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Real Estate Finance in India
 

Real Estate Finance in India

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Made this presentation for a college presentation, the viewpoint is very amateur!

Made this presentation for a college presentation, the viewpoint is very amateur!

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  • Demand for residential space is expected to grow at a compound annual growth rate (CAGR) of 19 per cent between 2010 and 2014 - Tier 1 metropolitan cities are expected to account for about 40 per cent of this. The top three cities - Mumbai, the NCR and Bengaluru account for 46 per cent of total office space demand in India. <br />
  • Additional deduction of up to USD 1,841 on interests payable on home loans of up to USD 46,032 announced in the Union Budget 2013–14 <br /> To liberalise scheme of interest subversion of 1 per cent on home loan by including loans of up to USD31,250 for houses that cost up to USD52,080 <br /> Allocation of USD1.1 billion for Rural Housing Fund in FY14 budget <br /> Allocation of USD0.37 billion for Urban Housing Fund in FY14 budget to bridge the huge shortage of housing in certain urban areas <br /> The government has allowed FDI of up to 100 per cent in development projects for townships and settlements <br /> FDI of up to 100 per cent is allowed in the hotel and tourism sector through the automatic route <br />

Real Estate Finance in India Real Estate Finance in India Presentation Transcript

  • Finance in Real Estate Manish Nagori
  • Contents Manish Nagori •Overview of the market •FDI •Government Relief •Next-gen Financing Options •Benefits of REITs and REMFs
  • Manish Nagori Real Estate Market • Real estate is one of the fastest growing sectors in the Indian economy • Contributes about 5% to India's GDP • The country's economic growth is driving the demand for real estate • Demand for residential space is expected to grow at a CAGR of 19% between 2010 and 2014 Source: IBEF March 2014 Real Estate report
  • Manish Nagori FDI- Foreign Direct Investment • Real estate sector is the fourth largest sector in terms of FDI in the country • From April 2012-January 2013, the sector accounted for 8.8 per cent of total FDI inflows into India • FDI in the sector is estimated to grow to US$ 25 billion in the next 10 years Source: IBEF March 2014 Real Estate report
  • Manish Nagori Government Relief Housing for economically weaker sections: • Allocation of USD1.1 billion for Rural Housing Fund and USD0.37 billion for Urban Housing Fund in FY14 budget FDI : • The govt. has allowed FDI of up to 100 % in development projects for townships and settlements • FDI of up to 100 % is allowed in the hotel and tourism sector through the automatic route Ease in housing finances: • Deduction of up to USD 1,841 on interests payable on home loans of up to USD 46,032 announced in the Union Budget 2013–14 Source: IBEF March 2014 Real Estate report
  • Manish Nagori Next-Gen Financing Options Real Estate Mutual Funds (REMF) • Functions like any other mutual fund • REMF invests directly in property or indirectly in the equity of real estate companies instead of investing in stock or bonds Real Estate Investment Trust (REIT) • A security that sells like a stock on the major exchanges and invests in real estate directly, either through properties or mortgages • REITs receive special tax considerations and offer investors high yields • Highly liquid method of investing in real estate
  • Manish Nagori Benefits of REITs and REMFs • Capital availability for real estate and infrastructure projects • Entry to small investors due to high liquidity and small investor size • Diversification benefits in portfolios • Dividend income and long term capital appreciation • Attractive to institutional investors due to transparency and professional management
  • Manish Nagori Thank You