HOUSING SECTOR IN INDIA Adani Institute of Infrastructure Management                 Batch 2011-12              MITTAL SHA...
Demand Drivers•   Population growth•   Increase in proportion of working population•   Economic growth•   Urbanization•   ...
Adani Institute of Infrastructure         Management
Adani Institute of Infrastructure         Management
Urban and Rural Housing Demand          Supply Gap          Adani Institute of Infrastructure                   Management
Structure of Housing Industry                                                     State of the                            ...
Institutional FrameworkRole of Central Government:• Ministry of Urban Development   -National Buildings Construction Corp ...
Major Acts and Regulations• GoI, in the constitutional Amendment Act 73 and  74 gave power of housing to local government ...
National Level acts and regulations(A)Laws relating to ownership of land for   development.  1. Urban Land Ceiling and Reg...
Contd..ULCRA failed to achieve its objectives• Instead of facilitating it lead to artificial scarcity• High Land prices• C...
Contd.. 2 Registration Act, 1908     Purpose is to conserver evidence, assurance of title,      publication of documents ...
Contd.. 4 Transfer of Property Act, 1872 5 Indian Contract Act, 1972                 Adani Institute of Infrastructure    ...
(B) Laws Relating to nature of development    1 Coastal Regulation Zone Notification    •      Imposes restrictions on con...
(C) Laws Relating to operations of developers   1 Building and Construction Workers Cess Act      •   Contract Labour Act,...
2 Income Tax    • Paid to Central Govt.3 Capital Gains Tax    • Classified as short term and long term    • Short term – 3...
State Level Acts and Regulations1. Rent Control Acts    • Maharashtra Rent control Act, 1999    • Delhi Rent Control Act2....
Policy FrameworkCentral Policies  1 National Urban Housing & Habitat Policy,  2007  – Provides Guidance to state governmen...
Contd..2 Two Million Housing Programme (2MHP)3 Interest Subsidy Scheme for Housing the  Urban Poor    • MHUPA, GoI has des...
3. Indira Awaas Yojana     • Flagship scheme of Ministry of Rural Development     • Aims at providing housing to BPL rural...
5. FDI                                         100% FDI is allowed                                         under the autom...
Policy FrameworkState Policies:  Gujarat      Gujarat Town Planning & Urban             Development Act, 1976  – Provides ...
Industry Analysis    Adani Institute of Infrastructure             Management
Adani Institute of Infrastructure         Management
Funding Sources•   Initial Public Offering (IPO)•   Private Equity (PE)•   Qualified Institutional Placement (QIP)•   Non ...
Challenges•   Land Acquisition•   Lack of Transparency•   Stamp Duty•   Raw Material Prices•   No Centralized Regulatory A...
Top Players : DLF• Founded in 1946• DLF Group is one of the biggest real estate giants• Built many high-quality buildings ...
Parsvnath Developers• It was incorporated on July 24, 1990 under the  Companies Act, 1956.• With more than two decades of ...
Unitech• Plans to invest US$ 720 million in building hotels  in the country• Its partner for this venture is Marriott  Int...
Ansals• Founded by Lala Chiranji Lal Ansal• By far most dominant activity of Ansals has been  Real Estate Promotion & Deve...
Top Players : Salient Features• DLF leverage (D/E) down from 10 to 1.09• Other players  Leverage close to 0.5• Unitech : ...
Impact of Budget 2012• Affordable Housing  – ECB  – Withholding Tax  – Interest Rate Subsidy Continued• Capital Gains Tax ...
THANK YOU Adani Institute of Infrastructure          Management
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Housing Sector In India

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Real Estate in India

Adani Institute of Infrastructure Management

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  1. 1. HOUSING SECTOR IN INDIA Adani Institute of Infrastructure Management Batch 2011-12 MITTAL SHAH NEERAJ MEHRA SHAMAN SINGH
  2. 2. Demand Drivers• Population growth• Increase in proportion of working population• Economic growth• Urbanization• Nuclear families• Easier financing Adani Institute of Infrastructure Management
  3. 3. Adani Institute of Infrastructure Management
  4. 4. Adani Institute of Infrastructure Management
  5. 5. Urban and Rural Housing Demand Supply Gap Adani Institute of Infrastructure Management
  6. 6. Structure of Housing Industry State of the Industry Institutional Major Acts and Policy Framework Regulations Framework Central State Central State Central State -Ownership of -Rent Control -HUDA Land for Acts -Examples of -NUHHP -DDA Development few states -MUD -Urban -JNNURM -Nature of Development -MHUPA -2MHP Development Acts -Government -IHSUP -Operations of -AgriculturalHousing Finance developers Development FDI Bodies -Earnings & Profits Laws of developers Adani Institute of Infrastructure Management
  7. 7. Institutional FrameworkRole of Central Government:• Ministry of Urban Development -National Buildings Construction Corp Ltd. -Town & Country Planning Organization -National Institute of Urban Affairs• Ministry of Housing and Urban Poverty Alleviation -Several Initiatives, e.g., JNNURM, Interest Subsidy Scheme, Rajiv Awas Yojana etc. - National Buildings Organisation• Major Government Housing Finance Bodies -National Housing Bank -HUDCORole of State Governments:• State and City Level Authorities Adani Institute of Infrastructure Management
  8. 8. Major Acts and Regulations• GoI, in the constitutional Amendment Act 73 and 74 gave power of housing to local government agencies.• Housing a state centric subject• Centre gives policy guidelines, implementation is on state Adani Institute of Infrastructure Management
  9. 9. National Level acts and regulations(A)Laws relating to ownership of land for development. 1. Urban Land Ceiling and Regulation Act, 1976 • Implemented in 1976 • Implemented to facilitate availability of urban land for MIG and LIG • Ceiling on ownership & possession of vacant land • Acquisition of excess land for common good • Payment of compensation for acquire land Adani Institute of Infrastructure Management
  10. 10. Contd..ULCRA failed to achieve its objectives• Instead of facilitating it lead to artificial scarcity• High Land prices• Central Govt. Repeal the Act by Passing UL (C&R) Repeal Act,1999 Adani Institute of Infrastructure Management
  11. 11. Contd.. 2 Registration Act, 1908  Purpose is to conserver evidence, assurance of title, publication of documents and prevention of fraud 3 Stamp Act • Stamp Duty needs to be paid on all documents • Rate of duty varies from state to state • High stamp duties are cited as a key reason for avoidance of registration • Calculated on the basis of the market value of property as quoted in the agreement Adani Institute of Infrastructure Management
  12. 12. Contd.. 4 Transfer of Property Act, 1872 5 Indian Contract Act, 1972 Adani Institute of Infrastructure Management
  13. 13. (B) Laws Relating to nature of development 1 Coastal Regulation Zone Notification • Imposes restrictions on construction • Exceptions being facilities that are essential such as construction of ports etc. • Objective is to protect belt from unauthorized exploitation 2 The Environment Protection Act, 1986 • Aims at providing protection and improvement of the environment • Projects categories: – A : Central Level and monitored by EAC’s – B : State Level and under SEIAA Adani Institute of Infrastructure Management
  14. 14. (C) Laws Relating to operations of developers 1 Building and Construction Workers Cess Act • Contract Labour Act, 1970 • Building and Construction Workers Act, 1996 • Minimum Wages Act, 1948 • Payment of Wages Act, 1936(D) Laws Relating to earnings and profits of developers 1 Property Tax • Levied by the municipal authorities • In India owner is liable to pay • Basically calculated on reasonable rent Adani Institute of Infrastructure Management
  15. 15. 2 Income Tax • Paid to Central Govt.3 Capital Gains Tax • Classified as short term and long term • Short term – 3 years from date of acquisition and treated at par with regular income • Long term – Taxed at 20% , also if the amount is invested in house property it is exempted • Alternatively, if capital gain invested in securities such as NABARD etc can avail tax exemption under 54EC Adani Institute of Infrastructure Management
  16. 16. State Level Acts and Regulations1. Rent Control Acts • Maharashtra Rent control Act, 1999 • Delhi Rent Control Act2. Urban Development Laws • Determines the development and use of land – Maharashtra Regional Town Planning Act, 19663. Agricultural development Laws • Limits up to which an entity may acquire agricultural land • Purchase and transfer of excess land is considered void and taken over by state Adani Institute of Infrastructure Management
  17. 17. Policy FrameworkCentral Policies 1 National Urban Housing & Habitat Policy, 2007 – Provides Guidance to state governments to meet growing housing shortage – “Housing for all” ,focus on “affordable housing” Adani Institute of Infrastructure Management
  18. 18. Contd..2 Two Million Housing Programme (2MHP)3 Interest Subsidy Scheme for Housing the Urban Poor • MHUPA, GoI has designed an interest subsidy for EWS & LIG • Scheme provides home loans for 15-20 years • EWS and LIG – EWS- Avg. monthly income of Rs. 3300 – LIG- Avg. monthly income between Rs. 3302 and Rs. 7300 Adani Institute of Infrastructure Management
  19. 19. 3. Indira Awaas Yojana • Flagship scheme of Ministry of Rural Development • Aims at providing housing to BPL rural households primarily to SC’s and ST’s4. Rajiv Gandhi Awas Yojana • Announced in 2009 targets slum- free India in 5 years • Main focus – Granting property rights to slum dwellers, provision of basic amenities like water etc ,subsidised credit for construction of houses to slum dwellers Adani Institute of Infrastructure Management
  20. 20. 5. FDI 100% FDI is allowed under the automatic routeAdani Institute of Infrastructure Management
  21. 21. Policy FrameworkState Policies: Gujarat Gujarat Town Planning & Urban Development Act, 1976 – Provides Town planning schemes for development of land under PPP basis – reservation of land for EWS housing Adani Institute of Infrastructure Management
  22. 22. Industry Analysis Adani Institute of Infrastructure Management
  23. 23. Adani Institute of Infrastructure Management
  24. 24. Funding Sources• Initial Public Offering (IPO)• Private Equity (PE)• Qualified Institutional Placement (QIP)• Non Banking Finance Companies (NBFC) Adani Institute of Infrastructure Management
  25. 25. Challenges• Land Acquisition• Lack of Transparency• Stamp Duty• Raw Material Prices• No Centralized Regulatory Authority• Constraints on bank Credit Adani Institute of Infrastructure Management
  26. 26. Top Players : DLF• Founded in 1946• DLF Group is one of the biggest real estate giants• Built many high-quality buildings across the country, specifically in Gurgaon• Tied up with Hilton Group to build whopping 100 hotels in India over the next few years.• In current expansion plans, DLF has over 425 million sq. ft. of development across its businesses, including developed, on-going and planned projects.• Spread over 32 cities, mostly in metros and key urban areas across India Adani Institute of Infrastructure Management
  27. 27. Parsvnath Developers• It was incorporated on July 24, 1990 under the Companies Act, 1956.• With more than two decades of experience in its repertoire, the group has already stamped its presence already in seventeen states and going Pan – India.• It has made various developments in areas like GURGAON, Noida, South Delhi. Adani Institute of Infrastructure Management
  28. 28. Unitech• Plans to invest US$ 720 million in building hotels in the country• Its partner for this venture is Marriott International.• Carved a niche for itself in India with its sprawling properties and projects in Bangalore, Gurgaon, Noida, Greater Noida and Kolkata• Unitech Group took over projects in International areas as well.• Actively involved in construction projects of power plants, expressways, highways, transmission lines, classrooms, amusement parks. Adani Institute of Infrastructure Management
  29. 29. Ansals• Founded by Lala Chiranji Lal Ansal• By far most dominant activity of Ansals has been Real Estate Promotion & Development• Company has several landmark high-rise commercial building like Statesman House, Ambadeep, Antriksh Bhawan, Tolstoy House, Indra Prakash, Navrang House and Ansal Bhawan• Ansals have also completed several residential buildings like Gauri Sadan, Upasana at Hailey Road & Dhawan Deep at Jantar Mantar road, all in the heart of New Delhi at Connaught Place. Adani Institute of Infrastructure Management
  30. 30. Top Players : Salient Features• DLF leverage (D/E) down from 10 to 1.09• Other players  Leverage close to 0.5• Unitech : – Low Liquidity Ratios – Net Profit > Gross Profit Adani Institute of Infrastructure Management
  31. 31. Impact of Budget 2012• Affordable Housing – ECB – Withholding Tax – Interest Rate Subsidy Continued• Capital Gains Tax Exemption – Equity – SME Equipment – Property / Tax Saving Bonds• Boost to Infrastructure and Construction• Service Tax Increase Adani Institute of Infrastructure Management
  32. 32. THANK YOU Adani Institute of Infrastructure Management

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