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INFLATION AND IMPACT
 

INFLATION AND IMPACT

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INFLATION AND REAL EASTATE SECTOR wrt DELHI LAND & FINANCES

INFLATION AND REAL EASTATE SECTOR wrt DELHI LAND & FINANCES

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    INFLATION AND IMPACT INFLATION AND IMPACT Presentation Transcript

    • SUBJECT MATTERS•INFLATION IN INDIA•REAL ESTATE SECTOR IN INDIAINFLATION: Increase in price level of goods and services, as there isless money circulated in the economy.REAL ESTATE: property consisting of land and buildings along withnatural resources such as crops, minerals, immovable property.INFLATIONInflation can be explained as constant increase in the level of pricesfor goods and services. Alternatively, it can also be explained asreduced purchasing power .There are different studies which can be classified as QUANTITYTHEORIES OF INFLATION AND QUALITY THEORIES OFINFLATION. The quality theory is worked upon money equation,whereas quality theory is worked upon by sentiments andexpectations of people.
    • There are several Inflation variants:Deflation is when the general level of prices are falling. This is theopposite of inflation.Hyperinflation is unusually rapid inflation. Inflation taking place inGeometric Progressions is termed as hyperinflation.Stagflation is when there is unemployment with economy on astandstill..
    • Categories of InflationIn Keynesian economics there are two basic types of Inflation:Demand-Pull InflationCost-Push InflationDEMAND-PULL INFLATION:Demand-Pull Inflation deals with the idea that the demand for goods and services inan economy is more than the supply, this excess demand pushes up the prices untilequilibrium is attained at a higher price level. So, inflation over here is demand-driven. Government expenditure, increase in supply of money and increase in theprice level in are the three primary factors that cause the aggregate demand to goup.COST-PULL INFLATION: Cost-Push Inflation results from decline in aggregate supply. Rise in prices of rawmaterials and wage rates are the two major factors behind the Cost-Push Inflation.However, it may even result from the increase in prices of any of the factors like land,labor, capital and organizations that are known as factors of production. When thereis an increase in the cost of production or operation, profit margin of theentrepreneurs decreases. The increased costs are transferred to the customers inform of higher prices. This results in Cost-Push Inflation.
    • Effect of inflation on real estate sector 1. Pric e s of ra w mat RY erials DUST shoot CO RE IN on pact 3.Im 4.Sde cop ve e o lop f me infr nt ast tak ruc es tur es a d al ip nc reas co s ts i ro wing 2.B o r
    • TREND ANALYSIS OF INFLATION RATE WHICH PREVAILED IN DIFFERENT MONTHS FROM 2009-2012 IN INDIA.
    • DLF vs. INFLATIONLand Is a scarce resource and the seekers are more, hence rise in prices of real estateestablishment is justified. But when price rises due to factors other than the normalfactors, then they are termed as abnormal factors or abnormal forces and INFLATIONand HIGH BORROWING COSTS are the main culprits of downfall of REAL ESTATE SECTORin IndiaQUANTITATIVE FACTSThe net profit of Delhi Land & Finances, India’s largest Real Estate Company droppeddown to 18 percent to Rs 292 crore for the quarter ended June, compared with Rs 358crore for the corresponding period last year. This was primarily due to high cost ofborrowing/financing and high Inflation.Quarter ended March, DLF’s net profit stood at212 crore.Net sales dropped by 10 percent to Rs 2197 crore compared with Rs 2447crore a 2 year ago period.The sentiment prevailed in entire Real Estate industry as price levels jumped up sohigh that people opted to save than to spend; also the core industry was impactedwhich comprises of steel, cement, oil as the prices of cement and steel increased costof real estate establishments also increased hence there was double push in the costsof the real estate property
    • TRADE CYCLESSLUMP – PRODUCTION SLOWS DOWN DUE TO REDUCTION INDEMANDRECESSION – PERIOD WHERE ECONOMY SLOWS DOWN ANDUNEMPLOYMENT INCREASES.FIRMS LOSE CONFIDENCE ANDPLOUGH BACK THE MONEYRECOVERY- PERIOD WHERE ECONOMY MOVES BETWEENRECESSION AND BOOMBOOM – PERIOD OF PAST ECONOMIC GROWTH
    • MILLION DOLLAR QUESTION … ????CAN INDIA PUSH FOR GROWTH INSPITE OF RISING INFLATION WITH RESPECT TO REALESTATE SECTOR?YES!Following are the reasons in the support1.ECONOMIC SURVEY REPORT 2011 – 122.ECONOMIC REFORMS BY GOI3.ROLE OF FOREIGN DIRECT INVESTMENT AND FOREIGN INSTITUTIONAL INVESTMENT4.MONETARY POLICY OF RBI5.CORE INDUSTRIES PEGGING UP6.TRADE CYCLE IS NOT STATIC,BUT DYNAMIC