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<p>PROJECT REPORT ON</p> <p>REAL ESTATE- Rise and fall (With special reference to Mumbai residential market)</p> <p>BACHELOR OF MANAGEMENT STUDIES SEMESTER V 2009-2010</p> <p>SUBMITTED:IN PARTIAL FULFILLMENT OF RECRUITMENT FOR THE AWARD OF DEGREE OF BACHELOR OF MANAGEMENT STUDIES.</p> <p>BY:</p> <p>Smruti Agrawal ROLL NO: - 105</p> <p>BIRLA COLLEGE OF ARTS, SCIENCE &amp; COMMERCE MURBAD ROAD, KALYAN (W).</p> <p>PROJECT REPORT ON</p> <p>REAL ESTATE- Rise and fall (With special reference to Mumbai residential market)</p> <p>BACHELOR OF MANAGEMENT STUDIES SEMESTER V 2009-2010</p> <p>Submitted:In Partial Fulfillment Of The Requirements For The Award Of The Degree Of Bachelor Of Management Studies</p> <p>By:-</p> <p>Smruti AgrawalROLL NO: - 105</p> <p>BIRLA COLLEGE OF ARTS, SCIENCE &amp; COMMERCE, KALYAN (W)</p> <p>BIRLA COLLEGE OF ARTS, SCIENCE, &amp; COMMERCE, KALYAN (Conducted by Kalyan Citizens Education Society) (Affiliated by University of Mumbai)</p> <p>BACHELOR OF MANAGEMENT STUDIES</p> <p>CERTIFICATE</p> <p>This is to certify that Miss.Smruti Agrawal Roll No. 105 has satisfactorily carried out the project work on the topic REAL ESTATE- Rise and Fall (With Special Reference to Mumbai Residential Market), for the V Semester of T.Y.B.M.S., in the academic year 2009-2010.</p> <p>Place:-Kalyan Date:-________</p> <p>__________________ Signature of Examiner</p> <p>______________ BMS Co-ordinator</p> <p>CERTIFICATE</p> <p>I, Mr. Anand Dharmadhikari hereby certify that Miss. Smruti Agrawal, of T.Y.B.M.S (Sem V), Roll No. 08 has completed project on REAL ESTATE- Rise and Fall (With Special Reference to Mumbai Residential Market) in the academic year 2009-2010. The information submitted is true and original to the best of my knowledge.</p> <p>Place: Kalyan Date:</p> <p>___________________ Signature of Project Guide</p> <p>DECLARATION</p> <p>I, Smruti Agrawal, student of T.Y.B.M.S semester V (2009-2010) hereby declare that I have completed the project on REAL ESTATE- Rise and Fall (With Special</p> <p>Reference to Mumbai Residential Market)I further declare that the information imparted is true and fair to the best of my knowledge.</p> <p>SIGNATURE</p> <p>SMRUTI AGRAWAL ROLL NO. 105</p> <p>Acknowledgement</p> <p>Before going on with the project study, I would like to extend my sincere gratitude to a few people without whom this project just wouldnt have been possible. First and foremost I would like to thank my Project Guide Mr. Anand Dharmadhikari for having spent considerable time and providing very useful information. I also express my thanks to all who have either directly or indirectly supported me in shaping the project very well.</p> <p>I would also like to extend warm regards to Project Finance Evaluation Manager of Kalpataru Pvt.Ltd. Mr.Sachin Agrawal &amp; Sales Executive of Regency Towers, Thane Mr. Sanjay Sarode for shelving out some of their precious time to provide the information required.</p> <p>I would like to thank the University of Mumbai and the College Authorities who gave me an opportunity to present my views in form of this project. I also want to express my heartfelt gratitude to our Course In-charge Mr. Anil Tiwari for believing in me and my caliber.</p> <p>It was an amazing experience working on this project and I would once again wish to thank all the people related to it for making the task worthwhile and so much fun.</p> <p>INDEXSR.NO. PARTICULARSExecutive Summary Preface 1 2 3 4 5 6 7 8 9 10 11 Real Estate- Introduction Participants Involved In Real Estate Market Mumbai City: A Conundrum Unexplained Mumbai Residential Market Market Segmentation Rentals In Mumbai Factors Affecting Real Estate Prices Mumbai Property Boom Impact Of Recession On Real Estate Market A Picture Of Fall In Property Prices In Mumbai After The Crises Visit Report Conclusion Bibliography &amp; Wibliography Annexures 1 6 10 24 28 39 43 48 55 60 69 75</p> <p>PG.NO.</p> <p>Executive SummaryThe term Real Estate is defined as land, including the air above it and the ground below it, and any buildings or structures on it. It covers residential housing, commercial offices and trading spaces. The main players in the real estate market are landlords, tenants, developers, builders, real estate agents, tenants, buyers etc. In this report I am focusing on Mumbai Residential Market. Mumbai, formely known as Bombay is a great city. No simple description of the city is adequate. The place is simply too complex and too diverse. For the last many decades, this island city has endured an explosion of growth and change, spurred on by an enormous expansion of real estate, where every assumption of the citys planners has been overtaken by its size and form. Residential market in Mumbai is widely spread all over Mumbai and also has witnessed luxurious amenities, infrastructure etc. with highest prices throughout the country. Mumbai market is too complex to understand so its divided into six micro markets namely South Mumbai, Navi Mumbai, Western suburbs, Central suburbs, Thane and Extended suburbs with different property prices in every market and large players in the market. The rentals in Mumbai have also been a big topic in Mumbai real estate. The house rents are touching sky which compels a majority of people to live under unhealthy atmosphere in cramped rooms or flats on a share basis. The rental trends in Mumbai are high-end rental apartment segment, the terrace flats, villas, pent houses etc. Mumbai has witnessed a huge amount of people migrating from all over India for employment, business, studies, etc. Mumbai is considered to be the financial hub of India attracting huge amount of foreign direct investment and wealth creations. Mumbai property market has been witnessing a boom in the last decade. People migrating from all over the country have lead to an increase in demand for housing. Favorable government policies and such overwhelming demand have seen the property prices touch the roof. When it was looking like the property prices are moving just one way. Subprime crises happened. It came as a big jolt in this forward- march. Suddenly the demand for property had vanished and the real estate industry witnessed a huge financial turmoil. Large developers were caught in a huge debt crisis and faced heavy losses.</p> <p>PREFACE</p> <p>I have given brief description about the project i.e. about REAL ESTATE and its practical implementation in MUMBAI with special reference to RESIDENTIAL MARKET. And lastly about the Rise and fall in Mumbai Residential Market.</p> <p>Objectives1. To study about Real Estate in Residential Market 2. To understand the Mumbai Residential Market. 3. To understand the rise and fall in property prices.</p> <p>METHODOLOGY</p> <p>Primary Data:</p> <p>My primary data was collected through Interviews, Face to face communication, through email, telephonic responses, from firms and organizations associated with Real Estate. I visited organizations like Kalpataru ltd. And Regency Towers and interviewed the managers in related department.</p> <p>Secondary Data:</p> <p>My secondary data was collected from the websites, magazines, books, trade journals and periodicals.</p> <p>REAL ESTATE- RISE AND FALL (With special reference to Mumbai Residential Market)</p> <p>Chapter 1 Real Estate- Introduction</p> <p>IntroductionThe term real estate is defined as land, including the air above it and the ground below it, and any buildings or structures on it. It is also referred to as realty. It covers residential housing, commercial offices, trading spaces such as theatres, hotels and restaurants, retail outlets, industrial buildings such as factories and Government buildings. Real estate involves the purchase, sale, and development of land, residential and non-residential buildings. The main players in the real estate market are the landlords, developers, builders, real estate agents, tenants, buyers etc. The activities of the real estate sector encompass the housing and construction sectors also.</p> <p>The real estate sector in India has assumed growing importance with the liberalization of the economy. The consequent increase in business opportunities and migration of the labour force has, in turn, increased the demand for commercial and housing space, especially rental housing. Developments in the real estate sector are being influenced by the developments in the retail, hospitality and entertainment (e.g., hotels, resorts, cinema theatres) industries, economic services (e.g., hospitals, schools) and information technology (IT)-enabled services (like call centres) etc. and vice versa. The real estate sector is a major employment driver, being the second largest employer next only to agriculture. This is because of the chain of backward and forward linkages that the sector has with the other sectors of the economy, especially with the housing and construction sector. About 250 ancillary industries such as cement, steel, brick, timber, building materials etc. are dependent on the real estate industry.</p> <p>Features of Real Estate Markets:In particular, the unique features of the real estate market must be accommodated. These include: Durability Heterogeneous High transaction costs Long time delays Both an investment good and consumption good Immobility</p> <p>Overview:Indian real estate sector is growing at thirty percent annually. The liberalized urban policy frame work along with a stable home loan rates by Banks helped this growth phase to sustain. The parameters for investment are changing and more FDI is expected to flow into this sector in the coming period. The Indian real estate sector has witnessed a resounding growth in recent years due to factors like liberalization of urban policy and increased competition in the home loan segment. Also the booming Indian economy, favorable demographics transition and liberalized foreign direct investment (FDI) regime acted as a catalyst in this growth phase. Growing at a rate of 30 per cent, the real estate sector has emerged as one of the fastest growing investment areas for domestic as well as foreign investors. The sector will remain as a booming sector and more investment is expected in the coming years. Construction and allied sectors are considered as one of the largest employing sector in India (including construction and facilities management). This vital sector is linked to about 300 ancillary industries like cement, brick and steel. So this sector has a strong backward and forward linkages and the growth will translate into an over all positive impact on these ancillary sectors too. Resultantly, a unit increase in expenditure in this sector has a multiplier effect and the capacity to generate income as high as 4.5 times.</p> <p>According to Mckinsey report the average profit from construction in India is 18%, which is double the profitability for a construction project undertaken in the US. Five per cent of the countrys GDP is contributed by the housing sector. In the next three or four or five years this contribution to the GDP is expected to rise to 6%.</p> <p>According Research, the</p> <p>to new</p> <p>Knight residential</p> <p>Frank space</p> <p>distribution of Pan India will be more then that of before. The NCR will be having maximum of distribution all over India that is 35%. Total supply all over India is 530.5mn.sq.ft. Distribution in all the places is as per the demand and availability of space. According to Housing Skyline of India 2007-08, a study by research firm, Indicus Analytics, there will be demand for over 24.3 million new dwellings for selfliving in urban India alone by 2015. As a result of this, this real estate sector is likely to throw huge investment opportunities. In fact, an estimated US$ 25 billion investment will be required over the next five years in urban housing, says a report by Merrill Lynch. With the significant investment opportunities emerging in this industry, a large number of international real estate players have entered the country. Currently, foreign direct investment (FDI) inflows into the sector are estimated to be between US$ 5 billion and US$ 5.50 billion. According to Cushman &amp; Wakefield, foreign investors have raised nearly US$ 30 billion since March 2005 for investing in Indian real estate. 100% FDI is allowed under automatic route in townships, housing, built-up infrastructure and construction development projects (which would include, but not be restricted to, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure) subject to certain guidelines.</p> <p>Leading companies like Carlyle, Blackstone, Morgan Stanley, Trikona, Warbus Pincus, HSBC Financial Services, Americorp Ventures, Barclays and Citigroup are some of the international players who have entered into Indian reality market. Real estate accounted for 26 per cent of total value of private equity investments, with 32 deals valued at US$ 2.6 billion. And according to industry estimates, another US$ 10-20 billion would pour into the sector in the next three years.</p> <p>Current scenario:The unending euphoria of real estate sector in India witnessed during the last few years is finally starting showing signs of ebbing. The talks of new malls, complexes, residential projects being built are all now being kept under bags. There is an overall slowdown in demand across India as has been experienced by industry players. Property prices and rentals are correcting which have led to the erosion in market capitalization of many listed players like DLF and Unitech. The slowdown is aided by the fall in stock markets as wealth creation does not happen and there is lack of capital among investors to invest in real estate projects. Also, to adjust their share market losses, many investors are forced to sell off their real estate properties. Other factors that have led to the slowdown is the increase in interest rates leading to higher costs. Also income levels have not risen in proportion to the increase in property prices thus forcing many potential buyers out of the market. Also with rising input costs of steel, iron and building material, it has become unviable for builders to construct properties at agreed prices. As a result, there may be a delay in project completion leading to financial constraints. Many residential buyers are waiting a price correction before buying a property, which can affect development plans of builders.</p> <p>Also with IT industry continuously experiencing a slowdown, there may be further constraints on residential as well as commercial demand since IT/ITES segment accounts for 70% of the total commercial demand. So real estate players may continue to face liquidity concerns in future due to rising costs and unfavorable stock market conditions for further capital raising. Only those players who have achieved substantial revenues from past deals could expect to rise against the tide. But the scenario may get worsen if the upcoming properties are not sold off as it may lead to a financial crisis in the property market.</p> <p>Chapter 2 PARTICIPANTS INVOLVED IN REAL ESTATE MARKET</p> <p>Participants in Real EstateParticip...</p>