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1. RealEstate Development
Realestate development
especially in Industrial sector

2. Needforstudy
• Understandingthe subjectof real estate provides key insightinto demand characteristicsof land for
different land use& itsimpact oneconomy.Livability & attractivenessof anurban area isoften
closely interlinked with “real estateindustry” & land prices.
Aim
• Theaim of the presentation isto understandthe real estate developmentinpublic & private sectors
(especiallyindustrial sector)
Objective
• Tounderstandreal estate asa facilitator ofdevelopment;
• Factorsdriving real estatesector;
• Realestate asa tool for controlling land values;
• Transaction& renting of real estate;
Scope
• Thescopeof the presentation will be limited to the published data available from different websites
onreal estate & thestudywill be carried outbased onthe secondary data obtained with a limited
primary survey.

3. Introduction
Basic Definitions
Real estate
• It isa ‘Property’, whichrefers to anything that canbe owned or possessed.It canbe a ‘tangible
asset’(physicalthingssuchasland, buildings etc.)or ‘intangible asset’(nonphysical suchascontractual rights, financial claims etc.)
• Inother words…. Realestate canbe defined asthe land & its permanent improvements.
• Improvementsontheland includeany fixed structuressuchasbuildings & they are often referred to as
infrastructure facilitiesdevelopment.
Land
• Property or real estate, notincluding buildings or equipment,that doesnotoccurnaturally.
Depending onthe title, land ownershipmay also give the holder the rights to all natural resourceson
the land.

4. Realestate– An industry in transition
• TheIndian real estate industry, valued at about
US$12 billion, rankssecondin the world, after the
United States,in termsof contributing to Gross
DomesticProduct(GDP)and generating
employment.
• Presently,real estate accountsfor about five per
centof India’s GDP;in the next five years itsshare
isexpected to rise to six per cent.It isalsothe
secondlargest employer in India after agriculture.
Realestatecontributes5% toIndia’s GDP

5. Factorsdriving theIndian Realestate
Realestate thriveson
growth of national
infrastructure and is
fuelled by the Government
of India’s thruston
infrastructure development.
It’ssuccessin different
sectorshasgiven a boost
for thedemand in land &
other properties for
establishmentof different
firms.
Thepolicies simplified the
investmentprocessby
reducing the need for
permissionsand licensesfor
constructionprojects resulting
in real estate development
Organized retail in India
with local & multinational
retail players making their
foray into retailing and thus
stepping upthe demand for
real estate
Social Economic Judicial Technological

6. INDUSTRIALREALESTATE

7. Industrial Real estate
Realestate development
Residential
80%
Commercial
10%
Industrial
5%
Offices& others
5%
• According to economicscience,‘land’ istermed asoneamongthe factors of production & it isan
important componentfor any industrialsetup.
• Increaseinpopulation, demand of different productsfor their survival inducedhighgrowth rate in
servicesaswell asmanufacturingsectorhasresulted in high demand industrial Real Estate.
Marketsfor Realestatedevelopment
Source:Real estatesector overviewby
M. ChandraSekharReddy, ExecutiveAssistant, CREDAI AP
Dated: 8/7/2013

8. Introductiontositearea
History
• The history of an industrial estate is closely linked with the current environmental condition of the
land and the health of its affected community. And this is no different for the industrial estates in
Medak district of Andhra Pradesh.
• It wasafter the formation of theAndhra PradeshIndustrial Infrastructure Corporation (APIIC)in
1973 that Patancherugrew into a mega industrial estate.
• In2010 there were 326 industriesin Patancheru,51 industrieshave also comeupoutside theAPIIC
designated area. Ina 2 decade period (1975-1995) APIICcreated 6 industrial estatesin
‘backward regions’around a thirty-mile radius of Hyderabad.
pharmaceutical industriesare located in theseindustrial estates.
• Thelargest wasthe 440-hectare estate in Patancheru.Someof the statesbiggest bulk drug and

9. NearestTown: Patancheru
Distance:10.8Km

10. Project profile
• Location
• Availability of raw materials
• Infrastructure
• Land
• Feasibility study
• Nature of the product & its application
• Market potential
• Installed capacity
• Technology/ manufacturing process
• Plant & Machinery
• Costof the project & meansoffinance
• Annualoperating expenses
Development
process

11. Land allotment
TheAPIIC(AndhraPradeshIndustrialInfrastructureCorporation)allots plots & shedsinIndustrial
DevelopmentArea’s establishedin different regions of the state onapplication processto different
firms whichare authentic& eligible for the allotment of plots.Thefirms whichhave to be setupin
Industrial DevelopmentArea hasto submitthe application included with the following details…
• Locationwhere the land hasto be allotted
• Personal details
• Project details
• Financing& Investment details
• Proposed employment
• Machinery equipped
• Land requirements
• Infrastructural details etc.

12. Feasibility study
• Asthe nameimplies, a feasibility studyis
ananalysis of the viability of an idea.
• Thefeasibility studyfocusesonhelping
answerthe essentialquestionof “shouldwe
proceed with the proposed project idea?”
All activities of the studyare directed
toward helping answerthis question.
• It includes
 Evaluating alternatives
 Pre– feasibility study
 Market assessment
 Results & conclusions
scenarios,itsalternatives&relationshipwithsurroundings)
Market feasibility (Industrycompetitiveness, Market
potentials, market outlets,sales projections)
Technicalfeasibility (facility needs,suitableproduction
technology,suitability of land, location & raw materials)
Financial/ economicfeasibility (estimationof capital
requirements, budget expected costs& returns)
Issuesin development(maybe technical, infrastructural,
or an issuesrelated to the site)
Plans,proposals, layouts, site plans & their
approvals
Results& conclusions
Feasibility study outline
Descriptionof Project(Identificationof business

13. Costbenefitanalysis
Whenmaking a decision, especially for the development of
the industry, it isimperative to understand the costsand
benefits of the project, to knowthe viability & feasibility of
the project.
Themainpurposeof the CBAisto assessthe casefor
intervention and guide that intervention. We haveto know
that CBAisimportantly distinct from financial analysis.
Financial analysis isa businesstool that focusesonfinancial
outlays and receipts associated with an investment. CBAis
concernedwith social costsand social benefits; thesecan often
differ widely from simplefinancial outlays and receipts.
“ByconductingCostBenefitAnalysis theentrepreneur
determinewhetherornottoproceedwith theproject
accordingtothecurrentplan”

14. CostBenefitModel
Costof
Equipment
Interventions
Displacementof
workers:
Remainingcosts
Productivity
Replacement
Lostwork
Disability
Lossesdueto
No Market
Avoided
Economic
Costs
Net – Cost of
Interventions
D B
An Overview of CostBenefitModel of anindustry
Costs Amount (PV)
Surveying & planning 5,65,000
ProjectExecution
Administration 8,70,000 Losses
Legalservices 5,50,000
Acquisationexpences 17,25,0M0e0dicalcare
2,15,00f0orworkersCost of Labor Site clearance
A Disposal, Lease& REentehnatniocnemcoesntstin 1,30,000
CProjecptriondspuecctitvioitny 86,000
Construction& Machinary 1,00,00,000
Site improvements 25,45,000
Miscelenious 4,75,000
Total costs
Benefits Amount
Increasein Projectarea land value 10,45,000
Increasein Neighborhootidmperoperty Values 15,10,000
Value of public improvements 26,60,000
Reductionsin service costs
Security11,90,000
Fire proAte+ctiBo+n2C6+,6D1,000
Miscelinious 15,85,000
TotalBenefits 1,06,51,000
1,71,61,000 SomeBenefitsare notquantitative butQualitative
Cost’s&Benefit’sof land for anindustry
Ref:CostBenefitanalysis reportof Marksmantextile industry.

15. Benefit– Costratio
• Thefirst step will be to review the projected operational and maintenancecostsfor the life of the system.
• Thesecondstep will be to examine the projected benefits for the life of the system.
• Thecostsand benefits will thenbe compared to determine if the tangible benefits justify the costs for
operation and maintenanceof the system.
Description/ FY 2009 2010 2011 2012 2013 2014 2015 Total
Annual costs 3100000 3245000 3480000 3675000 3775550 3900000 4125000 25300550
Annual Benefits 3285000 3375000 3690000 3815200 3982000 4057500 4370000 26574700
DiscountFactor 0.9825 0.9483 0.9154 0.8836 0.8529 0.8232 0.7946
DiscountedCosts (DC) 3045750 3077234 3185592 3247230 3220167 3210480 3277725 22264177
DiscountedBenefits (DB) 3227513 3200513 3377826 3371111 3396248 3340134 3472402 23385746
DiscountedNet (DB- DC) 181762.5 123279 192234 123880.7 176081.2 129654 194677 1121568
Benefit/ CostRatio 1.059677 1.040062 1.060345 1.03815 1.054681 1.040385 1.059394
Average B/C ratio 1.050385
AstheBenefit/ Costratio(1.050385) is>= 1, theprojectisfeasible.Hence,theentrepreneurcan continuewith currentactionplan
Discountrate/ factor:This is effectively a desiredreturn,or the returnthat an investorwouldexpectto receive on some othertypical proposalof equalrisk.This
means converting future costs andbenefitsinto presentvalue.This is alsoknown as the socialdiscountrate, or the rate at which societymakes tradeoffs over time.
Ref:CostBenefitanalysis reportof Marksmantextile industry.

16. Approvals &clearancerequired
• Anentrepreneur hasto obtain various approvals/ clearancesin order to setupanindustry in
Andhra Pradesh.Suchapprovals/ clearance are mentionedbelow for the knowledge of investor:
Approvals/Clearances Required Department /Authority responsible for Approvals/ Clearances
Incorporation of Company
Registration/Industrial license/ Industrial Entrepreneur
Memorandum (IEM)
Registrar of Companies
District Industries Centers for SSI / Secretariat for Industrial
Assistance (government of India) for large and medium industries
Allotment of land
Permission for land use
(in case industry is located outside an industrial area)
APIIC
APIIC
Department of Town and Country
Planning
Local authority /District Collector
Andhra Pradesh State Pollution Control BoardNOC and consent under Water and Air Pollution Control
Acts
Forest & Environment Clearance
Approval of construction activity and building plan
Permanent Account Number (PAN)
Ministry of Forest & Environment, Government of India
Developmental Authority
Income Tax commissioner
ISI Certificate Regional Office of the Bureau of Indian Standards (BIS)

17. Realestateportfolio wheel
• Lease• Rent
• Sell• Buy
Industry Land
ShedsWarehouse

18. Issues&Opportunities
Issues
• Therehasbeen noproper wastedisposal facilities built in theseareas, combinedwith thisisthe fact
that industrieshave been wantonly disposing off their waste in nearby land or into water bodies.
• Thecombinedindustrial estatesin Bollaram and Patancherugenerate a cumulative 8 X106 1/day of
effluents whichare directly discharged into surroundingland, irrigation fields and surface water
bodies.
• TheNakkavagu streamthat flows throughthe industrial estate in Patancherubears the brunt of
waste disposal of over 100 industries.
• Effect of pollutants onthe agricultural landsand water bodies extends 0.25 to 0.5 kmto either side
of the Nakkavagu river over a length of 25 km.
Opportunities
• APIICMega Infrastructure Park iscurrently in progress. Phase1 & 2 are already occupied.
• Textile park, 2008, 11.02 croresexpenditure industrial park PashamylaramPatancheruislocated in
Patancherusub-locality, Hyderabad locality, Medak District,Andhra PradeshState of India Country.
• March29: Mr. N. Kiran KumarReddy laid the foundation stonefor Friendly Industrial Park for ladies
in Nandigama Village of Patancheru.Thearea allotted for thispark in 100 acres.
• Heassuredthat Rs.200 crore would be spentfor this park.

19. Government orders
• GO.Rt.663.2005
Setting up of Integrated Textile Parks in Andhra Pradesh - Preparation of Project feasibility reports
by Infrastructure Leasing and Financial Services Ltd., (IL&FS) - Creation of separate revolving fund -
Orders - Issued....
• GO.Ms.336.2002
TheAndhra PradeshIndustrial Single Window Clearance Rules,2002 – Providing for speedy
processingof applications for issueof various clearancesrequired for setting upof industries...
• GO 178
• Industries& CommerceDepartment – Incentivesfor setting upof New IndustriesinAndhra Pradesh-
Industrial InvestmentPromotionPolicy for 2005-2010- Orders- Issued.(100% reimbursementof Stampduty
and transfer duty paid by the industry onpurchaseof land meantfor industrial use,100% reimbursementof Stampduty for
Leaseof Land/Shed/Buildings, 100% reimbursementof Stampduty and Transfer duty paid by the industryonfinancial deeds
and mortgages etc.)

20. Realestate transaction
• Landcanonly be transferred from oneindividual to another in the legally prescribed manner.
Historically speaking, a written deed isthe instrumentusedto conveyownershipof real property.
• Averbal grant wassufficient to complete the transaction,provided that it wasaccompanied by a
transfer of possession.
“DeedAwritten instrument, whichhasbeensignedanddelivered, by whichoneindividual, thegrantor, conveystitle to
real property to anotherindividual, thegrantee; a conveyanceof land, tenements,or hereditaments, from one
individual to another.”
• Sale deed: sale deed is a deed which recites a consideration and shows all of the interest of the grantor in the
property to the grantee. It is a deed that does not carry any warranties against liens; hence, it implies that the
grantor isallowed to conveya title.
• Rentaldeed:Arental agreement includesany written or oral agreement that provides for the useof tangible
property and istreated asa lease for federal incometaxpurposes."
• Leasedeed:Aleasehold deed of trust isa long-term lease that isacquired by a leaseholder. It combines
leasehold, whichisa rental contractual agreement for an extended period of time and a deed of trust,whichis a
deed that pledges one'sproperty ascollateral whenapplying for a loan.

21. Deed drafting
• Title
• Date of execution
• Placeof execution
• Description of parties
• Recitals- Contain the Background / factual details of the transactionbetween parties
• TestatumWitnessing Clause–After Recitals & Before theTerms& Covenants
• Terms& conditions
• Attestation Signature
• Annexure’& schedulesusedto describe the property
• Endorsements means “write on back” Used only on Negotiable Instruments Eg. Bills of Exchange, Cheques, etc.

22. Conclusion
• Thisstudyhasfound the sensitivity of various parameters of real estate development, itsimpact on
industrial markets& location of industries,type and ownershippreferences of the industriesdemand
in Patancheruarea sincethey act asgrowth poles.
• Someof the groups of the real estate market are very sensitiveto geographical parameters
whereasothersare moreresponsiveto economicand social parameters.
• Changingthegeographic, social and economicparameter valuesthroughvarious policies, actions
and strategies canalter the attractive potential of these zones.
• Thesefindings canhave immensebearing onpolicy and regulatory frameworks for future industrial
developmentanticipated in the Master Planof the city& economicaldevelopmentof the country
sincereal estate isa globalscenario.