INTRODUCTION OF REAL ESTATE SECTOR India has experienced experienced near-doublenear-double-digit digit growth in the last several several years and stories of the Indian economic juggernaut fill newspapers and bookstores. The commercial real estate market is no exception. The IT boom has created a huge demand for quality office space that was nonexistent a few short years ago. Several prominent Indian developers have have emer emerge ged d, and and more ore and and more ore inte nternat rnatiional onal inves nvesttors ors and and developers are plunging into the country. As with any local or regional market, there are many idiosyncrasies that colour the business environment, and India is no exception. Below is an introduction into the current conditions within the Indian real estate market market and what the future may hold as India quickly quickly becomes becomes a global global superpower.
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Marco-economic Overview
The Indian economy currently stands among the world's fourth largest growing economy in terms of purchasing power parity and holds the distinction of being a key contributor to Asia's balance of payment surplus. India's GDP is estimated to be the third largest in the world by 2020. India is also considered the second most attractive country in the world for Foreign Direct Investment (FDI). Forex Reserves (excluding gold and SDRs) stood at US$157.25 billion at the end of July 2006. India now holds the fifth largest stock of reserves among the emerging market economies and the sixth largest in the world.
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The performance of the country has been consistent and steady over the past three years with an average annual growth rate of 8%. The grow growth th tren trend d is bein being g led led by posi positi tive ve move moveme ment nts s acro across ss secto sectors rs in agriculture, manufacturing and services.
In recent years, the broad based growth in services sector has been a principle driver of the GDP growth. Business services (including Information Technology (IT) and IT Enabled Services), communication serv serviices, ces, fina financ nciial
ser service vices, s,
hot hotels els
and and
resta estau urant rants s
and and
trad trade e
(distribution) services are among the fastest growing service sectors. India’s share in the world market for IT software and services (including BPO) increased from around 1.7% in 2003-04 to 2.3% in 2004-05 and an estimated 2.8% in 2005-06.
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The proportion of manufacturing in the GDP has remained stable at arou around nd 25% 25%, how howeve ever, the the grow growtth rate ate of manuf anufac actu turring ing has has increased over years, from 2.7% in 2001 to 9.0% in 2006 against the growth rate of 2.3 % and 9.8% in agriculture and services respectively. Manu Manufa fact ctur urin ing g Indu Indust stri ries es like like text textililes, es, auto automo mobi bile les, s, ceme cement nt,, steel steel,, petrochemicals, Infr Infras astr truc uctture ure (civ (civilil avia aviati tion on,, road roads, s, and and port ports) s),, elec electr tron onic ics, s, beverages and tobacco products have been the prime drivers in India’s Industrial growth.
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REAL ESTATE SCENARIO IN INDIA The size of the Indian real estate market is estimated at USD 12 billion and it is currently growing at rate of about 30% annually. Real estate lending by banks has increased by 3.78 times in the last two year years, s, form formin ing g 18% 18% of the the tota totall bank bank cred credit it.. Stro Strong ng and and impr improv oved ed economic growth, proactive policy initiatives like relaxation of FDI in construction and availability of finance (institutional and retail) has driven the demand for real estate across all sectors - Commercial, Residential, Reta Retailil and and Hosp Hospit ital alit ity. y. Also Also,, ther there e is an incr increa ease sed d focu focus s towa toward rds s development of Special Economic Zones (SEZ) in India.
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The The last last few few year years s have have seen seen Indi Indian an mark market et matu mature re thro throug ugh h regulatory reforms reforms (rationalization (rationalization of stamp duties, reform reform of urban land ceil ceilin ings gs), ), impr improv ovin ing g prod produc ucts ts in terms erms of qual qualit ity y and and tech techno nolo logy gy,, chan changi ging ng tena tenant nt prof profilile e (MNC (MNCs, s, and and resp respec ectt for for tena tenanc ncy y laws laws), ), and and improv improving ing manage managemen mentt and mainte maintenan nance ce models models (enhan (enhanced ced produc productt life-cycles and sustained project / real estate yields). Although the initial real estate boom was concentrated in places like Bangalore and the National Capital Region of Delhi (including Gurgaon), more recently the geographical spread has widened. There has been a significant shift in real estate market from metros to its suburbs and to tier II and tier III cities. Lease rentals and occupancies have been picking up steadily and there is an increasing demand for quality infrastructure across various segments of the real estate sector.
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Commercial Real Estate
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. Cumulative demand for office space in India over the next two years (2006-08) is estimated to be in excess of 45 million sq. ft. The Indian IT-ITES Industry, estimated at USD 36.3 billion in 2006 has grown at a CAGR of 36% over the last decade and by 2008, is expected to account for over 7% of India’s GDP and 30% of foreign exchange inflows. 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. South Indian cities like like Bang Bangal alor ore, e, Chenn Chennai ai and and Hyde Hydera raba bad d alon along g with with NCR NCR (Nat (Natio iona nall Capi Capita tall Regi Region on)) cont contin inue ue to attr attrac actt the the majo majorr shar share e of IT/I IT/ITE TES S and and business investment. However, secondary cities, like Pune, Chandigarh, Indo Indore re,, Koch Kochii and Kolk Kolkat ata a are are now now emer emergi ging ng as the the new new pref prefer erre red d destinations for these companies due to their cost and infrastructure advantages.
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Residential Real Estate
The residential property market in India constitutes almost 75% of the real estate market in terms of value. Low per capita housing stock, rising disposable income coupled with easy availability of finance from the housing finance companies and banks are driving demand in this sector. Also, Average age of housing loan borrowers have decreased to 30- 35 years from 40- 45 years a few years ago, indicating a younger buying threshold. The housing sector is currently growing at 30-35% per annum. A proportion of demand is also being driven from investors who view housing as an attractive investment option as compared to mutual funds and stocks. The demand for housing is geographically widespread with townships being built in both the metros and the tier II and III cities. In India, there is a housing shortage of 19.4 million units out of which 6.7 mill millio ion n are are in urba urban n area areas s alon alone. e. This his trans ransla lattes int into ver very hig high opportunities for investors in the residential sector.
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Retail Real Estate
The Retail industry in India continues to be dominated by individual small format stores with floor space of less than 500 sq.ft. Total number of retail outlets is estimated to be around 12 -15 million, indicating a retail density of 12-14 outlets per 1,000 people, which is one of the highest in the world. The retail sector in India is currently estimated at USD 230 billion. The current size of the organized retail activity is USD 7 billion, which is a mere 3% of the total retail market. The retail sector is witnessing a growth of 5-7% per annum; however the organized retail is poised to grow at a rate of 25% - 30% per annum and is expected to be worth over USD 30 billion by the year 2010, thereby increasing the share of organized retail activity from the current level of 3% to 15% in the coming decade.
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Hospitality Real Estate
Hospitality industry in India is growing at an annual rate of over 8%. The number of foreign tourists’ arrivals (a major driver of hospitality industry) in the country increased to approx. 4 million in 2005. Over 55% of the total demand for hotels in the country is generated by foreign leisure tourists and business travellers (domestic and foreign). A large proportion of lodging demand in commercial cities such as Bangalore, Mumbai, Delhi etc. comes from business travellers.
This category also accounts for the major proportion of demand for five star or five star deluxe hotels. However, against the total current supply of 96,000 rooms, five star category accounts for just a quarter of the supply. With the expected growth in demand for rooms at 18%, another 65,000 – 80,000 hotel rooms will be needed till 2010. This demand – supply gap is expected to result in high level of activity in construction of hotels. The established brands in this sector such as Asian Hotels, Indian Hotels, ITC, Le Meridian etc are in expansion mode with many new players such as Accor Group, Marriot, Choice, IHG Group keen to establish their footprint.
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Special Economic Zones
The upcoming realty trend in India after multiplexes and mega housing projects are the Special Economic Zones (SEZ). Currently, 28 SEZs are operational in the country, including those converted from Export Processing Zones (EPZ) to SEZ. Approx. 189 proposals have already been granted approval since the SEZ Act, 2005 came into force. Thes These e incl includ ude e SEZs SEZs in vari variou ous s segm segmen ents ts such such as mult multii-pr prod oduc uct, t, Information Technology, Bio-technology, Gems and Jewellery, Textiles and techno technolog logy y intensi intensive ve indust industri ries. es. Both Both develo developer pers s and corpor corporate ate have shown tremendous interest in developing SEZs in the country. Reli Relian ance ce Indus Industr trie ies, s, for for inst instan ance ce,, is plan planni ning ng a 25,0 25,000 00 acre acre SEZ SEZ in Gurgaon and is also the main partner in twin SEZs coming up at Navi Mumbai and Maha Mumbai, with a combined size of 35,000 acres. The Adani group is also setting up an SEZ at Mundra, covering 30,0 30,000 00-3 -35, 5,00 000 0 acre acres, s, and and it prop propos oses es to inve invest st Rs 7,30 7,300 0 cror crore e on infrastructure. Other corporate who are in process of setting up SEZs include TCG Refineries of the Chatterjee Group (SEZ refinery at Haldia in West Bengal), Suzlon Infrastructure (hi-tech engineering products and serv servic ices es near near Coim Coimbat bator ore e in Tami Tamill Nadu, Nadu, Udup Udupii in Karn Karnat atak aka a and and Vadodara in Gujarat), Hindalco (aluminium SEZ at Sambalpur in Orissa), Genpact (IT SEZ at Bhubaneshwar in Orissa, Jaipur in Rajasthan and Bhop Bhopal al in Madh Madhya ya Prad Prades esh) h),, Vedan Vedanta ta Alum Alumin ina a (alu (alumi mini nium um SEZ SEZ at Orissa). Seeking the permission for SEZs are also a number of real estate developers, including DLF, Ansals, Omaxe, Parsvnath, Shipra Estate and Sunny Vista Realtors.
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FDI in Real Estate
With the opening of the sector for 100% FDI under automatic route, the real estate sector is estimated to capture about 18-20% of the total FDI coming to India in 2005-06. The FDI in Real Estate is expected to have a favourable multiplier effect on the economy. As an indicator, for every rupee spent on construction, an estimated 7580% gets added to the GDP. The spill-over effect of this initiative can also be witnessed in important sectors like the cement and and cons constr truc ucti tion on indus industr trie ies, s, wher where e the the key key play player ers s are are expa expand ndin ing g capacity to meet the soaring demand. With the relaxation of the FDI limit, the country saw an influx of global real estate estate developers developers like Dubai-base Dubai-based d Emaar Properties Properties (the (the largest listed real estate developer in the world) – which enetered India in a joint venture with Delhi based MGF Developments.
Growth and leverage to higher India growth
The real estate sector is developing rapidly in India. The demand side has robust and sustainable macro drivers across all segments.
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Residential:
Accou ccount ntiing for for more more than han 70% 70% of the sect sector or in term terms s of spac space, e, residential segment growth is driven by urbanization and the migration of households up the income curve. According to the National Council of Applied Economic Research estimates, the number of urban households earning more than INR 500,000 (about US$12,000) should more than double to 7.6m in 2006-10. Commercial:
Rapid growth in IT/ITES services (manpower in the sector has doubled in the past three years to 1.6m) is the main driver of Grade A commercial office space demand. Jones Lang LaSalle, a property consultancy, estimates that the absorption of office space in the top seven cities in India was 31.1m square feet in 2006. Retail:
According to CRIS INFAC, the penetration of organized retail into the overall market will increase from 3.5% in 2005 to 8% in 2010, thereby driving the demand for mall space. Hospitality:
According to CRISIL, the number of 5-star rooms is expected to grow by 60% in the next four years with foreign tourist arrivals growing at 10% CAGR.
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Structure Of Real Estate
The real real estate estate indust industry ry has histor historica ically lly been been fragme fragmente nted d and opaque, but this is changing: Penetration of mortgage finance:
Mortgage disbursals grew by 38% in FY2001-06 and have become an integral part of the buying process. This has helped reduce the unaccounted “cash component” of transactions. Entry of foreign capital:
Regula Regulatio tions ns govern governing ing foreig foreign n capita capitall in the sector sector have been been relaxe relaxed, d, motiva motivatin ting g develo developer pers s to become become transp transpare arent nt and improv improve e corporate governance. Change in legislation :
In many states, strict laws like the Urban Land Ceiling Act (which defines ceiling of land holdings in urban areas) have been repealed or modified. Consumer preferences:
Consu Consume mers rs are are now now will willin ing g to pay pay prem premiu ium m pric prices es for for bette better r amenities and a good brand. In response, most of the bigger developers are scaling up geographically, which necessitates rigorous systems and processes.
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MUMBAI REAL ESTATE Mumbai is no way behind when it comes to a talk on property. The Mumbai real estate is in its growth orbit and attracts investors from major multinationals in the recent times. Such is the potential of the city's infrastructure that it is known to be spearheading most cities as far as property market is concerned. With Mumbai serving as the entertainment city, even the organized retail sector here is fast flourishing. Purchasing
real
estate
in
Mumbai requi quires
a
significant
investment, and each piece of land in the city has unique features, so the property market in Mumbai has evolved into several different fields. Having the potential to leverage high returns, a large number of real estate projects are financed everyday in Mumbai. NRIs can shop for property in the city with the expectation of attaining an investment good, or with the purpose of utilizing it as a consumption good, or both. Mumbai is also the fashion capital of India, so it is one of the foremost cities to be hit by the retail buzz. With the opening up of the retail market, there has been a growing demand for retail properties in Mumbai. Mumbai. This has created a viable market for mall space and other retail stores and showrooms. These retail stores and malls are either owned by a business group or leased for hefty prices as the demand is high.
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The property prices as well as the increase in rental values in Mumbai owe much of its credit to the large scale investments in the commercial sector. Mumbai has always been the hot favorite for most of the corporate sector to have their headquarters in the city. And with increasing investments by MNCs in the IT, ITES and the BPO sector, the there has has been been a grow growiing dem demand and for offi office ce spac space; e; which hich have have consequently created an imbalance in demand and supply for residential properties. The rental values in Mumbai have also in high corresponding to that in other metros.
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Navi Mumbai- Emerging Commercial Hub
Even India’s leading conglomerates have taken up commercial space space here. here. The state state admini administr strati ation on has already already shifte shifted d wholes wholesale ale commodity markets to Navi Mumbai. So, you have endorsements from different segments that Navi Mumbai’s commercial real estate is much sought after,” he says. Suresh Haware, MD, Haware Builders concurs. “Even at the ‘nano’ end of the commercial real estate spectrum, demand is high,” he says. It is the small offices and shops’ segment that have witnessed the highest demand at Haware Builders’ commercial projects in Navi Mumbai, he reveals. Today, industrial units in Navi Mumbai are relocating to locations in Raigadh district and commercial is the latest buzzword in Navi Mumbai’s real estate scenario, says Vijay Gajra of the Gajra Group. “Commercial opti option ons s in Navi Navi Mumb Mumbai ai span span a huge huge pric price e band band.. Grow rowth of the residential segment in Navi Mumbai, prior to that of the commercial segm segmen ent, t, actu actual ally ly work works s out out in favo favour ur of the the endend-us user er today oday,, as manpower resources are easily available,” he points out. “Commercial real estate in Navi Mumbai comes at competitive prices vis-à-vis other opti option ons s in the the Mumb Mumbai ai metr metrop opol olit itan an regi region on (MMR (MMR), ), with with the the added added advantage of being located in a well-planned city,” adds Gajra. IT/ IT/ ITeS ITeS SEZs SEZs and and busi busine ness sses es that that have have anyt anythi hing ng to do with with rail/road transport and logistics or shipping, are proving to be the next big segmen segmentt in Navi Navi Mumbai Mumbai’s ’s commer commercia ciall spectr spectrum, um, shares shares Mayur Mayur Shah, honorary secretary, MCHI. Ramneek Bakshi, principal of global property consultants, LJ Hooker, points out that MNCs view India within the parameters of the ‘Brazil, Russia, India, China’ (BRIC) equation. 18
“When they look at India as a business entity, Mumbai takes prime position. When they start looking out for space, Navi Mumbai, which forms the third level of real estate pricing, is attractive for MNCs looking to set up shop in the Mumbai region,” he explains. At the Norwegian cons consul ulat ate e in Mumb Mumbai ai,, Geor George ge Math Mathew ew,, hono honora rary ry cons consul ul gene genera ral, l, concurs, “If you look at real estate pricing trends in the MMR, Navi Mumbai fits the bill on many counts. However, the clincher is the price efficiency and developed infrastructure that Navi Mumbai provides,” he concludes.
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Appreciations
The hike in demand as well as supply and appreciation in capital valu values es are are attr attrac acti ting ng good good atte attent ntio ion n from from over overse seas as inve invest stor ors. s. The The Mumbai real estate has become a reflective of the high growth in Indian property market. There has been an increase in real estate value across micro markets in Mumbai as well. Mumb Mumbai ai is look looke ed upon upon as one of the the most ost organ rganiz ized ed and and tran transp spar aren entt prop proper erty ty mark market et in Indi India. a. With With cash cash comp compon onen ents ts and and transactions shooting up in the last two years, the city has gained much popularity among the investors, both domestic and international. The investment market has been thriving with excellent returns going high over the past few years. The real estate boom and an upsurge in development activities in major parts of Mumbai have led to a rise in investment prospects in commercial and residential sector. Known Known locati locations ons like like Bandra Bandra-Ku -Kurla rla Comple Complex x (BKC) (BKC) and Lower Lower Parle have seen appreciations in commercial spaces falling under the category of Grade A. The occupancy levels in other preferable locations like Andheri West and Nirman Point also increased in the current year and are are believ believed ed to have marked marked the rise rise by by 90-95%. 90-95%.
Another Another mark mark
appreciation is in regard to commercial properties in Mumbai, and is prevailing in the city's micro markets barring a few exceptions.
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NRI Real Estate trends
Maj Major prope roperrty devel evelop oper ers s in Mumb Mumbai ai, unde underp rpin inne ned d by the the vastness, scope, success and scale of progress in the city are now transf transform orming ing develo developin ping g proper propertie ties s into into stron strong g retail retail bases. bases. Then Then of course, the government permitting foreign direct investment (FDI) up to 51% in retail trade has also brought about major moves in retail industry. The demand for property whether commercial or residential, is very high in Mumbai. There has been steady demand for consecutive years and has resulted in an increase in the yield rate. New real estate projects in Mumbai are always in queue to be launched by private as well as by government. This encouraged overseas investors especially Non resident Indians (NRIs) to make significant significant investments investments in Mumbai Mumbai properties. With an excellent accessibility across the globe, the city of dreams, Mumbai has emerged as an ultimate destination for most people. As per property surveys, one can sell any property and get a price which is fairly good. Within the real estate industry, it is believed that such periods come in cycles and bring an apt time to cash upon. What What makes makes real real esta estate te in Mumb Mumbai ai so exciting are an ongoing demand and and the proposed projects that are to be executed in approaching years. Builders always have special offers and attractive sche schem mes in sto store for for end end cons consum umer ers. s. Capi Capittal Val Values ues of qual qualiity apartments, in well-maintained old buildings and upcoming projects, in South and South Central Mumbai, have gone through the roof
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Agency
Agency is that branch of the real estate business which engages the attention of the greatest number of persons who are concerned with the business, and in that respect it is of prime importance. It is divided into two parts, brokerage and management. A broker is a person who for compensation, usually proportioned to the value of the subject-matter, brings about transactions between principals. Brokerage has two divisions according to the kinds of business which usually engage the attention of the broker. b roker. The sales broker is a broker who devotes his time and attention to the bringing about of the sale or exchange of real property. A loan broker is one who gives his attention to the obtaining of loans upon the security of real property. One One man man may may prac practi tice ce both both bran branch ches es of the the busi busine ness ss,, or a specialist may devote himself to either of these branches. Management, the second branch of agency, is the operation of deri derivi ving ng inco income me and and cari caring ng phys physic ical ally ly for for real real esta estate te stru struct ctur ures es.. It concerns itself not only with the deriving of income, but with the keeping down of expenses and the care in making expenditures. It is popularly known as "Agency."
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COMPANY PROFILE
ALLIANCE PROPERTY SERVICES PVT. LTD .
Regd Off: 20/3, Vandana Bldg, R.A. Kidwai Road, Wadala, Mumbai-400031.
Administrative Office:
Vashi Plaza, Ground Floor, Sector 17, Vashi, Navi Mumbai- 400705.
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VISION
“Benchmarking our services in terms of People, Pace & Passion to be the best in the Industry.”
MISSION
“To provide creative solutions, by customizing our services to suit the requirements of our clients. To encourage & facilitate our team to reach its optimal potential combining its diverse strengths to provide total customer satisfaction.” Background
They started as a journey by a single individual with a desire to excel has now become an organization which is serving the needs of the real estate industry in the country today. Alliance today has the best talent on its board of directors who are professiona professionals ls in real estate, finance, accounting accounting and taxation taxation striving striving to render the best of services to its clients. Alliance today has given shape to and and has has stru struct ctur ured ed som some of the the most ost com complex plex and and land landma mark rk transactions for reputed clients. They add value to your properties through their experience and expertise, with their wide network of clients and contacts all over India and global arena. They assist everyone in identifying opportunities and the right partners to compliment their capabilities.
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Business Segments
Real Estate
BUSINESS
Management consultancy
SEGMENTS
Financing
Franchising Approach
Our Our serv servic ices es help help clie client nts s to achi achiev eve e valu value e addi additi tion on by turn turnin ing g assets into dynamic assets and realize the best potential of each asset and try try to optimize optimize by putting putting each asset to its its best possible possible use.
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Projects HandledLittle World Mall:
They had sole mandate to lease the mall which started in October 2007 in Kharghar. Complete project was completed by them them with good anchors and brands as listed below: Aditya Birla more, Archies, Levis, Levis Signature, Max Lifestyle, Adlabs, The Raymond Shop, Reid & Taylor, Welspun,Thomas Scott , Connexions, Koutons, Planet M, The Mobile Store, Homes & Apparels, Lill Lillip iput ut,, Carm Carmic iche heal al Hous House, e, Kitt Kitten ens, s, Thom Thomas as Scot Scott, t, Gini Gini & Jony Jony,, La Diam Diamon ond, d, Nice Nice Looks Looks,,
Dosa Dosa Plaz Plaza, a, Chin China a Land Land,, Chop Chopki king, ng, India Indian n
Tadka, Moti Mahal, Café Energise, Café Bollywood, Kwality Swirls Juice Zone, Namrata Cup Corn.Curries and Parathas.etc
City Center Mall:
They have leased Operational Mall on Palm Beach Road, Vashi. The list of brands which we introduced to this mall are: Levis, Roop Sangam, Sangam, Kittens, Gini& Gini& Jony, La Diamond, And And Design, Ador Adora, a, M&B M&B Shoe Shoes, s,Bl Blac ack k berr berry, y, Week Weekend ender er,, Infa Infanc ncy, y,Ti Time mex, x, GKB GKB Opticals, Black Berry, ITC John Player, Unistyle, Addidas, Nike, Spykar, Lee Lee Coop Cooper er,, Ruff Ruff Kids, Kids, L effe effect ct,, Live Live In, In, Lovab Lovable le,, Domi Domino noes es,,
Nice Nice
Looks, Top Corn, Café Coffee Day, Ameoba Game Zone, Stone age Restaurant.
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Other Individual Projects Handled : Brokerage deals: ¤
Crystal Mall- Bandra & Mumbai Times Café
¤
Reliance & Maithili Signet at Vashi.
¤
Kstar Mall –Chembur Aditya Birla More
¤
Fantasia Mall-Inox (Multiplex)
Bank Finance: ¤
Arrangement for Akshar Developers from Axis Bank
¤
Arrangement for Wellwisher Constructions from Axis Bank
¤
FDI investment for Little World Mall.
¤
Etc,.
Quality Objectives
Continuous improvement in the quality of services.
Prompt response to customer complaints co mplaints
Strong property data bank.
Aggressive follow up & due diligence.
Panel of associates for legal, finance, market research, investments and other allied subjects.
Handling properties in all metros and all other cities across the country.
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An Overview
Alli Allian ance ce Prop Proper erty ty Serv Servic ices es is prof profes essi sion onal ally ly mana managed ged comp compan any y having presence in Mumbai, India in the following activities: 1. Real Real estate estate –Sal –Sale e and leas lease. e. 2. Lease of of retail retail outlets outlets in malls malls and and High street street.. 3. Joint Joint venture ventures s with develo developer pers. s. 4. Leas Leasin ing g and and sale sale of enti entire re prop proper erti ties es with with High High Valu Value e clie client nts. s. /Builders/Investors/Private equity /Venture capital /Foreign Direct Investors. 5. Franchisin Franchising g in retail retail and other other spheres. spheres. 6. Arranging Arranging attractive attractive investmen investmentt proposals/ide proposals/ideas as for investors. investors. 7. Holding Holding real estate/fran estate/franchisin chising g /retailing /retailing /financing /financing expositions expositions and exhibitions in all towns and cities. 8. Finding Finding investors investors for local develope developers rs and Builders. Builders. 9. Unde Underw rwri riti ting ng enti entire re proj projec ects ts for for mark market etin ing g ,inv ,inves estm tmen ents ts and and execution.
Corporate Real Estate Services
Transactions for all kinds of properties across the country including:
Residential
Office
Commercial
Retail & Shopping Malls
IT Park
BPO/ Call centre
Hotel & Resorts
Leisure & Entertainments
Hospitals
Multiplexes
Industrial
Institutional.
Advisory Services:
Investment Advisory Services
Third Party Due Diligence & Service Management
Feasibility Analysis
Lease & Utility Audits
Relocation Studies
Property Valuation & Tax Consulting
Site Selection Modeling Analysis & Strategic Planning
Merger and Acquisitions
Joint Venture, Collaborations, Franchise
Foreign Direct Investment (FDI)
Allied Services:
Valuation and Land Appraisal
Tenant / Purchaser Representation
Research & Feasibility Studies
Project Management
Bank Finance: Preparing project and feasibility report, Bank Turnkey Financing Solutions
Value added Services
1.
Turn Turn Key Proje roject cts s : Less Lesson oniing for for App Approva rovall a)
Central Govt. of India
b)
State Govt. of India
c)
Loca Locall Gov Govt. and and Mun Munic iciipal pal Corp Corpor orat atiions ons
2.
Join Jointt Vent Ventur ure e wit with h Bes Bestt Indi Indian an Real Realto tors rs for for Mult Multin inat atio iona nall Companies.
3.
Offi Office ce Buil Buildi ding ngs s and and Hous Houses es for Comp Compan any y Man Manag agem emen ent. t.
4.
Proje roject ct Manag anagem emen entt Con Consu sulltanc tancy y Ser Servi vice ces. s.
5.
Desig sign, Ar Architect, Ma Marketing, et etc.
6.
Loca Locall Assi Assist stan ance ce for for Sit Site e Deve Develo lopm pmen entt / Con Const stru ruct ctio ion. n.
7.
Global Partnership with leading realtors overseas for Indian Realtors.
After achieving a reasonable success in Mumbai and Navi Mumbai, they are now planning to have branches and associate offices in all cities and
Tier 1, 2 and 3 towns of India as well as all the parts of the world. They would be willing to start a no commitment tie-up with organizations.
MY PROFILE IN ALLIANCE PROPERTY SERVICES PVT. LTD.
Projects Handled:
CENTUR CENTURION ION COMME COMMERCI RCIAL AL & SHOPPING COMPLEX
Plot No 88-91, Sector: 19A, Nerul (East), Navi Mumbai.
HAWARE’S FANTASIA BUSINESS PARK
Plot no.47, Sector-30A,
Vashi, Navi Mumbai.
HAWARE’S VASHI INFOTECH PARK
Plot No. 16, Sector – 30A, Vashi, Navi Mumbai.
HAWARE INFOTECH PARK Plot No. 39/3, Sector – 30A, Opposite Vashi Vashi Railwa Railway y Statio Station, n, Vashi Vashi,, Navi Navi Mumbai.
LOAN DEPARTMENT
As centurion shopping complex is a vast project, it consists of more more than than 500 500 shop shops s and and offi office ces. s. The The cust custo omers mers com come for for the the investment as well as to start up their own business. The customers are basically heterogeneous in nature. Out of which few of the customers were willing to give the total cost of the shop/office as their 100% own contribution within the specified time period. But when analyzed that the cust custo omers mers were were not not fina financ nciially ally stab stablle aft after goi going thr through ough their heir docu docume ment nts, s, they they were were give given n the the opti option on of comm commer erci cial al bank bank loan loan according to their requirements. Marketing Marketing executives were appointed appointed to approach approach different different banks and were asked to give the detailed view of our shopping complex. Every week a meeting would be held between the trio to discuss the various factors and schemes regarding the particular bank. As to know what are the different rates of interest been levied , and many other factors. Most of the banks do not support the commercial loan as it involves very high risks and suspicions. Whereas there are banks with whom we had tie-ups. They are:•
Mahanagar Co-Operative Bank
•
HDFC Bank
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ICICI Bank
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Saraswat Co-Operative Bank
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Deutsche Bank
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Abhyudaya Bank, etc….
We as the intermediary would collect the required document from the customer. The bank then verified the the documents and declared whether the customer is liable to repay the loan taken by them. Within this period we had to follow up with the bank and customer for paying 40% of their agreem agreement ent value. value. Custom Customer er should should pay their their 40% and comple complete te with with registration before bank proceed. Banks are able to provide up to 60%70% loan according to customer profile. At the time of registrations we are required to provide instruction to cust custom omer ers s rega regard rdin ing g regi regist stra rati tion on.. Foll Follow owin ing g inst instru ruct ctio ion n were were to be provided by us : 1.
Cust ustomer omer hav have to bring ring Rs. Rs.350 3500 with with them hem at the tim time of registration for printing and stamp duty chargers.
2.
Customers current 2passport size photocopy with pan card Xerox.
3. It Requires Requires 2 witnesses witnesses also also from the the client’s client’s side. side. 4. 5% stamp stamp duty 1%registr 1%registratio ation n paid by customer customer on Agreement Agreement or Market value whichever is higher. 5.
The The agre agreem emen entt is to be done done on agre agreem emen entt or mark market et valu value e whichever is higher. Market value is to be calculated by following formula: Build up Area = Carpet Area + 20% Market Value = Build up Area X Rate Per Square Feet
COLLECTION DEPARTMENT
The collection department is the main hub in this business unit, wherein the money is collected from the customer after the booking is done. The customer can officially book the shop only after paying the toke token n amou amount nt.. The The toke token n amou amount nt vari varies es with with resp respec ectt to place place and and project. The customer details are jot down in the booking advice. This is done in order to ensure that the follow up of the particular customer is done and also to keep a check i.e., that customer should pay the latter half of the remaing amount within the time limit. The follow up mainly helps in maintaining essential records which is in Microsoft Excel format. It is made sure that the database is up to date at any given point of time so as to main mainta tain in the the flow flow of the the vari variou ous s acti activi vity ty rela relate ted d fina financ nciial transaction. If the customer fails to repay the amount on time, as a penalty he/she liable to pay the interest on the remaining amount. We are there to keep keen observation on every individual account. We had to report report to Mr.Hawar Mr.Haware e about about the full weeks weeks detailed detailed data data in order order to give him the current scenario of his project.
Example:
Mr. A came to the site for seeing the shop and buying it to start his own business. We gave him a fair view of all the shops available with us, the cost and size of the shop varied differently. The cost of the shop was dependent upon floor wise also. We had G+3 floors. Among which ground floor was the most expensive one. After going through our shops Mr .A decided to purchase shop at first floor. Then we took out our booking booking advice which had to be filled filled by us which carried all the information pertaining the client which was of our great use. After filling the booking advice we took the token amount which had to be more than Rs.11000/-. Suppose Mr.A purchases shop in Centurion project, Nerul on first floor. First process is to fill booking advice. Booking advice includes:
Name of customer : Address: Date of booking: Mobile number: Office Number: Residential Number: Sq Ft.:
After filling filling booking advice, booking advice will go to Haware head office,Vashi for confirmation. When that booking goes to head office at that that time time shop shop is conf confir irm m for for that that cust custom omer er till till regi regist stra rati tion on.. Afte After r registration legally that shop will transfer to Mr.A’s name. At the time preparing booking advice Mr.A decided to pay their 50% amount within 15days as per their requirement and their condition, for remaining they required bank loan. So we have to keep contact with Mr.A and remind every time about payment, payment, recorded all all payment detail in excel sheet wherever payment is made by Mr.A . Within 15 day Mr.A paid their 50% amount. Mr.A Purchased on 9 May2009, 212 sq. Ft., on first floor as per demand at that time per square rate was Rs.6,000. Therefore total cost for Mr.A’s shop is Rs.12, 61,000/-. While booking, Mr.A gave Rs.11000/as a token money in cheque. Following is the excel sheet which is prepared and maintained daily if any customer paid any amount that will added into total received colu colum mn ever every y time. me. Ther There e is one more ore she sheet was was thei heir is whi which PDC(Post Dated Cheque) is to be maintained. If Mr.A gave PDC of Rs.1,00,000 for 12th may 2009 then it will recorded in PDC sheet, and on 12th May when cheque will clear we have to added that Rs.1,00,000 into Mr.A account after conformation.
Mr.A completes completes their 50% payment payment within 15days. If it could not poss possib ible le from from Mr.A Mr.A then then they they are are elig eligib ible le to pay pay inte intere rest st on thei their r remaining amount. Mr.A required loan on remaining 50%. So within 15days when Mr.A was paying their part of payment we contact with our bank and fulfil all requirement of bank. Firstly bank required following document from customer’s side :
If business man then 3 years Income tax returned filed,if service men men then then form no.16 from from and 3 years years salary slips.
Last 1 years updated bank pass book copy.
Residential proof :- Electricity bill, Pan card Xerox,
2 photograph
Agreement and register document.
Esti Estima mate ted d 5 year years s proj projec ecte ted d bala balanc nce e shee sheett some some bank bank required
Ever Every y bank bank has has diff differ eren entt crit criter eria ia for for diff differ eren entt cust custom omer er.. CoCooperative operative bank like Mahanagar Co-Operative Co-Operative Bank, Abhyudaya Abhyudaya Bank, Saraswat Co-Operative Bank provided loan only to businessmen not for servicemen and not NRI person. Only businessmen are eligible for their req requir uiremen ementt. And bank bank’’s like ike ICIC ICICI, I, HDFC HDFC etc. tc. provi rovide de loan oan to businessmen as well as NRI and Servicemen. Servicemen should have net salary more than Rs.30000.
Rate of Interest is also differing from bank’s to banks. Cooperative bank have less interest compare to nationalised bank. Rate of Interest for commercial loan is between 12.5% to 14.0 %. Bank’s also charger processing fees and charger for pre-payment. Processing fees also differ from bank to bank between 0.5% to 1.0%. It took 15days 15days to provided provided loan to Mr.A after providing every document which is required.
SELLING & MARKETING DEPARTMENT
The ultimate aim of the Real Estate Estate Marketing Marketing is to increase the demand for a particular type of property and to increase the price so that the seller of the property owns the highest amount of profit for himself. The Real Estate marketing is needful also to make the Real Estate project work and make it familiar among the public as much as possible. Most of the Real Estate sellers keep an amount intact just for their Real Estate Marketing and on that basis they choose certain Real Estate Marketing Agents and give them the responsibility to sell their property off with as much profit as possible. If the seller’s budget is big enough then he can go for renowned Real Estate Marketing agency and for those with small budgets the smaller agencies are also available. Most of the big Real Estate owners who want to sell their properties prefer to go for big marketing agencies as they have better ways to promote one's properties and have able agents who can find the right kind of agents working for them who have better contacts and have better ways to popularize the real estate property.
A good good Real Real Esta Estate te Mark Market etin ing g Agen Agency cy alwa always ys puts puts spec specia iall emphasis on the right kind of information that one needs before starting Real estate Marketing and for that the agency normally conducts some kind of survey to gather the right kind of information. Later the Real estate marketing Agency depending on that report develops their ways of marketing.
Nowadays Nowadays a lot of Real estate marketing marketing is done through the help of the Internet. One can have various websites that do marketing for different real estate properties for a certain amount of money. One also need needs s to mak make the websi ebsitte prec precis ise e and and fil filled led with with to the point oint information. The Real estate Internet Marketing is a very simple process and is cheaper in nature as well. Although one needs to keep the demands and the reasonable amount of price in mind. I was functioning under operational projects of Alliance Property Services for Haware’s Commercial Projects namely
Centurion Commercial & Shopping Complex, Nerul
Vashi Infotech Park, Vashi
Haware Infotech Park, Vashi
Fantasia Mall, Vashi
In marketing, Promotional strategies were used namely
News paper advertisements,
Visual media ads in local cable channels chan nels
Direct Marketing(door-to-door) Marketing(door-to-door) in commercial complexes and
Through www.iproperty.com.
Business cards can either by a waste of paper or an effective bridge between a prospect and their potential as a long-term client. So, followups of all the business cards that were dropped in at the site office were done on a daily basis. Brokers & agents were also approached to get their clients for the deals. Telephone & Email follow-ups also formed a part of my job. There was was faceace-tto-fa o-face ce int interac eracti tion on with with the custo ustome mers rs for the sale sale of shops/offices by convincing them to buy. Customer Database was also maintained considering various heads like- Date of purchase, purchase, Shop/Office Shop/Office no., Name of the customer, customer, Area of the shop/o shop/offi ffice ce in sq.ft. sq.ft.,, Total Total value value of Shop/o Shop/offi ffice ce in Rupees Rupees,, Total Total Received(cash/cheque) and Balance amount.
ADVANTAGE FOR REAL ESTATE AGENT :
10-Year Tax Holiday
The The finan inance ce Minist nistry ry has has anno announ unce ced d a 10-ye 0-year ar tax tax holi oliday day for developers of Industrial parks set up from April 1, 2006 to March 31, 2009. According to the Industrial Park Scheme 2008 notified by the Central Board of Direct Taxed (CBDT), the industrial park developers will be elig eligib ible le for for 100% 100% tax tax dedu deduct ctiion whic which h is to be prov provid ided ed for for 10 consecutive assessment years out of 15 years after the commencement of operations of such units. The developers will be free to choose the 10 consecutive years for the purpose of availing themselves of the tax holiday. Price Variations in India
There are unbelievable variations in the prices of real estate sector in the past. Which mainly affect to the sale of business. Mainly there are two causes for the same:
Per Capita Income
GDP at Market Price
Per Capita Income
As depicted by fig. 2 per capita income is increasing in India, which has increased the purchasing power of the people. Due to this over the last year (2006-07) houses prices have raised by 10-90% and commercial property prices by 10-30% in different area of India. Correlation .996 is found between PCI and real estate prices. Thus there is a positive correlation between per capita income and real estate prices. GDP at Market Price
GDP, the indicator of the national growth, from the past 2-3 years is increasing by 6.5% to7.5%. Every rupee spend on the construction add to nearly 60% of GDP. As shown by the figure the GDP has increased from the 2463324 crore to 3529240 crore from 2002-03 to 2005-06, so it indicates that how the spending on the construction sector helps the real estate prices to increase.
Price Variations in Different cities:
Price variations in Mumbai
Price variations in Delhi
Price variations in Pune
Price variations in Kolkata
It is clear from the above tables that in real estate prices are touching heig height hts. s. In some some area areas s the the pric prices es are are incr increa ease sed d by 90-1 90-100 00%. %. In Gurgaon and Noida prices has jumped by as much as 200%. The cheapest DLF apartment in Gurgaon costs Rs. 1 crore.
Clear Title
90% of the lands in India do not have clear title. The ownership is unclear, thereby creating a scarcity of land. This is due to poor record keeping and outdated complaint processes. All updated records must be computerized to increase transparency in land ownership. And special fast track courts must be set up to clear all legal land disputes in a short period of time. Stamp Duty & Registration
The cost of transferring land titles must be reduced from rates of 10% stamp duties to reasonable levels of 3 to 5%; similar to prevailing rates in developed countries. This will encourage sellers to pay stamp duties, instead of trying to cheat the government, thus increasing the revenue for the country. The high duties have also encouraged unaccounted mone money y bein being g used used in most most real real esta estate te tran transa sact ctiions ons in Indi India. a. The The registration procedure should also be made transparent and simple so that corruption can be minimized. Building Codes, Standards & Permissions
There are several building guidelines and standards in various cities and stat states, es, howe howeve verr they they are are neit neithe herr foll follow owed ed by the the deve develo lope pers rs nor nor implemented by the authorities.
Development and Planning
In India development and planning concerned with real estate sector is not up to the mark. The city or state authorities must use professionals to plan and execute all development plans for cities and towns, with futu future re deve develo lopm pmen entt in mind mind.. This This must must be done done with withou outt poli politi tica call compulsions. This will allow proper zoning within cities and towns, green are areas and and othe otherr infr infras asttruct ructur ure e syst system ems s to fall all int into plac place e as the the development plans unfold.
Present Scenario in India
Up to the end of 2007 real estate sector in India was growing at a very high rate. There was a situation situation of boom in this sector. sector. The home loans were were easi easily ly avai availa labl ble e and and RBI RBI was was foll follow owin ing g very very libe libera rall poli polici cies es regarding the interest rates. But in 2008 the things are changing due to the high rate of inflation in the Indian economy. There is uncertainty in the market as share market is showing depression and the RBI is also increasing the Bank rate leading to the increase in the interest rates. So the buying power is reducing. The major reasons for this downfall are inflation and the low rate of GDP.
Findings
• As the GDP increases the real estate prices also increases because there is a high degree of positive correlation between the real estate prices and GDP. • Real Real esta estate te pric prices es also also incr increas eases es with with incr increa ease se in the the per per capi capita ta income as there is high degree of positive correlation between these two also. • The infrastructure of India is also growing day by day so it adds to the better facility to different sectors which affect the real estate prices. • The FDI into the country affects the real estate FDI and real estate having a positive correlation leads to the boom in this sector. Increase in FDI from 2006 to march 2007 is 10%. Earlier it was 16% and now in 2008 it is 25%. • The interest rate also affects the real estate prices because it affects the lending and borrowing by the investors. • The growth in the real estate sector is between 25-30% in a residential sector, 10-15% in commercial sector and agriculture sector. • Housing sector constitute 80% of real estate in terms of value and 20% by commercial sector. • In residential segment, availability of easy home finance and rising purchasing power has driven the growth. Builders are launching highend, life style residential products to cater to the growing bunch of high net worth individuals.
• In 2008 the growth of real estate sector is going down due to high inflation and hike in home loan rates by the banks following the increase in bank rate and SLR by the RBI • The outsourcing and IT/ITES industry have contributed to the demand for qualit quality y office office-sp -space ace.. The estima estimated ted demand demand from from IT/ITE IT/ITES S sector sector alone is expected to be 150mm sq. ft. of space across the major cities by 2010.
Suggestions
The following recommendations are made this paper• Due to high prices the lower income group is not able to purchase the shops, so company should take kept in mind to protect the lower income group. • The The agri agricu cult ltur ure e land land cove covere red d into into the the comm commer erci cial al and and resi reside dent ntia iall purpose. But the population is also increasing day by day. So company should steps for the same. • The investors should analyze the type of project in which they are going to invest and the potential returns from it. • Privatization of Airports and ports needs to be speed up. • There is a lack of proper data and management of the real estate sector so company should take the corrective steps in this regard so that the proper estimation and management of the real estate can be made possible. • Commonwealth is scheduled for 2010. Hotels, sport stadiums and other infrastructure to have successful games need to be expedited. This is another great opportunity for foreign developers and investors to step in India. Thus more and more encouragement should be given to foreign investors. • Stamp duty is extremely high and must be rationalized and brought down to 2-3% as per global practice, which is now in India varies from 56%. • Due to lot of investment avenues in real estate in India, fraud cases are also increasing day by day like in Delhi deconstruction of buildings. Thus
careful measures and laws should be enacted to deal with these types of situations.
Conclusion
After studying all the factors of the real estate it can be concluded that the Real Estate is a very wide concept and it is highly affected by the macro-economic factors like GDP, FDI, per capital income, Interest rates and employment in the nation. The most important factor in the case of Real Estate is location which affects the value and returns from the Real Esta Estate te.. Indi India a need needs s a stro strong nger er capi capita tall mark market et base base for for prop proper erty ty financing. The debate on the potential introduction of REITs and real estate funds points in the right direction. The introduction of REIT s in 2007, will give international investors in particular a familiar investment vehicle. Private investors could also enter into indirect investment in real estate. Although interest in new projects is most likely to come primarily from institutional investors, the rising middle class is likely to seek new instruments aside from direct property investments in the medium term. So, in the end we can say that the investment in Real Estate in India is a very good investment investment opportunity. opportunity. But one should be very careful careful while taking taking decision decision in this direction direction due to rising rising inflation inflation and interest interest rates. Legal issues should also be kept in mind while choosing a property.