real estate ppt(final)(2)
TRANSCRIPT
Real Estate
Commercial Office Space
Residential Space
Hospitality SpaceRetail Space Special Economic
Zones (SEZs)
• The current contribution of Real Estate to India’s GDP is about 5% • FDI inflows worth more than $2.8 billion between 2000 and 2009
• Market size is $50 billion
• Expected to be $180 billion by 2020
Source: IBEF report 2009
Commercial Office SpaceGrowth Drivers
• Multinational companies (MNCs) and the growth of the services sector.
• Significant growth in FDI
Market Structure• Pan India presence• International players
Segmentation• CBD /EBD /ABD /SBD /PBD
Outlook• Growth in services —telecom, financial services, IT& ITeS, etc.,
14%
23%
8%26%
11%
8%
10%
Commercial Office Space AbsorptionTotal: 45 mn sq.ft
MumbaiNCRHyderbadBangloreChennaiKolkataPune
Source: E&Y estimates for top seven cities
2003-04(224)
2004-05(203)
2005-06(173)
2006-07(169)
2007-08(159)
2008-09(143)
Larsen & Turbo
5600 9636.53 10392.03 12622.50 18410.05 27456.22
Bharat Heavy Electricals
1881.06 2743.71 2885.23 3803.77 3975.01 5261.15
Punj Lloyd 1459.16 1380.72 1328.37 2180.98 4421.17 6734.56
ABB 603.56 1044.87 1422.88 2154.03 3295.49 3580.52
TOTAL
Companies wise trends in salesIndustrial
Crore
30.82%
5.91%
7.56%4.02%
51.69%
Larsen & TurboBharatPunj LloydABBOthers
2003-04(55)
2004-05(60)
2005-06(61)
2006-07(65)
2007-08(62)
2008-09(59)
IVRCL 773.44 1053.49 1517.89 2334.88 3671.83 4951.56
Nagarjuna 728.62 1126.21 1774.43 2759.44 3397.99 4083.68
Simplex 641.34 999 1342.74 1708.21 2808.12 4653.87
TOTAL
Companies wise trends in salesIndustrial
Residential SpaceGrowth Drivers
• Urban population estimated to reach 590 million by 2030• Number of nuclear families estimated to cross 300 million• 16 to 64 age group—almost 64% of the total population• Growing demand for affordable housing• Easier access to loans
Market Structure• Unorganized• Regional players are expanding to achieve a pan-India
presence
Segmentation• Broad categories include low-cost, mid-market and premium
housing
Outlook• Current space shortage is close to 19.4 million units, largely in
the middle and low income groups• Mortgage finance
2005 2006 2007 2008 2009 20100
50001000015000200002500030000350004000045000
14000 1800023000 27000
32500 3650060006000
50007000
65007500
HFCsCommercial Banks
Annual Home Loan Disbursal from Formal Sector
Source: Report of the 11th Five Year Plan (2007-12), Working Group on Urban Housing
US$ m
illio
n
Companies wise trends in salesHousing
2003-04(157)
2004-05(129)
2005-06(105)
2006-07(104)
2007-08(92)
2008-09(84)
DLF 442.52 411.77 983.94 1124.15 5516.39 2705.42
EmaarMGF 1026.90 926.22
Sobha 211.37 453.06 28.61 1056.52 1242.01 809.51
Ansal 149.45 184.32 319.08 718.25 823.02 631.70
TOTAL 3841.09 3909.79 5770.01 9428.56 16351.95 13986.87
Crore
19.34%
6.62%
5.79%
4.52%63.73%
DLFEmmarMGFSobhaAnsalOthers
2008-09
Retail SpaceGrowth Drivers
• Growth in organized retailing• Entry of international retailers
Market Structure• Small proportion of the total real estate industry in India• Dominated by unorganized retail• Large corporate houses entering the organized retail sector• International retail brands are tying up with Indian partners.
Segmentation• Organized retail contribution to the retail industry grew from
2% in 2003 to 5.5% in 2009• International retailers are growing through the franchisee
route
Outlook• Relaxation in FDI norms• Organized retail expected to grow at a compound annual
growth rate (CAGR) of 19 per cent over the next five years
2004
2005
2006
2010
0 50 100 150 200 250 300
10
15
20
30
OrganizedUnorganized
Source: Edeliwiss, E&Y Research
Growth of Retail Industry
43%
21%
5%
12%
9%4%
6%
Absorption of Organized Retail SpaceTotal
NCRMumbaiBangloreKolkataPuneChennaiHyderbad
Source: E&Y estimates for top seven cities
Hospitality SpaceGrowth Drivers
• Increase in tourism, including both business and leisure travel• Medical tourism destination• International events
Market Structure• Existing hotel operators are scaling up their operations. • Budget hotels and service apartments• Increasing presence of International players
Segmentation• Classification on the basis of star rating —one-star to five-star
deluxe
Outlook• The total estimated supply of hotel rooms is expected to
reach from 2.9 million to 6.6 million between 2010 and 2020, respectively.
• Demand to grow at 10% CAGR for the next 5 years• Service apartments, hospitals, wellness spa gaining
popularity
Special Economic Zones (SEZs)• Under the new SEZ Policy, formal approvals have been
granted to 577 SEZ proposals out of which 114 have started operating providing direct employment to 5,50,000 people.
69%
4%
5%2%
5%
4%
11%
Industry - Wise classification of formally approved SEZs
Electronics Hardware, IT/ITES/BiotechnologyEngineeringOthersGems & JewelleryPharmaceuticalsTextile
Source: Edeliwiss, E&Y Research, ET 7 September
FDI in Indian real estate
• US$ 2.80 billion in 2008–09, as per the Department of Industrial Policy and Promotion (DIPP)
• Growing interest of foreign players in the Indian market
• West Asia and investors from the US and Europe, who have shown keen interest in the launch of several real estate funds
• Expected to witness an increase of US$ 21 billion from the current values over the next 10 years
Regulations & Guidelines for FDI in Real EstateConditions for Development
• Minimum 10 hectares to be developed for serviced housing plots
• For construction-development projects, minimum built-up area of 50,000 square meters prescribed
• In case of a combination project, any one of the above two conditions should be sufficient
• At least 50% of project to be developed within 5 years from date of statutory clearances
Conditions for Investment• Minimum capitalization of US$ 10 million for wholly owned
subsidiaries & US$ 5 million for joint ventures with Indian partners
• Infusion of funds within 6 months of commencement of business
• Original investment cannot be repatriated before a period of 3 years from completion of minimum capitalization.
Miscellaneous Conditions• Investor not permitted to sell undeveloped plots• Project should follow the norms and standards laid down by
respective State authorities• Investor responsible for obtaining all necessary approvals as
prescribed under applicable rules/ by-Iaws/ regulations of the State
• Concerned Authority to monitor compliance of above conditions by developer
FDI Experience in Indian Real Estate
2003-04 2004-05 2005-06 2006-070
2
4
6
8
10
12
0.40.60000000000000
10.8
2.12.1
3.2
4.7
8.2 Other SectorReal Estate
US$
bill
ion
Source: ASSOCHAM, E&Y Research
59%25%
10%2% 4%
Major Countries investing in Indian Real Estate
DubaiIndonesiaSingaporeMalaysiaOthers
Source: Industry sources, E&Y Research
Foreign Investors
• Present in India since 1997• Established a wholly owned subsidiary, Ascendas India Private
Limited• Operating 5 IT Parks across Bangalore, Hyderabad and
Chennai having BUA of 4.4 million• Plan to develop two new IT Parks in Pune and Nagpur at a cost
of US$ 375 million
Dubai• Present in India since 2005• Developing integrated township at Mohali over 3000 acres• Plans to develop integrated townships, commercial offices, IT
Parks, SEZs and Hotels• Planning to venture into Healthcare and Education sector• Joint Venture with MGF Development Limited, India• EmaarMGF has JV with Accor Hotels (France) & Premier Travel
Inn (UK)• Capital outlay of US$ 4 Billion for group projects in Real Estate
in India
Indonesia• Present in India since 2004• Developing township at Howrah over 450 acres• Plans to construct expressways and bridges and multi-product
SEZ in India• Joint Venture with Unitech and Universal Success• Plans to invest US$ 4.2 billion for projects in India
• Operating various asset classes in Residential, Commercial and Retail segment
• Developed more than 7 million sq.ft. of Built Up Area (BUA)• Specializes in planning Residential, Commercial, SEZ
development, Retail and Hospitality, Integrated townships• 430 million sq.tf. of BUA under planned projects• Major presence in National Capital Region and other areas
such as Kolkata, Chennai and Hyderabad
Domestic Players
• Largest Real Estate developer in India• Developed Asia’s largest private township DLF City at
Gurgaon, Haryana spread over 3000 acres• Present across all the asset classes : Residential, Commercial
and Retail• Developed more than 220 million sq.ft. of BUA• Specializes in planning Hotels, Infrastructure and SEZs 574
million sq. ft. of BUA under planned Projects• Pan-India footprint, major presence in Gurgaon & Kolkata
• Operates primarily in Residential & Commercial asset classes• Developed over 2850 acres in Gurgaon and Delhi• Developing Integrated Townships, Malls, Hotels, IT parks and
SEZs• Plan to construct 157.6 million sq.ft. of BUA• Pan-India footprint with major presence in 16 North-Indian
cities across 4 states
• Present in Commercial, Retail & Residential asset classes• Developed over 5 million sq. ft. of BUA• Developing 15 self-contained townships and 10 Hotels• Planning to construct 13.2 million sq. ft. of BUA• Major presence in Mumbai with operations in Bangalore,
Ahmadabad, Goa, Pune and Hyderabad.
• Asset classes include Residential, Commercial, Development of plots and Contractual projects
• Developed over 4.5 million sq. ft. of BUA• Planning residential and retail projects• 101 million sq. ft. of BUA is planned under various projects• Major concentration in Bangalore with presence in other
areas such as Cochin, Chennai and Pune.
• Presence in Residential, Retail Commercial asset classes• Developed over 3.8 million sq. ft. of BUA• Plans to develop IT Parks and 12 SEZs across the country• Planning to construct around 46.5 million sq. ft. of BUA• Major Presence in National Capital Region• Increasing Pan-India Footprint, active in over 46 cities across
17 states
Residential Realty
• Residential property market is growing due to: – Rising per capita income– Increasing urbanization– Increase in the working age population– Increase in the lending of loans
2002 2003 2004 2005 2006 2007 2008 2009 20100
50001000015000200002500030000
Commercial Banks Contribution to Loan
2002-03 2005-06 2008-09 2011-120
100002000030000400005000060000
1888525661
38084
56530Per capita Income
Residential Realty
• The city of Mumbai has expanded vertically as much as it can in the Last Decade and still continues to do so
• The Developments in the city at the present moment are projects of Redevelopment: SlumsMillsDilapidated BuildingsReason being the scarcity of open lands
• Saturation due to lack of Infrastructure in its place Which has lead to the expansion of the city horizontally
Current Trends in Mumbai
• To understand the Current Trends we have taken up two Research reports conducted by
WesternSuburbs
Venue: MMRDA Grounds, Bandra-Kurla Complex, MumbaiDate: April 8-11, 2010
Displayed Locations
29%
29%
15%
12%
5%
3%3%
3%
1%Outside Mumbai
Western Suburbs
Thane
Central Mumbai
Navi Mumbai
Kalyan / Dombivali
South Mumbai
Western Suburbs beyond Dahisar
Ambernath / Badlapur
Apartment type showcased /Preferred Type of Apartment
13%
34%
11%
25%
10%
7%
1 -1.5 BHK2BHK2.5BHK3BHK>3BHKRH / Bungalows / Plots
33%
2%
37%
2%
15%
4%5%
2%
1BHK 1.5BHK2BHK 2.5BHK3BHK 4BHK>4BHK / Bungalow Studio
Preferred Stage of Construction
57%
20%
17%
6%
Ready for Possession
Project near Completion
Project 50% completed
Project Launch
Their Findings
• Data shows that around 57% of the respondents were willing to buy ready possession property.
• Around 33% of the respondents preferred 1 BHK unit type. However, only 13% of the projects offered 1 BHK options.
• 1 BHK unit type appears to be a huge untapped potential for developers.
• It can be seen that the LIG segment can afford an apartment of around 650-700 sq. ft. However, there is a dearth of supply for this configuration.
• The MIG would prefer an apartment size of more than 750 sq. ft., but could afford to purchase only a unit size of around 550-600 sq. ft.
• The HIG segment, which generally would have a preference of an apartment size of 1000 sq. ft. onwards, but could afford to purchase an apartment size of only around 750-800 sq. ft.
• This possibly is an indicator that the increase in property prices is not in commensurate with the improving affordability of the masses at large.
CentralSuburbs
Central Suburb Venue: R City Mall, Ghatkopar, Mumbai Date: February 5-7, 2010
Project Location Showcased/Preferred location
34%
27%
16%
13%
3%
3% 3%
Central suburbs ThaneKalyan Western SuburbsNavi Mumbai South MumbaiOutsside Mumbai
53%
13%
8%
6%
6%
6%
1%7%
Central Suburbs South MumbaiThane Western SuburbsKalyan Navi MumbaiAmbernath Outside Mumbai
Apartment type Showcased/ Preferred Apartment type
16% 3%
37%16%
24%
4%
1BHK 1.5BHK 2BHK2.5BHK 3BHK >3BHK
38%
18%
24%
9%
7%
1%3%
1BHK 1.5BHK2BHK 2.5BHK3BHK > 3BHK / BangalowCommercial
Findings based on the responses from visitors:
•39% of the respondents were in the age bracket of 26–35 years•30% were 36-45 years•14% of the respondents belonged to age group of 46-55 years•Around 7% were above the age of 55 years
Age Profile
•76% Salaried Class•24% Self-employed CategoryOccupation
•46% of the respondents reported monthly income of Rs. 25,000•30% reported a monthly income in bracket of Rs. 25,001 – 50,000 •Remaining 24% reported in higher income group
Monthly Income
Preferred Budget
9%
42%
23%
16%
6%4%
Upto 10 Lac
10 - 20 Lac
20 - 30 Lac
30 - 50 lac
50 - 75 Lac
Above 75 Lac
Their Findings
• The data gathered from the exhibition shows that 38% of the respondents prefer a 1 BHK apartment, whereas 1 BHK properties were showcased only in 16% of the projects.
• 24% of the properties on display were 3 BHK. However, only 7% respondents preferred a 3 BHK apartment. This gap needs to be addressed in the coming period, which would further propel the housing demand.
• The market sentiment seems to have improved in recent times which have resulted in further price escalations. Upon comparison of the property prices at the start of August 2009
• With the improving consumer sentiments, the absorption has picked up in recent times. However, the upward price march should not negate the higher absorption trend.
Our Observation
• The city is expanding horizontally• The demands of LIG will be met in the outskirts of the city• LIG and Low MIG would prefer to stay in the outskirts once
the infrastructure is in its place • Residential space is expected to grow by 18-19% CAGR every
year
Mumbai Office Market Overview
Key Micro markets– Corporate Office
Secondary Business District (SBD)• Andheri East• Vile Parle East• Jogeshwari East
Alternate Business District (ABD)
• Bandra Kurla Complex• Santacruz
Extended Business District (EBD)• Lower Parel• Worli• Prabhadevi
Central Business District (CBD)• Nariman Point• Fort• Cuffe Parade
Front Office Districts
Back Office Districts
• Thane• Western Suburbs• Malad• Goregaon• Navi Mumbai• Central Suburbs• Powai• Vikhroli• Kanjurmarg
Central Business District
Extended BusinessDistrict
Alternative BusinessDistrict
Secondary BusinessDistrict
Central Suburbs
Navi Mumbai
Western Suburbs
Thane
Major Movers – The shift away from CBD
Corporates preference for the EBD / ABD :
• Barclays• Goldman Sachs• Credit Suisse• Societe Generale• Citibank• UBS• JP Morgan• Franklin Templeton• Nomura India• Daiwa Securities• Dow Jones• IFC
Extended Business District – Worli / Prabhadevi
Key Characteristics• Central Mumbai• Preferred location for large Indian and international corporate
entities.• Financial institutions and large Indian corporate houses.• Average Rental Values (Grade A) : INR 275 - 325 per sq ft
month ($ 5.50 – 6.50)• Average Capital Values (Grade A) : INR 30,000 – 35,000 per sq
ft ($ 600 – 700)• Rental Trends: Q-on-Q: ↔ Y-on-Y: ↓ 25% Vacancy: 6%
Pros
• Connected from South Mumbai and Suburbs
• Retail and entertainment.• Proximity to good hotels• Residential projects in close
proximity• Connectivity with Western
suburbs with the opening of Worli sea link.
• Established corporate office location (Siemens, Aditya Birla)
Cons
• Location prone to traffic• Limited accessibility from
Western & Central Railways
Infrastructure Initiatives
• Western Freeway Sea Link Project
• Phase I: Connecting Bandra with Worli 8-lane bridge with length of approx. 5.6 kms
• Phase II: Connecting Worli to Nariman Point approx length 12.8 kms(Expected to be completed in 4 years from the start of construction)
• Mumbai Metro Rail – Sewree – Prabhadevi(3.5 Kms) Phase III.
Alternate Business District
Key Characteristics• Bandra East, Santacruz and Kurla.• Emerged as the new financial and business hub of Mumbai.• Large Indian and international corporate.• Average Rental Values (Grade A) : INR 225 - 275 per sq ft
month ($ 4.50 – 5.50)• Average Capital Values (Grade A) : INR 27,500 – 32,500 per sq
ft ($ 550 – 650)• Rental Trends: Q-on-Q: ↑ 6% Y-on-Y: ↓ 24% Vacancy: 18%
Pros
• Planned micro market with good Infrastructure
• Ample car parking facility available
• Connected with Western, Central & Harbour Railways
• Domestic/ International airport and good hotels
• Mono and Metro rail planned within the micro market
Cons
• High capital & rental values• Limited food &
entertainment options
Infrastructure Initiatives
• Western Freeway Sea Link Project• Mumbai Metro Rail – Charkhop – Bandra – Mankhurd
(32Kms)• Mumbai Metro Rail – BKC – Kanjurmarg Via Airport (19.5Kms)• 5 minute drive to eastern and western express highway
Secondary Business District
Key Characteristics• Western Suburbs from Andheri East to Goregaon East• Preferred location for corporate that are cost sensitive.• Major Occupants – FMCG, pharmaceuticals and IT / ITES.• Average Rental Values (Grade A) : INR 100 - 150 per sq ft
month ($ 2.00 – 3.00)• Average Capital Values (Grade A) : INR 11,000 – 16,000 per sq
ft ($ 220 – 320)• Rental Trends: Q-on-Q: ↓ 8% Y-on-Y: ↓ 34% Vacancy: 30 %
Pros
• Proximity to International/Domestic Airport
• Proximity to good hotels – ITC, Leela, Hyatt, Intercontinental, Marriott
• Lower rental & capital values
• Metro rail would ease the traffic congestion once operational
Cons
• Poor state of roads resulting into traffic congestion
• Lack of planned development
• Limited options available for car parking
• Low lying and prone to flooding
Infrastructure Initiatives
• JVLR – 6-lanes 10.3 kms concrete freeway connecting Western and Eastern corridor
• Mumbai Metro Rail - Versova – Andheri – Ghatkopar 11.4kms metro rail project will reduce travel time by an hour. Work has commenced and is expected to be operational by 2012. Major initiative to connect Western and Eastern Suburbs
• Mumbai Metro Rail – Charkop – Dahisar (7.5 Kms). Phase III
• Mumbai Metro Rail – Charkop – Bandra - Mankhurd (38 Kms)
Emerging assets
Low-cost housing• Housing shortage expected
19.4 million units• Easy access to finance • Nuclear family
Healthcare infrastructure• Expected to grow at a CAGR of 12% for next 5 years• Medical tourism
Logistics and warehousing• Booming Trade• MNC• Large infrastructure and
engineering projects
Education infrastructure• Huge market• Demand for literacy• Research laboratories
(global outsourcing)