Single Family Residence

2.

Row Houses/ Townships

3.

Flats

4.

Bungalows

(B). Commercial Property:

1. Multi-Family Commercial Real Estate:

Commercial real estate property types include duplex homes, and other construction for
habitation by multiple family groups. Condominiums are frequently called multi-family because
of their construction as a group, but are normally listed and sold as single family residential units.
Duplex homes are also frequently listed and sold as residential units to a buyer that lives in one
side and rents out the other.
2. Retail Space Real Estate Properties:

This category would include single buildings used as stores for clothing, electronics and other
consumer products, as well as malls, strip centers and the like. Restaurant spaces are a specialty
subset of the retail category, with some listings shown as restaurant/retail. Valuations can be based
on size and land value, retail sales per square foot or other investment return calculations.
3. Office Buildings and Office Complexes
A single building designed for office use, or a group of offices in a single building or cluster of
buildings would fall into this category. When offices are grouped in structures with single
ownership, they are listed as commercial office rental property. The owner derives income from
the rental payments of the office tenants. These can be valued based on the rental income return
on investment, rather than methods using square footage and land value. Medical & Dental offices
are a subset.
(C). Vacant Land

Land Investment has historically been the forte of large development companies, rich farmers or
wealthy individuals. It can be a profitable business if proper development of land is undertaken.
Land Investment is referred to as a long term investment and with land prices on the rise in many
parts of the world, it is said to be the safest and smartest way of investing ones money. Capital
gains can easily be realized from land when land price increases. The most striking feature of land
investment is that investment takes place in a tangible asset which the investors can readily put
into use. It is a branch of real estate investment which is gaining ground as major part of capital
budgeting analysis. Real estate is basically defined as immovable property such as land and
everything permanently attached to it like buildings. It is essentially at this juncture that land as an
asset differs from real estate as it does not necessarily includes buildings and the attachments to
the land.Land is perhaps the most basic asset that we want to invest in and may include vast open
tracts with no significant estate on it. The job of developing the land lies with the developer, and
with proper care to include modern houses and the associated amenities, it will significantly

appreciate its value. Land situated close to developed areas will cost more as opposed to those in
less developed areas. Land developed for commercial purposes and those developed for building
residential

complexes

will

have

different

prices

and

tax

implications,

if

any.

Investing in land can be profitable as there is limited supply of land and the purchaser can really
sell dear if he wants to.
4.2 CHARACTERISTICS OF REAL ESTATE INVESTMENT:
Real estate properties have its own some important features. Some of the characteristics that make
real estate unique as compared to other investment alternatives are as follows:
(1). Tangible:
Real estate is, well, real! You can visit your investment, speak with your tenants, and show it off
to your family and friends. You can see it and touch it. A result of this attribute is that you have a
certain degree of physical control over the investment - if something is wrong with it, you can try
fixing it. You can't do that with a stock or bond.
(2). Requires Management:
Because real estate is tangible, it needs to be managed in a hands-on manner. Tenant complaints
must be addressed. Landscaping must be handled. And, when the building starts to age, it needs to
be renovated.
(3). Inefficient Markets:
An inefficient market is not necessarily a bad thing. It just means that information irregularity
exists among participants in the market, allowing greater profits to be made by those with special
information, expertise or resources. In contrast, public stock markets are much more efficient information is efficiently dispersed among market participants, and those with material non-public
information are not permitted to trade upon the information. In the real estate markets,
information is king, and can allow an investor to see profit opportunities that might otherwise not
have presented themselves.
(4). High Transaction costs:
Private market real estate has high purchase costs and sale costs. On purchases, there are realestate-agent related commissions, lawyers' fees, engineers' fees and many other costs that can
raise the effective purchase price well beyond the price the seller will actually receive. On sales, a
substantial brokerage fee is usually required for the property to be properly exposed to the market.

Because of the high costs of trading real estate, longer holding periods are common and
speculative trading is rarer than for stocks.
(5). Lower Liquidity:
With the exception of real estate securities, no public exchange exists for the trading of real estate.
This makes real estate more difficult to sell because deals must be privately brokered. There can
be a substantial lag between the time you decide to sell a property and when it actually is sold usually a couple months at least.
(6). Underlying resident Quality:
When assessing an income-producing property, an important consideration is the quality of the
underlying residence. This is important because when you purchase the property, you're buying
two things: the physical real estate, and the income stream from the tenants. If the tenants are
likely to default on their monthly obligation, the risk of the investment is greater.
(7). Variability among Regions:
While it sounds clich, location is one of the important aspects of real estate investments; a piece
of real estate can perform very differently among countries, regions, cities and even within the
same city. These regional differences need to be considered when making an investment, because
your selection of which market to invest in has as large an impact on your eventual returns as your
choice of property within the market.
4.3 CONSIDERATIONS WHILE MAKING INVESTMENT IN REAL ESTATE
When it comes to making money, Real estate is considered to be one of the surest investments.
Lots of opportunities abound, whether it be in the stock market or in business. But these areas also
offer a significant amount of risk. As a result, most people do not engage in these speculative
activities. But real estate is something which more people can be involved in, simply because
everyone needs a home to live in. However, no investment is entirely risk free, and so even here a
certain amount of due diligence is required.
Some important point you need to think about:
1.Who is the developer?
Is the project a self development / partnership or joint venture?
Past business / trading history
The location of the proposed project
Basic amenities
The growth prospects of the neighborhood development

Industrial and business development in the locality

Price comparison analysis
Future property price valuation
What are the returns on your investment?
Affordability is a key consideration when making any purchase. One should factor additional
expenses such as electricity and property taxes to get a complete idea of how much can be
afforded.
An integrated service model offering end-to-end - 360 Realty Services to cater to the diverse
needs of corporate & developers in project management & execution. Managing realty projects
right from identification to marketing is a lengthy process replete with many challenges. You may
be keen to execute realty projects for commercial / residential purposes but may not be equipped
with

the

right

skill-sets

know-how

for

the

undertaking.

Build-One offers you with a integrated service model meeting the entire realty business needs to
help you successfully undertake your realty projects. Build-One offers you with a unified valuechain of core realty services with critical forward & backward integration of other value-added
services. The services are effectively streamlined enabling steady progression of the projects,
right from idea conceptualization to profit generation / hand-over, encompassing all functional &
operational tasks.

360* Degree Firms significant Functions pertaining to Construction Project.

Market Study

Feasibility StudyProperty Identification

Title Check/Legal Work

Regulatory Approvals Budgeting

Planning & Designing

Property acquisition

Project Mgt. / Construction

Marketing Plans
Selling, Leasing & Hand over

1. Market study:
Market study refers to detailed analysis of market and locations in different
regions within the specific area. One has to look the trend and path of the property market in
the area where he want to set up the project. A marketability study tries to create a market area
demand model based on available demographic information and the application of common
sense to develop a picture of the current and future market area trends that may effect demand.
2. Feasibility Study:
Feasibility Study typically involves testing geographic locations for a real estate development
project, and usually involves packages of real estate land. Developers often conduct feasibility
studies to determine the best location within a jurisdiction, and to test alternative land uses for
given packages. Jurisdictions often require developers to complete feasibility studies before
they will approve a permit application for retail, commercial, industrial, manufacturing,
housing, office or mixed-use project. Market Feasibility takes into account the importance of
the business in the selected area. Could the project be built?, Can the site support a building
structure that is planned?, etc. should be check out.

3. Property Identification:
Property identification refers to the type of project which the builder has to plan. It mean
whether put residential or row house or to put specific commercial project looking at the
locations and demand for the market. Property identification generally is driven by demand of
type of property in the market.

4. Title clear/Legal work:

Title clear is the phrase used to state that the owner of real property owns it free and clear of
encumbrances. In a more limited sense, it is used to state that, although the owner does not
own clear title, it is nevertheless within the power of the owner to convey clear title. For
example, a property may be encumbered by a mortgage. This encumbrance means that no one
has clear title to the property. However, standard terms in a mortgage require the mortgage
holder to release the mortgage if a certain amount of money is paid. Therefore, a buyer with
enough money to satisfy both the mortgage and the current owner can get clear title.

5. Property Acquisition:
Generally, property acquisition refers to a person or other entity acquiring

title to real

property by a deed. A deed is the legal instrument used to transfer ownership in real estate.
Real property can also be acquired by inheritance and by a court order.
6. Planning & Designing of Project:
Planning and designing is carried out only after finishing the above legal works. It is
concerned with the proper plans and the design of the project that the developer is going to
construct. Here, builder can approach architects to develop plan and design as per the
requirements of builder.
7. Budgeting:
This point is also important to be considered by a builder. The budget of the real estate project
should be optimal as per the plan and designs of the structure. Budgeting needs to analyze the
size of the projects.

8. Regulatory Approval:
After the plans and design of the projects, it needs to be submitted the same at the concerned
govt. authority (Municipal Corp./Municipality) for further verifications and approval for the
project. If authority finds no objections, then after they can arrive at decision for approval and
sanction of project.
9. Project Mgt./Construction:
f government regulatory approvals and project get sanctioned by authority, then after builder
can take step further to start initial work of construction. A project management team also has
to form for various aspects of the project of residential or commercial. At regular interval of
time, govt. executives checks the work whether is going as per the criteria.
10. Marketing Plan:
While developer put the marketing plan for the project he has put. On the bases of demand for
the housing and location. As a promotional efforts and marketing for the project Hoardings,
newspaper ads. attractive schemes, agent/ broker approach has to be followed.
11. Selling, Leasing and Handover:
Builder may sell the entire project to other party, or he may sell the project on leasing bases.
Another option he may adopt is he can hand over to the party who want to handle this project.
Below are some of the main points that were made along the way:
Real estate investments fall into one of the four following categories: private equity, public
equity, private debt and public debt. Your choice of which one to invest in depends on the type of
exposure you are seeking for your portfolio.
You can invest in either income-producing properties or non-income-producing properties. Any
leased property is income producing, and vacant properties are non-income producing. You can
still earn a capital return on a non-income producing property, just as you would on an investment
in a home. .
Real estate can produce income (like a bond) and appreciate.

Real estate is tangible, so it requires ongoing management. On the other hand, you also have an
increased ability to influence the performance of a single investment as compared to other asset
classes.
Some of the benefits of adding real estate to a portfolio include: diversification, yield
enhancement, risk reduction and inflation-hedging capabilities. However, real estate also has high
transaction costs, can be difficult to acquire and it is challenging to measure its relative
performance.
Buying real estate requires substantial due diligence to ensure that you're getting what you expect
after you close.
The way to determine the value of your property (other than actually selling it) is to have it
appraised by an accredited appraiser.

4.4 ADVANTAGES AND DISADVANTAGES OF REAL ESTATE INVESTMENTS:

ADVANTAGES:
Investing in real estate is as advantageous and as attractive as investing in stock market. Here are
the main benefits of investing in property market.

Real Estate Investments are Less Risky:

As compared to other investments, less of misadventure is involved in a real estate property.. Real
estate investments are traditionally considered a stable and rich gainer, provided if one takes it
seriously and with full sagacity. The reasons for the real estate investments becoming less risky
adventure primarily relate to various socio-economic factors, location, market behavior, the

population density of an area; mortgage interest rates stability; good history of land appreciation,
less of inflation and many more.
No Need for Huge Starting Capital.
A real estate property can be procured for an initial amount as low as $8,000 to $ 15,000, and the
remaining amount can be taken on holding the property as security. This is what you call High
Ratio Financing. If you don't have the idea as to how it works, then let explain with the help of an
example.
Honing Investment Skills
A real estate investment, especially when you buy a condo for yourself, will be a pleasurable
learning experience. It gives you the opportunity to learn and when you went ahead with your first
real estate property.
Not a time taking Adventure
Real estate investment will not take out all your energies, until you are prepared and foresighted
to take the adventure in full swing. You can save hell lot of time, if you are vigilant enough to
know the techniques of making a judicious investment in the right time and when there are good
market conditions prevailing at that point of time.
Leverage is the Right Way
The concept of leverage in real estate is not a new one. It implies investing a part of your money
and borrowing the rest from other sources, like banks, investment companies, finance companies,
or other people's money (OPM). There have been many instances where people have become rich
by practically applying OPM Leverage Principal. Moreover, in case the lender is interested in
selling the property, the net proceeds resulting from the sale of the property should comfortably
cover the mortgage amount.
Real Estate Appreciation
An appreciation is an average increase in the property value over original capital investment,
taking place over a period. There are some neglected real estate properties that have an
appreciation below the average mark, whereas, some of the properties located in maintained

geographical areas, showing high demand, have an above average appreciation. In such centrally
located and high demand areas, the average appreciation can reach up to 25% in a year.
Low Inflation
Inflation is the rise in the prices of the products, commodities and services, or putting it another
way, it is the decrease in your capacity to buy or hire the services. Supposing, a commodity was
worth $10 a decade back, will now cost $ 100 as the result of inflation. Comparatively, real estate
sector has minimum rate of inflation.
Tax Exemptions

You get various tax exemptions on your principal and investment income property. The tax
exemptions available in real estate property investment are more than available in any other
investment. In other investments, you lose terribly on the investments in your bank in the form of
inflation and high taxes therein, but in real estate; you don't actually have such hindrances.
There are several beneficial provisions in the Income-tax Act, 1961 which promote
investment in residential properties, having regard to the need for housing millions of citizens. Of
course, only those who pay taxes can take advantage of the appropriate incentives given under the
law.
Interest payable on loans taken for purchase or construction of house is deductible to the extent of
Rs 1.5 lakh every year, though the annual value of one self-occupied residential property is
exempt from income-tax. In addition, repayment of the installment of housing loan is deductible
to the extent of Rs 1 lakh per annum under section 18-C.
High Return on Investments
Real estate investment gives you potentially high Rate of investment before and after the taxes
levied on your income. In fact, investing in real estate gives you high ROIs after the taxes
Net Positive and High Income is Generated.
Increased demand for properties.
DISADVANTAGES

Beside the large potential of return on Investments, there are certain levels of Disadvantages.
These disadvantages can be easily taken off, if you have an insight about the limitations of real
estate investment and what can be its short term as well as long-term repercussions.
Taking Wrong Decisions
People going for the real estate investment property take decisions in haste. Make a firm decision
when you go for purchasing your first real estate property, is just not easy man. If you are swayed
by emotions, you will be ruined.
No readily available Liquidity:
With your real estate investment, you need to know one thing straight, and that is you simply
cannot aspire hard cash immediately. You have to wait and watch the market movements and
other socio-economic and politico economic factors before selling your real estate property, like a
mall or your home.

Eats away your time and energy:

Real estate investment can get you real fatigue. It is a lethargic time consuming process that
makes you feel almost laid back. You need to plan and have those instincts to get going with your
property. You will learn more on about making you real estate investments more time efficient in
later part of the chapters.
A Risk full decision can harm:
Investing in a real estate property can be a risky and costly even, if you are not prepared before,
you will make losses. Not just losses but, but you will become a pauper. Remember, as I said in
my earlier statements, Real estate market is speculative.
No Stringent Comparison Methodologies
Real estate market is variable. The price of two real estate properties can vary a great deal,
provided you keep other factors such as time and location, constant. No two real estate properties
can have exact. There always exists kind of variation and this need to be taken into account.

Though, you do have the existing rule of thumbs and set strategies, but all these are workable, if
tried in combination.
Guided and Drawn on Government Policies:
Government policies and regulations play an indispensable role in deciding on the real estate
investment. These policies and regulations include control the zone based bylaws, construction
activities; property prices; rent control procedures; license dispensations and property transfers;
taxes etc.

4.5 The Factors that affects the Real Estate market:

Social,
Legal,
Political

Supplier,
Cost,
Competitor

Micro

Real Estate

Marketing Intermediary

Macro

Global and
Demographic

Micro factors;
There are certain Micro factor that influences the property market and its aspects. Suppliers, Cost
of materials, firms competitors and also marketing intermediary are the major elements that have
effect on property business.
Macro Factors:
Factors like political, legal, social, global and demographic are the Macro environment with
generally influences reeal estate industry in large scale.

4.6 Government regulations in Real Estate sector:

Much of the over 100 laws governing various aspects of real estate in India dates back to the 19th
century and major amendments to existing laws are required to make them relevant to modern day
requirements. The Central laws governing real estate include:
Registration Act, 1908
The purpose of this Act is the conservation of evidence, assurances, title, and publication of
documents and prevention of fraud. It details the formalities for registering an instrument.
Instruments which it is mandatory to register include:
(a) Instruments of gift of immovable property;
(b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or
extinguish, whether in present or in future, any right, title or interest, whether vested or
contingent, to or in immovable property;
(c) non-testamentary instruments which acknowledge the receipt or payment of any consideration
on account of instruments in (2) above.
Leases of immovable property from year to year, or for any term exceeding one year, or reserving
a yearly rent.

Urban

Land

(Ceiling

and

Regulation)

Act

(ULCRA), 1976
This legislation fixed a ceiling on the vacant urban land that a 'person' in urban agglomerations
can acquire and hold. A person is defined to include an individual, a family, a firm, a company, or
an association or body of individuals, whether incorporated or not. This ceiling limit ranges from
500-2,000 square meters (sq. m). Excess vacant land is either to be surrendered to the Competent
Authority appointed under the Act for a small compensation, or to be developed by its holder only
for specified purposes. The Act provides for appropriate documents to show that the provisions of
this Act are not attracted or should be produced to the Registering officer before registering
instruments compulsorily registrable under the Registration Act.
The objective of acquiring the excess vacant land could not be achieved because of intrinsic
deficiencies in the legislation itself.

Stamp Duty:
There is a direct link between Registration Act and Stamp Act. Stamp duty needs to be paid
on all documents which are registered and the rate varies from state to state.

Rent Control Act:

Rent legislation in India has been in existence for a very long time. Rent control by the
government initially came as a temporary measure to protect the exploitation of tenants by
landlords after the Second World War. However these rent control acts became almost a
permanent feature. Rent legislation provides payment of fair rent to landlords and protection of
tenants against eviction. Besides, it effectively allows the tenant to alienate rented property.

Property Tax:
Property tax is a levy charged by the municipal authorities for the upkeep of basic civic
services in the city. In India it is the owners of property who are liable for the payment of
municipal taxes whereas in countries like the United Kingdom, the occupier is liable. Generally,
the property tax is levied on the basis of reasonable rent at which the property might be let from
year to year. The reasonable rent can be actual rent if it is found to be fair and reasonable. In the
case of un-let proper-ties, the rental value is to be estimated on the basis of letting rates in the
locality.

4.7 KEY DEMAND DRIVERS

The following factors are driving the demand for real estate in India:
Demographics: Indias rapidly growing population is a key factor behind the rising demand.
Growing urbanization, a burgeoning middle-class with higher discretionary income and a
gradual shift away from the joint-family system has resulted in increased demand for
residential property.
Growth in IT & ITES sector: Continuing strong trends in the global outsourcing boom have
resulted in a greater demand for commercial property for IT and ITES operations. The sector
now accounts for around 80% of the total commercial space occupied in the country. The
Indian IT sector is the countrys fastest growing sector and Indian IT and ITES industry is
expected to continue to grow at more than 30% for at least the next ten years. The sector is
likely to be the key demand driver for commercial real estate in the country.
Easier financing options: Due to structural changes in interest rates, rates on housing finance
have halved, from as high as 15% in FY99 to 7.75% in FY04, significantly increasing
affordability. With the increase in the number of players in the housing finance market, there
has been a greater focus on customer service all of which have made financing easier.
Improved corporate governance: Developers are becoming more professional and
transparent in their approach enabling them to have greater access to bank funding. As a
result, developers are now able to execute larger and greater number of projects.

Government policies: The following recent regulatory changes have proved to be conducive
to the growth of real estate industry in India:
Proposed rationalization of stamp duties: At present, stamp duties vary across states from
14.5% (Orissa) to 5% (Andhra Pradesh). The government has proposed rationalizing rates
to 4% across all states
Fiscal incentives: Interest payments up to Rs150,000 on housing loans are tax-exempt,
while annual principal repayments are also eligible for a tax rebate.
The Urban Land Ceiling Act (1976), a key deterrent in government regulation, has been
repealed in nine states, which is encouraging. The move towards computerization of land
records is also positive.

 Easier FDI norms in real estate: Although 100% FDI has been permitted since 2001, the
flow of investments had been curbed by a criterion that required the minimum land area
for projects to be 100 acres. Under the new regulations announced earlier this year, this
has been reduced to 25 acres, thus allowing foreign investors to capitalize on smaller
projects. Moreover, a committee set up by the government has recommended that Real
Estate Investment Trusts (REITs) should be implemented in India through the mutual fund
schemes. Allowing FDI in real estate along with creation of real estate funds is likely to
create the platform for garnering fresh investments into the sector.
Infrastructure Development: Initiatives like National Urban Renewal Mission (NURM)
have given a boost to infrastructure development in the country. NURM involves the redevelopment of 60 major cities which includes the 7 megacities (Delhi, Mumbai, Bangalore, Chennai, Kolkatta, Hyderabad and Ahmedabad), 29
cities with populations of over 1m and 24 cities with populations of less than 1m. The
FY06 Budget allocation for NURM is Rs55bn (US$1.25bn) which indicates the
seriousness of this initiative. Moreover, infrastructure overhaul for the Commonwealth
Games in 2010 will have a positive impact on the real estate market.
Retail Boom: The global real-estate consulting group Knight Frank has ranked India 5th in
the list of 30 emerging retail markets and predicted an impressive 20 per cent growth rate
for the organized retail segment by 2010. Over 200 malls with a combined retail space of
2.5 crore square feet are coming up across the country at an investment of Rs 12,500
crore. Recent government approval for 51% Foreign Direct Investment in the retail of
single brand products is also likely to fuel the demand for large commercial spaces. Retail
segment will continue to drive demand for real estate in the country significantly.
4.8 DEMAND-SUPPLY SCENARIO
The last few years have witnessed a strong growth in residential demand supported by rising
disposable incomes, low interest rates, fiscal incentives on both interest and principal payments
and increasing urbanization. Ten years ago, the average house loan in India was 15 times the
annual salary. Today it is just 4.5 times the average salary. Also, as per industry estimates, the
average age of a house buyer has fallen from 42 to 31yrs. However, inspite of the recent growth in
the residential demand, the demand supply gap

is still widening. According to National Housing Bank (NHB), there was a housing shortage of
19.4mn units (12.7mn units in rural areas; 6.7mn units in urban areas) in 2001 which is estimated
at 19.8 million in 2005.Further, penetration levels are still very low across India, despite the
recent growth seen across housing. The mortgage to GDP ratio is only about 3% compared to over
50% in the US and between 15-20% for most South East Asian countries.
Demand for new office space has grown from an estimated 3.5 million sq.ft in 1998 to 16 million
sq.ft in 2004. The IT & ITeS industry has emerged as the main driving force behind this. IT &
ITeS companies are now the predominant occupiers of office space in India, accounting for about
80% of office space absorption. The IT & ITES sector is creating over 200,000 jobs per annum
which itself is expected to create a demand for commercial space of >15mn square feet per
annum. It has been estimated that there will be a demand for around 100mn square feet of
commercial space from the IT & ITES sector over the next five years.
OUTLOOK
The real estate industry is expected to grow at an estimated 25-30% per annum. Inspite of the
rapid growth in residential demand in the last few years, the demand supply gap has only
widened. The huge shortage in housing units fuelled by rising disposable incomes, low interest
rates, fiscal incentives, urbanization and growth in the BPO sector coupled with low penetration
levels of mortgages indicates significant potential for growth in housing demand in future.
According to industry reports, over the next 10-15 years, 8090 million housing units will have to be constructed with a majority catering to the low-income
group. According to a study done by Cushman & Wakefield, just the top 50 to 60 cities in India
would be able to absorb over 350 to 400 townships, each of over 2,000 dwelling units involving a
conservative capital outlay of over $ 40 billion over the next 5-7 years .As far as commercial
demand is concerned, continued growth in the IT & ITES sector will continue to be the main
driver. This sector is expected to grow at 30% per annum which even after adjusting for
increasing revenue per individual is expected to increase commercial property demand by over
20% per annum. Demand for commercial space by the sector is estimated at 100 million sq ft @
20 million sq ft per year.

5.1

FINDING REAL ESTATE VALUES:

It is the practice of knowing the market value of a property. As all properties differ from each
other in terms of location area, etc. so their value is different. Basic amenities of the area and
surrounding environment are the factors playing an integral role in the valuation of the property.
Real estate returns are generated in two ways. First, the income return comes from tenants' rent
payments. The income return is a straightforward calculation because all you need to know is how
much cash remains after all property expenses have been paid. The second type of return is the
capital return, which is the increase or decrease in the value of the property due to changes in
market demand and/or inflation. The capital return is more difficult to calculate, and requires the
property to be valued or appraised.
If you want to determine the value of a real estate investment, the most accurate method is to sell
the property and see how much money you get for it.
Appraisal method:
Appraisers use a variety of methods to determine value, and for income-producing properties the
most common method is the capitalization rate approach. In its simplest form, a capitalization rate
equals the net income from a property divided by its purchase price. To use the capitalization rate
approach, an appraiser gathers capitalization rates from actual sales of similar properties, and
based on those sales and capitalization rates forms a judgment on the appropriate capitalization
rate for the property being valued. The appraiser then applies that capitalization rate to the subject
property's income to estimate the value. For example, if the market-derived capitalization rate for
a property is 10%, and the net income for that subject property is $100,000 in the year after you
purchase the property, then the value of the property is $1,000,000.
-Year 1
Year 2
Year 3
Year 4
Year 5

Operating Cash
100,000
105,000
110,250
115,763
121,551

Hiring and Appraiser:

Sales price
n/a
n/a
n/a
n/a
10,00,000

Total Cash Flows

100,000
105,000
110,250
121,551
1,121,551

When choosing an appraiser to value your property, the most important consideration is that they
have the appropriate experience and background to appraise your type of property. You don't want
to hire a residential appraiser to value your commercial building unless they also have experience
valuing commercial buildings. They also need to have experience appraising properties in your
geographical area, because different locations have different market attributes. If your appraisal
will be used by a third party, such as a mortgage lender, then you should be certain the lender will
accept reports from your chosen appraiser. Last, the amount of the appraiser's fees should be a
consideration.
Mortgage Financing:
The type and amount of mortgage financing is important to the performance of the property for
two reasons. First, if your property has a closed mortgage in place that also happens to have poor
terms (for example, a high interest rate or an undesirable loan to value or amortization period),
then it can affect the value of the property. Therefore, it is important to consider the perception of
the market when locking in your financing if there is a chance you will sell the property during
the mortgage term. Assume, you purchased a property for Rs.1,000,000 one year ago without any
financing. You just completed an appraisal that says the property is worth Rs.1,200,000. So, your
capital gain is Rs. 200,000, which results in a capital return of 20%.Now, assume you bought the
same property but financed your purchase with a 50% loan to value, interest-only mortgage. After
your purchase you therefore have Rs.500,000 of your own cash invested and the bank has loaned
you the other Rs.500,000. One year later, you still owe the bank Rs.500,000 because you used an
interest-only mortgage. So when you get your Rs.1,200,000 appraisals and subtract what you owe
the bank, your equity in that property is worth Rs.700,000. Since you have Rs.500,000 invested,
your capital gain is Rs.200,000. Your capital return, however, is 40% rather than the 20% you
would have achieved if you didn't use financing. This occurs because you still achieve a gain of
Rs.200,000, but you get it using only Rr.500,000 of your own money instead of Rs.1,000,000 of
your own cash (but keep in mind that you would need to pay out interest payments to the bank).
This is known as leverage, and it has a powerful impact on property returns.

5.2 Trends and prospects in Real Estate sector:

India is recognized as a land for all season. Everybody is amazed by the beauty and
culture of India. Humanity, religious and races are nowhere better on this earth than India. Each
characteristic of nation represents itself on a huge, inflated scale, praiseworthy when compared
with other countries on the globe. People feel immense pleasure owning a property or a piece of
land here. It is one of the fastest growing sectors in the country. This rapidly growing real estate
market is getting matured day by day as large and international people are taking part. The market
has augmenting investors and carries a real industry-responsive approach.
Even the property prices are augmenting fast, especially Chennai, Hyderabad , Delhi,
Bangalore, Ahmedabad, Kalyan, Pune real estate are on the very high phase. The market boom is
spread across the country and hence more and more Indians are not interested in investing for
India real estate. The economy rate as well has managed to grow faster than 8% each year because
of increasing real estate market trend.
Last decadal Increas in growth Indian Real Estate

% growth rate

14%
12%
10%
8%
6%
4%
2%
0%

2003-042004-052005-062006-072007-082008-092009-10
Year

At present, the real estate and construction sectors are playing a crucial role in the overall
development of Indias core infrastructure. The real estate industrys growth is linked to
developments in the retail, hospitality and entertainment(hotels, resorts, cinema theatres)
industries, economic services (hospitals, schools) and information technology (IT)-enabled

services (like call centers) etc and vice versa. Realty market is just not trendy among Indians, but
has also gained popularity among foreigners. Morgan Stanly one of the worlds best banks has
of late invested about $152 million Mumbai real estate. The presented report also stated that this
is the only biggest investment in Indias booming real estate sector. This proves that India real
estate is improving in reality. Further more states that foreign investors have immense interest
investing in real estate India. Due to the demand of residential and commercial real estate among
NRIs has pushed the price of real estate beyond actual limit.
Trend of Property Market: Decade ago
The market was not in an initial stage at the time of 1991. The industry was more focused in only
two centre Bombay and Delhi. Those years didnt find construction activities on large scale as the
industry is today. The residential as well as retail sector was not as healthy as we experiencing
today. There were hardly construction of retail malls and complexes, also the concepts of
integrated townships, high-rise complexes, and row hoses schemes were not introduced at this
stage. People were found generally unaware of investment opportunities in real estate it was
because of negligible return on their investment. Also real estate index was not indicated at Stock
exchange. The Tier II and III cities were far away from the property concerns, very slow pace of
development were taking around such cities. Hence, the Real estate industry couldnt take place at
these times. The price of property was quite low as compared to todays situation, it was because
was the less number of dealings and transactions regarding property. It has been observed since
the last few years that end-user buying in the sector has increased from 35 percent to more than 60
percent. There are many obvious reasons for this improvement. First, the advent of the IT sector
has made job in the cities a highly common phenomenon. This has induced office workers to
migrate to cities.
The table below depicts the growth of different sectors that have contributed heavily to the real
estate growth in India.
Sector

CAGR (Compound Annual Growth

Organized Retail

Rate)
49.53

IT and ITES

28

Overall Housing

30

Real Estate

33

 Trend of Property market: Recent year

India is a growing economy and has witnessed a growth of 8.1% in the last financial year.
Therefore, the investors are eying on Indian property and willing to invest at this right time to
reap huge profits.
Rising income levels of a growing middle class.
The focus of Property market shifts to Tier II and Tier III cities, rather than only concentrating
on

only Metro cities like Mumbai and Delhi. Smaller cities middle class house holds increasing

more rapidly than of metro cities. So there is a tremendous boom in smaller cities.
Growth in commercial office space requirement is led by the burgeoning outsourcing and
information technology (IT) industry and organized retail
There is a great demand for office and industrial space of 100 million square feet to
accommodate an estimated 2 million new graduated passing out from various Indian universities
recently.
The following chart depicts the rate of property in the particular year, and indicates the trend of
market.

TIER III cities

TIER II Cities

1999-00

2009-10

TIER I Cities

5000

10000

15000

20000

25000

However Property rate differs from location to location in the same city. These rate are taken on
average bases.
There is a huge demand for corporate space of a large number of Fortune 500 and other
multinational companies who are willing to set up offices in India.
Investment of $ 320 billion requires in next five years in infrastructure. Credit to be

housing

sector has continued to be strong and benefited from low interest rates.
India is witnessing growth in other sectors like auto ancillary, chemical, healthcare,
pharmaceutical, jewellery that lead to huge demand in this space as well.
Home loans and other incentives:
Presently the commercial banks and other finance landing institutions are also started playing an
important role in the development and growth of the Property Market. Easy availability and
governmental incentives have boost in the reality boom. At present the market leader in the India
mortgage market is the Housing Development Finance Corporation (HDFC), the State Bank of
India (SBI), ICICI and other banks proving home loans to the customers. At present the total
worth of the India Mortgage Market is nearly US $ 18 billion. The present home loan rate is 8.5%
p.a.

Till December 31 last year, the SBI was offering teaser loans where the interest rate was 8% for
the first year, 9% for the second and third years, and a floating rate thereafter. As on that date, the
total outstanding retail home loans stood at Rs82,376 crore for the bank
The services offered by institutions
New home loans
Home equity loans
Mortgage refinancing
Real estate lending
Chart showing home loan amount disbursed to customers:

The three major financial institutions HDFC, ICICI and Corporation bank had provided home
loans. According to CARG report, the total size of Home loan market in India is Rs.150,000 caror
as in year 2010.
Year
1991-00
2000-2001
2001-2002
2002-2003
2005-2006

Total Loan Disbursed (in Cr.)

9812.03
12637.85
14744.85
33840.53
56,600

 Contribution of total investment in major two type of property in India

Residential

Commercial

Of the total investments done in properties, about 20% investment was in Commercial segment
and about 80% of investment was in Residential segment.
The residential housing development contributes to 80% of the real estate in India.
Remaining 20% is for commercial property development including offices, shopping
malls, hotels, hospitals, multiplexes, entertainment centers.

5.3 INVESTMENT CLIMATES:

(Factors influencing high investment in Maharashtra)
Real Estate sector in Maharashtra has shown a rapid growth in last decade, resulting in realty
boom. There are various factors which drives realty boom in the state are as:

Highly industrialized state, with more than 38% GDP contributed by secondary sector.

Creating value for investors, ranked as the best state for investment approved by financial
institutions.

Top contributor to Indian economy, around 22% of the Indian exports contributed by
Maharashtra

An economy on the boom and beating recession, more than 10% since 2004

State with highest number of MoU realization

Utility cost one of the least as compared to competing destinations

Taxes at par with other business destinations

Globally cost competitive labor force

DMIC
Some Mega Projects proposed to com up at Maharashtra, will boost the real estate investments,
and largely affect the market:
1) Special Investment Region (SIR, Dholera)
2) Delhi Mumbai Industrial Corridor (DMIC)
3) Special Economic Zones (SEZs)

The Ministry of housing in 2006 to assess the urban housing shortage has estimated that at the
end of the 10th Five Year Plan, the total housing shortage in the country was 26.53 million.

35
30
25
20
URBAN

15

RURAL

10
5
0
2001

2005

2008

2010

2014

Real Estate Sector in Kalyan. Trend in Property market

Mumbai is one o f the most growth oriented state in India. And Kalyan & Ambernath are the most
happening cities in the state. The transformation of these cities into Metros is fast and benefiting to all. The
prices o f properties in Kalyan and Ambernath are at new high. The cities were almost unknown just before
few years now they have become most popular. Both the cities are growing in terms o f finance and
developing even as career hubs. Simultaneously Number of new, national and multinational Companies are
ready to invest in these cities as they have seen a bright future in business opportunities. There were times
when people wanted to invest in other cities than Kalyan and Ambernath. But the scenario has been
improved. Now a days people have started investing in these two cities as they look at them as places of new
growth. Maharashtra is one of the most growth oriented state in India. The prices of properties in Kalyan and
Ambernath are at new high. The cities were almost unknown just before few years, now they have become
most popular. Both the cities are growing in terms of finance and developing even as career hubs.
Simultaneously Number of new businesses, national and multinational companies is ready to invest in these
cities as they have seen a bright future in business opportunities. There were times when people wanted to
invest in other cities than Kalyan and Ambernath. But the scenario has been improved. Now a day's people
have started investing in these two cities as they look at them as places of new growth. While Ambernath is

the historical city of Maharashtra with a rich heritage, Kalyan is the clean and green city or the port city of
Maharashtra. Total population of larger Ahmedabad is approximately 5.5million people. Kalyan too has the
population about 4.9million. Kalyan is being the fastest growing city of India now textile and diamond
business have bright future. Other than these two industries, lot more industries are growing up very fast in
these cities. So there is no doubt that demand for housing will increase by leaps and bounds. All working
class people will need residence/apartments. So investment in residential projects in these two cities will
bring huge profit to housing companies or the builders. Housing sector is the most preferred segment in
Kalyan and Ahmedabad. Well known builders and popular property developers who were not interested in
building small houses and apartments are now coming up with all kinds of affordable and luxury homes to
buyers from all class. Though industrial sector of both the cities are quite well established, the expansion and
business with a new vision is going in full speed. As life has become fast and modern, the new generation
needs something novel. So for their recreation and entertainment new malls, multiplexes and retail outlets are
opening up daily across the cities. Further people invested in gold and silver or in stock market. But as these
markets are as always uncertain smart people will prefer to invest in Real estate. So a common trend among
affluent Maharashtrais is to invest in a property which will rise soon. In real estate there is minimum risk of
cost cutting and they are growing at rapid speed. So many projects are up coming too that will attract higher
middle class people to middle class people. Investors from other affluent cities have also seen a great
opportunity and flocked in to these cities with their profits.

5.4REAL ESTATE MARKET IN MAHARASHTRA......

In the industrial map of India, Maharashtra has a significant place as its citizens are well known
for their entrepreneurial talent. As part of the global real estate property market boom,
Maharashtra too is gearing up for welcoming the change. By introducing world-class real estate
infrastructure to the Maharashtras soil, many real estate companies have made it an ideal place
for living and organizing profitable businesses. Currently, we witness a phenomenal rise in the
demand for both residential and commercial complexes all over the region. It seems the
Maharashtra investors are returning to real estate business after an interval. Many of them are now
eyeing fresh projects to put their money in. The growing demand of real estate brokers tells it all.
In the present day, as the infrastructural development is at its peak, the real estate sector in
Maharashtra witness a steady growth. Property developers in Maharashtra offer high-end flats and
bungalows to locals as well as non-resident Indians. It is a known fact that the NRIs are one of the
major investors in Maharashtra residential property and this makes the real estate developers
focus on luring them in foreign investment. Investing in real estate market in Maharashtra is the
wisest option for the investors at this moment as the state witness a huge growth in real estate
development. Real estate in Maharashtra is primarily divided as residential properties and
commercial properties. The real estate brokers in Maharashtra predominantly crack down on
Ahmedabad real estate as it is one of the promising real estate property markets in India. Whats
more, it is a known fact that many major industries are eyeing on real estate properties in Kalyan
and Ambernath, it is wise to invest on property at the right time. If you are looking for such
opportunities, it is always better to approach a real estate agent or a real estate broker as they are
the ones who know better about the localities and the prices of the properties. Try to find out
professional real estate agents that are into the real estate business for long time.

As a conclusion of real estate studies in India, we can see that as far as real estate is concerned,
the bar of investment has significantly raised. India has immense scope for building infrastructure,
in addition to increase investment returns by

25% which was just 12 to 15% past decade.

The commercial real estate yield in

India is larger than any other

country, thus making it one

of the most popular

destinations for real

estate

investment.
India is on the
verge

of

witnessing

a
sustained

growth

buildup.

in

infrastructure
Infrastructure

investments
continue to be the

most

important growth driver for construction companies.

Demand-supply gap for residential housing, favorable demographics, rising affordability
levels, availability of financing options as well as fiscal benefits available on availing of home
loan are the key drivers supporting the demand for residential construction.
However, there are potential constraints for domestic as well as foreign investments in
India. Absence of a single regulator to monitor business practices prevailing in Indian real estate
market is perceived to be a risk factor by investors.

BIBLIOGRAPHY:
BOOKS:

Investment Analysis & Portfolio Management- 2nd Edition Prashana Chandra .

Tata Mcgrill Publication , New Delhi.

WEB REFERENCICES:

http://www.investopedia.com

http://www.indianground.com

http://www.economywatch.com

http://www.realestateindia.com

http://www.siracusaco.com/