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Realty prices

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  • 1. Debashis Mondal (MBA) 1
  • 2.  Real estate is Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water.  Immovable property of this nature more generally buildings and housing .  The business of real estate including of buying, selling, or renting land, buildings or housing. 2
  • 3. Real estate pricing deals with the valuation of real estate and all the standard methods of determining the price of fixed assets apply.  According to NBH residential index, the prices have shown a declining trend in 22 out of 26 cities in the April-June 2013 Qtr compared to the January-March quarter.  Real estate prices have softened in major cities like Delhi, Mumbai, Bangalore, Chennai, Hyderabad, Kolkata and Pune. 3
  • 4. Earlier…  Real estate in India was unorganized  Lack of uniformity in local laws and their application  Non availability of bank financing, high interest rates, and transfer taxes  Lack of transparency in transaction values Now…  Greater organization and     transparency Greater availability of financing for real estate developers Permitting foreign investment Heightened consumer expectations influenced by higher disposable incomes Increased globalization 4
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  • 6. Residential real estate development  Fragmented market with few large players  Demand of over 400,000 units in the seven major cites in 2013 Commercial real estate development  Few players with presence across India  Over 38.2 million sqft demand in 7 major cities in 2013 Retail real estate development  FDI in multi brand retail to boost demand  Fragmented market with few national players  Demand of around 15 million sqft in major cities 6
  • 7. Special economic zones  589 SEZs have been approved by the government so far  Majority of SEZs are in the IT/Ites sector Tourism and Hospitality industry  A competitive market with many players  Over 121000 hotel rooms in the country as of 2013 7
  • 8. Residential Real Estate Development  By rising disposable incomes  Rapidly growth middle class  Low interest rates  Fiscal incentives  Heightened customer expectations 8
  • 9.  The Indian real estate market size is expected to touch US $180 billion by 2020  Foreign direct investment is the sector is expected to increase to US $ 25 billion in next 10 years from present us $ 4 billion  Demand is expected to grow at a compound annual growth rate (CAGR)Of 19 percent between 2013 to 2017  The housing sector contributes 5-6 % to the country’s gross domestic product 9
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  • 12.  Middle class mentality – The middle class people in India has a fear in their mind that their money misuse by the developer & they may not get proper valued properties from the promoter ends  Fall in economic growth – Now a days the entire global economy is going through a crisis and its impact a lot in Indian real estate market 12
  • 13.  Rise of the professional real estate investor – The last 10 years have seen a growing number of middle class Indians trying their hand at the property market. Their speculative behavior is not unlike that of middle class Americans who during the go-go years bought houses only to flip them a couple of years later for a 15-20 % gain. That came crashing down in early 2008 13
  • 14.  DLF group is a leading real estate developer in India since 1946.  DLF has over 220 million sq. ft. of existing development projects and 574 million sq. ft. of planned projects.  DLF’s development projects across India span over 30 cities like Gurgaon, Noida, New Delhi. Indore, Ahmadabad. Lucknow, Mumbai, Pune, Goa. Kochi. Chennai. Bangalore. 14
  • 15.  Established in 1967. API today is dearly amongst the real estate leaders of India.  Having established itself very strongly in the NCR region, Ansal API is now focusing on ventures in cities like Faridabad. Gnrgaon, Noida. and Ghaziabad. Meerut. Agra, Lucknow,  Developed and delivered more than 190 million sq ft  The company currently has a land reserve of about 9,335 acres. 15
  • 16.  The Company was founded in 1995  Today, this is Rs 10 billion valued company  Sobha has completed 47 residential projects, 13 commercial and 166 contractual projects covering about 36 million sqft area in 18 cities across India.  The company currently has 21 ongoing residential projects aggregating to 8.5 million sqft, while 424 million sqft of contractual projects are under various stages of construction. 16
  • 17. Rationalization of process :  Rationalization of the regulations in governance affecting real estate  For example, improved land records, rationalizing stamp duty across states, simplifying urban development guidelines etc. Social Infrastructure:  Focus from both public and private sector  Different models for foreign investment being evaluated. 17
  • 18. Government incentives:  SEZ Act, 2006 provides major Tax benefits,  Tax relief and Single window clearance and approval Urban Infrastructure Development:  Focus on urban infrastructure  Urban Reform schemes  JNNURM  City Challenge Fund  Mega Cities Fund 18
  • 19. Policy Impact  NHB to introduce reverse mortgage  Senior citizens to receive monthly income against their property  They do no have to repay the loan  Regulations for mortgage guarantee companies  Guaranteeing mortgages on the behalf of the banks and finance companies. 19
  • 20. Direct Tax Impact  Reduction in tax burden due to increase in threshold limits on individual tax slabs  No change in corporate income tax rates and surcharge. 100 per cent tax holiday for five years for hotels and convention centres in World Heritage sites if they  start functioning before March 31, 2013. 100 per cent tax holiday for five years anywhere in  India if they start functioning before March 31, 2013.  No tax regime proposed for Real Estate Investment trusts. 20
  • 21. Indirect Tax Impact  General rate of excise duty reduced from 16 per cent to 14 %  Excise duty revised on bulk cement from US$ 10 per tonne to 14 per cent of assessable value or US$ 9.8 per tonne, whichever is higher.  No change in service tax rate  Seven new taxable services included in the service tax net  Decrease in customs duty rate on imports under  project import scheme from 7.5 per cent to five percent. 21
  • 22.  There is a shortage of 12 million housing units in urban areas  There is a scope for 400 township projects over the next five years spread across 30 to 35 cities, each having a population of 0.5 million 22
  • 23.  Total project value dedicated to low and middle income housing in the next seven years is estimated at USD 40 billion  Instrumental such as mortgage-backed security(MBS)  Commercial and collateralized debt obligations(CDO) are being use to make capital work more efficiently 23
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