Presented By:

Gunjan Masand

Ritul Jain

Saurab Vats

Shanky Singhal

Shubhomita Sengupta

Shweta Datta

REAL ESTATE

• What relevance does Real Estate And construction hold in our economy?

• Why has infrastructure getting the prime focus in the recent budget?

• What has actually changed the face of Realty and Real Estate?

• Who are the names behind this change?

INTRODUCTION

• The strong fundamentals of the Indian economy are having a favorable impact on all asset classes of Indian real estate viz. housing, commercial – office space and retail and hospitality.

• In recent years, the growth has spread out to tier-II and III cities as well.

• High growth in services as well as manufacturing sector has resulted in high demand for commercial and industrial real estate.

• Further the economic growth has trickled down to the large Indian middle class increasing affordability and affluence. Improving living standards are driving the demand for better quality housing and urban infrastructure.

INTRODUCTION

Drivers for Growth of Real Estate & Construction

Real Estate

Rising Tourism

Decline of Joint

Families

Easy Availabilit

y of Finance

Rise Of Middle Class

Real Estate

Fiscal Policy

Strong Demograp

hics

Rise of Middle Class

Rising FDI

Real Estate

First Time

Buyers

International

Tourism

Development of

new Stream of Business

Medical Tourism

Overview of India Infrastructure

OBJECTIVES

Generation of additional economic activities.

Promotion of investments from domestic and foreign sources.

Creation of employment opportunities.

Development of infrastructure facilities in the country.

Special Economic Zones

There has been a drastic

curtailment in restrictive

policies such as the Urban Land

Ceiling and Regulation Act.

Reforms in the Integrated Township

Policy.

Liberalization of FDI rules

and the emergence of

real estate funds.

Range of Government benefits & incentives including

residential tax breaks and the

Special Economic

Zones.

Govt. Initiatives and Policy

Major Players in Real Estate

DLF Group

Ansals

Parsavnath Developers

Unitech Group

K. Raheja

DLF Group

Founded in 1946 DLF Group is one of the biggest real estate giants Built many high-quality buildings across the country,

specifically in Gurgaon Tied up with Hilton Group to build whopping 100 hotels in India

over the next few years. In current expansion plans, DLF has over 425 million sq. ft. of

development across its businesses, including developed, on-going and planned projects.

Spread over 32 cities, mostly in metros and key urban areas across India

DLF Group

ANSALS

Founded by Lala Chiranji Lal Ansal By far most dominant activity of Ansals has been Real Estate

Promotion & Development company has several landmark high-rise commercial building

like Statesman House, Ambadeep, Antriksh Bhawan, Tolstoy House, Indra Prakash, Navrang House and Ansal Bhawan

Ansals have also completed several residential buildings like Gauri Sadan, Upasana at Hailey Road & Dhawan Deep at Jantar Mantar road, all in the heart of New Delhi at Connaught Place.

Ansals

There is the most prestigious “Ansal Plaza” Shopping Mall associated with its work

Also it has made elite townships, Sushant Lok and Palam Vihar in Gurgaon and several other places all over the country.

It was incorporated on July 24, 1990 under the Companies Act, 1956 as Parsvnath Developers Limited.

With more than two decades of experience in its repertoire, the group has already stamped its presence already in seventeen states and going Pan – India.

It has made various developments in areas like GURGAON, Noida, South Delhi.

Parsavnath Developers

Plans to invest US$ 720 million in building hotels in the country

Its partner for this venture is Marriott International. Carved a niche for itself in India with its sprawling properties

and projects in Bangalore, Gurgaon, Noida, Greater Noida and Kolkata

Unitech Group took over projects in International areas as well. Actively involved in construction projects of power plants,

expressways, highways, transmission lines, classrooms, amusement parks.

Unitech Group

Radisson Hotel, New Delhi has won accolades for its wonderful infrastructure, astounding interiors, ideal location and extra ordinary facilities for the distinguished customers.

Rohini Amusement Park is also a creation of Unitech Group.

The commercial complexes like Global Business Park, Signature Towers, Unitech Business Park and Unitech Trade Center and the launch of Millennium Plaza & Infocenter in Gurgaon have made Unitech Builder earn a good reputation in the industry.

Financials Of DLF

DLF is the market leader in this sector with net profit of 1547 cr.

It was way lower than its last year profit by more than 1000 cr.

It was well supported by the timely launch of IPL. The share of this co. touched the all time high of

1227 in dec. 2007 which was just 6 months after its issue and now trading at 337.

Financials Of Ansals API

Their profit declined by 81.24% in the last financial year over the last year.

This is one of the badly hit company by the economic slowdown.

569 is the all time high of this company in 2006 and now trading at just 10% of its all time high.

SUBPRIME CRISIS

Investment in Real Estate by PE Firms

The Housing Bubble Burst

Bankruptcy Of Investment Banks and Crash of US Economy

DEVELOPMENT OF REAL ESTATE IN INDIA

•IT Infrastructure – Temples of Modern India

•Townships

•Programming Houses

•Green Buildings

Skill Shortage.

Non Availability of Statistics.

Overvaluation of Property.

Highly Fragmented.

Lack of Transparency.

BARRIERS IN GROWTH OF REAL ESTATE

CONSTRUCTION COST

Labour Rates Escalated to 5-

10 %

Bricks Prices Increase by

30-35 %High Interest

Rates

Rising Prices

Decreasing Demand

FALL OF SENSEX AND REAL ESTATE STOCKS

DLF

UNITECH

PARSAVNATH

IMPACT OF RECESSION ON REAL ESTATE

KEY ISSUES

Incompletion of

previous projects.

Bad Debts.

Less demand in

all segments.

Cash starvation.

MEASURES TAKEN BY DLF

Launched affordable housing project.

Payment of short

term debt by raising long term

debt.

Terminated projects with long gestation period.

Sale of properties

for liquidity

preservation.

Cost reduction through

tight cash flow.

MEASURES TAKEN BY UNITECH

QIP issuance to reduce debt.

Reduced promoter’s stake from 64% to

51%.Increased confidence

with customers on project delivery.

Major Strategic restructuring.

Key Focus Areas Before Now

1. Residential Segment Primarily target luxury/upper middle income housing segment

More focus on mid and affordable housing segment.

2. Assets and Land bank Buy predominantly agricultural land and build land bank for projects across all segments.

Sell assets selectively and acquire land only for mid/low income housing projects.

3. Debt Short Term maturities. Restructured to longer maturities.

Higher proportion of expensive unsecured loans.

Cheaper Collateralized loans.

Increasing debt with more projects.

Reduced leverage.

SHIFT IN STRATEGY

Overall Impact considered to be marginally positive. Infrastructure investment to be raised over 9% of

GDP. Funding pressure on construction companies to be

eased by PPP. PPP infrastructure projects to be refinanced upto 60%

through IIFCL. Rs 39.7 billion allocated for rural housing schemes. Focus on providing housing to people of economic

weaker section & lower income group.

IMPACT OF BUDGET

FUTURE PREDICTIONS

Close to $7 billion to $8 billion of venture capital expected to flow into Indian real estate market.

A significant increase in project execution through Public- Private-Partnerships.

More demand for office and industrial space. Current levels of investments in infrastructure are not

sufficient to bridge the gap between demand and supply.

THANK YOU