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Realty prices

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Realty prices

  1. 1. Debashis Mondal (MBA) 1
  2. 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. 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. 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. 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. 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. 8. Residential Real Estate Development  By rising disposable incomes  Rapidly growth middle class  Low interest rates  Fiscal incentives  Heightened customer expectations 8
  9. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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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