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DLF Real Estate Project Report
DLF Real Estate Project Report
This is to certify that the project report titled Real Estate Industry is submitted in partial
fulfilment of the degree of Bachelor of Business Administration at MAHARAJA
AGRASAIN INSTITUTE OF MANAGEMENT STUDIES,ROHINI SEC-22, NEW
DELHI is a bonafide project carried out by ANKIT JINDAL under my supervision and
guidance and no part of this report had been submitted for the award or any other degree,
diploma, fellowship or other similar titles or prixes and the work has not been published in
any scientific or popular journal or magazine.
Submitted to
ACKNOWLEDGEMENT
The present work is an effort to throw some light on Real Estate Industry. The
work would not have been possible to come to the present shape without the able
guidance, supervision and help to me by number of people.
With deep sense of gratitude I acknowledge the encouragement and guidance received
by my organizational guide Ms Sulekha Munshi and other staff members.
I convey my heartful affection to all those people who helped and supported me
during the course, for completion of my Project Report.
EXECUTIVE SUMMARY
Real estate has proved to be a real engine of growth. The real estate sector in India is
emerging as the next engine of economic growth going by the fact that it is
the second largest employer next only to agriculture. It has significant
linkages with several other sectors and over 250 associated industries.
According to estimates, every rupee invested in this sector results in 78
paisa being added to the GDP. Accordingly, a unit increase in expenditure
has a multiplier effect and the capacity to generate income is as high as five
times. For instance, if the economy grows at the rate of 10%, the sector has
the capacity to grow at 14% and generate 3.2 million new jobs over a
decade. The sector size is close to $12bn and grows at 30% per annum.
Presently, it is contributing 5% of the country's GDP and is expected to rise
up to 6% within three to four years.
The present project has been carried out with the objective of analyzing the financial
aspects related to the real estate.
TABLE OF CONTENTS
1.
INTRODUCTION
5-31
2.
18-30
3.
32
4.
RESEARCH METHODOLOGY
33-38
5.
DISCUSIONS
39
6.
DATA ANALYSIS
42
7.
RECOMMENDATION
62
8.
CONCLUSION
63
9.
BIBLIOGRAPHY
64
10.
APPENDICES
65
INTRODUCTION
REAL ESTATE:
The term real estate is defined as land, including the air above it and the group below
it, and any building or structure on it is also referred to as realty. It covers residential
housing, commercial offices, and trading spaces such as theater, hotels, and restaurant
retail outlets, industrial buildings such as factories and government buildings. Real
estate involves the purchase, sale and development of land, residential and nonresidential buildings. The main players in the real estate market are the landlords,
developers, builders, real estate agents, tenants, buyers etc. The activities of the real
estate sector encompass the housing and construction sectors also. The real estate
sector in India has assumed growing importance with the liberalization of the
economy. The consequent increase in business opportunities and migration of the
labor force has, in turn, increased the demand for commercial and housing space,
especially rental housing. Developments in the real estate sector are being influenced
by the developments in the retail, hospitality and entertainment (e.g.: Hotels, resorts,
cinema theater) industries, economies services and information technology (IT)
enabled services etc. The real estate sector is a major employment driver, being the
second largest employer next only to agriculture. This is because of the chain of
backward and forward linkage that the sector has with the other sectors of economy,
especially with the housing, construction and commercial sector. About 250 ancillary
industries such as cement, steel, brick, timber, building material etc are dependent on
the real estate industry.
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had also played a pivotal role in the development of this sector .It had aided the sector
by giving income tax benefits to consumer and benefits to developers. It initiated the
rationalization of stamp duty and repealed the Urban Land Ceiling Act in 9 states. A
number of state governments are moving towards computerization of land records.
Real estate in India has a bright future .The report also pointed out certain issues,
which need to be addressed by the government to ensure rapid growth. Some of the
issues are absence of large listed companies in these sectors, which has affected fund
flow. Foreign still cannot buy or sell undeveloped land, and reassessment of the legal
aspect to stamp duty and rent control. At last, changing demographics, low interest
rate regime, rising disposable income, and fiscal incentives have provided huge
demand for housing. Further nuclearization of Indian families has accelerate the
demand for mortgages and for fresh housing thus give rise to more real estate
developer in India.
Political reforms in relation to real estate: The government is quite rational when it
comes to infrastructure and development in the country as it is required to achieve and
maintain a growth rate for the economy. The real estate sector being directly related to
it, is being given due importance. The government has made suitable amendments in
the FDI regulations, taxation structures and various land acts in order to attract more
foreign investment into the country.
Economic factors: The lower interest rates and ease of credit availability is fueling
the demand for real estate in the country. This scenario coupled with the huge
potential for consumer credit penetration in India is favoring the real estate sector.
Demographic factors: Demographic factors like increasing literacy rates, higher
disposable incomes, and increasing urbanization in the country are important factors
propelling the demand for real estate in the country. The above factors are going to
generate huge demand for residential space, which comprises 80% of the total real
estate demand in the country.
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is booming IT AND ITE s segment. With lower operating costs being the driver
office property have moved from Central Business Districts to suburbs to Class I
cities and this market is continue to expand in Tier II and tier III cities. Real estate
sector is still facing the main problem of high stamp duty in Indian states. These range
in most Indian cities between 10% to 15% Some states even have double stamp
incidence first on land and then on its developments even National Housing and
Habitat Policy 1998 recommend stamp duty of 2-3%. Its needed to be reduced by
taking the recommendation into consideration which is mentioned in the report
otherwise this increasing rates of stamp duty and land cost will give rise to parallel
economy which lead to huge loss of government revenue.
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detail. A number of transactions and also corporate land bank values are ignoring this
basic tenet of real estate investing.
Questioning the capability to deliver: Although there have been huge plans of
development in all the areas of real estate development whether residential,
commercial, office, retail or SEZ, various questions have been raised on the execution
capability of the developers in delivering the promised product within the specified
time period.
Oversupply: With the real estate story getting big in India, major plans are afoot for
various types of real estate developments in big cities and small towns. There have
been concerns of an oversupply situation arising 2-3 years from now.
Still unorganized: India's property market remains unorganized and underdeveloped.
This creates risk for investors. In the absence of a clear title to property, the risk of
litigation is high. For those foreigners who invest in India via real estate investment
trusts, there are no rules on the marking of their stakes to market or on whether they
must pay stamp duty on transactions.
Relation to the stock market: The true origin of this bubble-like situation may be
traced to the stock market boom. The Indian stock market has been witnessing a nonstop bull run for an unusually long time. During the last couple of years, share prices
have surpassed all expectations. The present situation can be compared to Japan's real
estate crash in 1991. Prior to the crash, both the stock market and the property market
were on fire. Profits from the stock markets used to be transferred to the property
market and vice versa. The same thing is happening in India as well.
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As the focus on infrastructure development by the government has been
strengthening, growth prospects of Indian real estate sector looks bright. A study by
housing development finance reveals that India is short of 20 million housing units.
Deutsche Bank researchers forecast that by 2030 India will need up to 10 million new
housing units per year. Another driving factor for the industry is SEZs, which come
with tax exemptions like 10-year corporate tax holiday. Besides this, the fifth most
attractive market in the world, the retail market of India, has also been contributing
significantly on a large scale for the growth of the sector. Leading national and global
players have big plans to invest in the infrastructure and construction of the retailing
business.
All these positive signals indicate that there is huge growth potential for the real estate
industry. Joint ventures and consolidations will become the order of the day in realty
space. However, there are challenges like fragmented industry with less transparency
and high transaction costs. The condition can be improved with the increase in the
professionalism of the industry and flow of organized money into the sector. Given its
huge growth potential, real estate can be vindicated as the best investment avenue for
long-term investors.
The following is the overall assessment about the real estate industry in IndiaReal estate sector is a major contributor to GDP (Gross domestic product of India),
over the last decade, the average household income in urban areas has grown at a
CAGR of 5%. According to estimates, 80% of the real estate developed in India is
residential space and the remaining 20% comprises of offices, shopping malls,
restaurants and hospitals. According to the 10th Five Year Plan, there will be a
shortage of 22.7 million housing units by the year 2007. The changing lifestyles of
Indians and better incomes have led to the development of retail and hyper malls.
This, in turn, has led to the demand for space from the retail sector.
Real estate has proved to be a real engine of growth The real estate sector in India
is emerging as the next engine of economic growth going by the fact that it is the
second largest employer next only to agriculture. It has significant linkages with
several other sectors and over 250 associated industries. According to estimates, every
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14
rupee invested in this sector results in 78 paisa being added to the GDP. Accordingly,
a unit increase in expenditure has a multiplier effect and the capacity to generate
income is as high as five times. For instance, if the economy grows at the rate of 10%,
the sector has the capacity to grow at 14% and generate 3.2 million new jobs over a
decade. The sector size is close to $12 bn and grows at 30% per annum. Presently, it is
contributing 5% of the country's GDP and is expected to rise up to 6% within three to
four years. Along with the residential property, the sector has also witnessed a spurt in
demand in commercial property mainly driven by fast-growing IT and ITES services
along with BPO boom. According to estimates, 42 million sq. ft. of space will be
required every year till 2010 only in these services in cities like Delhi, Bangalore,
Chennai, Hyderabad and Pune. As the cost of land in leading metros is skyrocketing,
developers are getting interested in developing townships in Tier II cities and
industrial towns where the growth of real estate is relatively slow. It is expected that
in the very near future, even these cities will witness abnormal prices.
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cities in the manner that is required so as to release the pressure on the few that we
have. Until new towns/cities come up, the few existing ones will continue to provide
sub-standard quality of living and at very high prices. Another sharp contrast is in the
sphere of public housing. While more than 50% of Mumbai lives in slums, most of
Singapore lives in (subsidized) mass housing provided by the government.
Whether this boom will sustain or not, the answer could be both a yes and a no. Yes,
because of the above mentioned positive drivers. No, because a lot of factors/events
can spoil the party; such as, an increase in interest rates globally and locally, a
political directive (overseas) to reduce outsourcing to India, the emergence of China
as an alternate outsourcing hub, a major terrorist attack, the policies of the
government with respect to land and real estate supply, property prices becoming
unaffordable, etc.Already in some locations it appears that the cost of land is way too
high in comparison to the finished product, and there is a price limit beyond which
resistance can set in. Therefore, there is a risk of having unsold inventory at a high
cost. In some sectors, there is a re-emergence of the investor in large proportions.
Hence, when the stock comes in the market for absorption in large volumes, will there
be actual users to absorb it? That is still to be seen. On the retail front as a whole,
though we (as a country) have barely scratched the surface of organized retail, I feel
that in some locations there is an excess supply of mall space coming up. With terribly
poor efficiencies and very high running costs, not to mention a complete lack of
differentiation, its a matter of time before these malls will come back in the market to
be repositioned. Today, there is a feeling of success seeing footfalls by the
thousands, which reminds me of the internet days eyeballsplenty of visitors, poor
conversion into shoppers.
BUYERS PERSPECTIVE:
1. Quality of Construction Obviously when one buys a property he makes sure
that the quality of construction is good. Everyone while buying a new product
wants to buy quality stuff. Same applies to the property. Every buyer wants to buy
a well built house.
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2. Pollution Free Environment The immediate surroundings of the property is
always evaluated by the buyer. These days developers give due importance in
making the surroundings beautiful with innovative and creative landscaping. They
involve landscape architects from different corners of the world to give their
customers the best. The NCR is becoming more and more popular among home
buyers because of its greenery and pollution-free environment.
3. Water Availability Water Availability, power backup and safety and security are
some very important factors which people do consider while purchasing the
property. All these factors are hugely responsible for the transition of people from
Delhi to housing complexes in NCR as many colonies of Delhi faces problem of
shortage of water and power failure while availability of these essential facilities
are ensured in housing complexes by the respective developers.
4. Occupancy - Due to increasing crime this factor is becoming more and more
important for the buyers. They dont want to settle down in such a place where
hardly anyone else lives. People prefer to stay in a reasonably well-occupied
housing complex. But its also true that people dont prefer to stay in highly
populated areas as it was observed in the case of Shipra Sun City, Ghaziabad
where 5000 families living in one single housing complex fight for space and car
parking place.
5. Suitability of Home Type Nowadays due to the wide range of options available
people can afford to be choosy. Now they dont need to compromise on anything.
They dont buy a property till the time all of the essential things match their
requirements. Developers do pay attention to the different requirements of
different customers. Some want a flat on the second floor while some want a flat
with two bedrooms. All these requirements are tried to be met by the developers.
6. Sport Complex / Recreational Facilities All work and no play makes Jack a
dull boy. People have started believing in this concept. Now each parent wants
that within the complex his/her kids get all kind of sports to play. Even adults
want different recreational facilities to be available in the housing complex, which
may help them in eliminating work stress.
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DEVELOPERS PERSPECTIVE:
1. The major external factors which people consider while purchasing the property
are Price, Availability of loan and Proximity to workplace.
2. The major In-Locality factors which people consider while purchasing the
property are Quality of construction, Availability of water and Pollution-free
environment
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Britain's Knight Frank, and other foreign investors. Warburg Pincus, the largest
private-equity investor in India, says it is spending nearly a third of its time studying
opportunities in this area. And Deutsche Asset Management recently hired someone to
head its real estate activities in India. "As the largest active managers of real estate
funds in the world," says Edouard Peter, head of Deutsche Asset Management Asia
Pacific and Middle East, "we expect to be actively raising and investing funds in real
estate in India."
It isn't going to be a cakewalk. "It's not easy to do business in India," says Seek Ngee
Huat, president of GIC Real Estate, an arm of the Singapore government that is
planning to invest several hundred million dollars in Indian real estate over the next
two years. "It's difficult finding suitable partners who have the same long-term
objectives, as most firms are small and family run."
Already margins have shrunk. "The vast majority of the planned real estate funds are
targeting annual rates of return of between 25% and 30%, but I'm skeptical that the
vast majority will cross 20%," says Mumbai real estate advisor Rajiv Bhatia.
To achieve the target returns, several funds are focusing on second-tier towns and
second-tier developers. "Many investors are going to lose their shirt here, as it's an
opaque market, and a wrong partner can easily do you in," says S. Sriniwasan,
executive director at Kotak Mahindra Realty fund in Mumbai. There's also
bureaucracy and corruption to deal with. Says Ashwin Ramesh, who runs a boutique
fund called Primary Real Estate Advisors: "There are a couple of hundred malls
currently being developed across India, and predictions are that only 10% will be
successful. Yet every developer feels his mall will be among the survivors."
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Figure I
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The rental rates in India are among the highest in the world as returns on investment
on the capital value of the property. Figure II compares the rental returns for various
cities all over the world with the Indian cities. Investment in commercial property,
where the returns are 10 to 15 per cent, is a proven option, while residential property
is always in demand for leasing.
Figure II
Since the 9/11 attack in the US, investments in Indian markets have gathered pace.
India has encouraged Non Resident Indians (NRIs) with tax incentives and relaxation
of foreign direct investments (FDI) rules. The sudden change in sentiments is clearly
visible in Indias bulging foreign exchange reserves, which are at a record high of
over 60 billion US dollars. And the RBI has relaxed the rules further for NRIs with
respect to repatriation of foreign exchange on real estate investments. Besides being a
safe destination, India offers 10 to 12 per cent returns, perhaps the highest in the
world. 30 per cent of all high major real estate transactions in Mumbai are accounted
by NRIs.
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Moreover, with increasing volatility in stock markets and falling interest rates, many
investors have started considering investment in commercial and residential
properties. The bottom-line is that this is the time to go shopping for property; as the
market has started firming up already. As the organised market develops, real estate as
an investment is one of the better options available today. As Naresh Malkani, CEO of
Indiaproperties, says, Considering the current property rates and housing loan
interest rates, it is worth investing in real estate in India.
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EXTERNAL ENVIRONMENT
Commercial which ranks next only to food and clothing amongst basic human needs
has always had and continues to have important
socio-economic
implications.
Especially in countries like India which are in the throes of rapid development
housing has come to assume a crucial role as it contributes significantly to the
national economy and nation building. Arguably, housing has been the only industry
in recent times which has not only withstood the recessionary pressures, but has also
shown a consistent and healthy growth and if the future is to be interpreted in light of
the macro picture, the best is yet to come.
Housing and GDP are interlinked and contribute to each others growth. It is,
therefore, no wonder that Housing for All is invariably proclaimed as a national
priority by all major political parties and adopted as a goal by the Government of
India in the National Housing and Habitat Policy document. Integrated housing
development not only satisfy the basic human needs but also facilitates holistic
development within the parameters of a planned welfare economy. Safe, secure and
affordable housing by any means increases employment and educational opportunities
for individuals and enriches communities leading to a better civil society and better
quality of life. Besides the direct contribution which housing makes to GDP it
increases social capital which is intelligible wealth that comes with good social
network at the heart of which lies clean environment, hygienic living and quality
housing.
India, with its billion plus population, still witnesses an acute shortage of dwelling
units. Despite sharp increase in the Usable Housing Stock from 70 million units in
1961 to170 million units in 2001, the shortfall in 2001 was estimated at 19 million
dwelling units, although unofficial estimates peg the figure at higher levels. This has
occurred due to the high population growth, especially in urban areas. Studies reveal
that the population in the five most populous cities of India, namely Mumbai,
Kolkata, New Delhi, Chennai & Hyderabad are set to increase at a scorching pace of
more than 50% between 1995 and 2010 and by 2025 the number will be more than
double. The 2001 Census reveals that the decadal population growth in the urban
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areas is one and a half times higher than the national average. All these statistics point
to a high level of migration of population from rural and semi urban areas to a more
urbanized form of settlement. The percentage of population staying in urban areas
have steadily climbed from 23.34% in 1981 to almost
28% in 2001. As on 2001, more than 5000 centres have been identified as urban
centres in India.
Coupled with the demand for dwelling units, another major factor which has
contributed to the buoyancy of Housing activity is the affordability of properties.
This, in turn, has been the result of a combined effect of stabilized property prices,
higher level of incomes and lower cost of borrowings. In fact the boom witnessed by
the Housing Finance sector can be heavily attributed to these factors.
Housing has often been called the Engine Of Domestic Growth of the Economy. An
investment in Housing and construction triggers of a series of investments in various
sectors. From Heavy Industries like Steel, Cement to industries like Paint, Furnitures
and even to Small Scale Industries, Housing affects as many as 269 industries directly
and indirectly. Housing ranks third amongst 14 major industries in terms of total
linkage effect in the Economy. The linkage effect, particularly with reference to the
Steel and Cement Industries was also underlined by the Government in the Economic
Survey of 2002-2003.
In terms of contribution to the GDP, for every rupee invested in Housing and
construction, 78 paisa gets added to the GDP. Housing ranks fourth in terms of the
multiplier effect on the Economy, ahead of sectors like transport and agriculture. The
Investments in the Housing sector has steadily increased from Rs. 1150 cr in the First
Plan period to more than Rs. 1,20,000 cr in the Ninth Plan period. Estimates of the
Tenth Plan peg the figure at about Rs. 7,00,000 cr.
Perhaps the greatest socio-economic impact of Housing is in employment generation.
Housing is the second largest employment generator in the country after Agriculture.
A host of vocations and professions derive their livelihoods from Housing, either
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directly or indirectly. Construction workers, builders, developers, suppliers, civil
engineers, valuers, property consultants, furnishers, interior decorators, plumbers
the list is virtually unending. In a developing nation like ours, Housing can be the
solution to the most nagging problem that any Government faces that of
employment. Apart from these various indirect benefits that the economy derives from
Housing, the Government itself is a direct beneficiary in terms of collection of stamp
duty rising out of acquisition of real estate assets.
It is therefore not surprising that the Government has left no stones unturned to
support Housing activities. The continued tax incentives on Housing Loans to trigger
a higher off-take in credit for retail Housing is a reaffirmation of the Governments
committment to aid the sector. Other initiatives like extension of benefits u/s 80 I to
mass housing projects, scrapping of the Urban Land ceiling act, implementation of the
Securitization Act are all in line with the same objective of propelling growth through
Housing. However, it may also be added here that there is scope of further
improvement in various areas , mainly with reference to streamlining of laws related
to construction activities and rationalizing of stamp duties on transfer, securitisation,
etc.
When one looks at the future, the big picture appears to be very bright. A
comparison of the Mortgage Finance to GDP ratio places India at the foot of the table
with a penetration rate of less than 2% , lower than the 9% of Thailand, 36% of
Singapore and 51% of USA. There is thus much room for the upside and a long way
to go.
With the population of India steadily increasing, it will not be long before India
overtakes China and emerges at the top position. Demographic experts have predicted
Indias working age population the segment which has the highest demand for
Housing to be the highest. This ensures that the demand for Housing is a long and
sustained one. Rapid strides in Infrastructure development like the Golden
Quadrilateral Project and the National Highways Development Programme, which
have progressed at an impressive speed is bound to trigger off a fresh round of
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Housing and habitation through further development of semi urban and rural areas as
well as setting up of new Satellite Townships.
To sum up, a reference to the Goldman Sachs Report on the Development of the
BRIC Economies can be made, wherein India is projected to have the fourth largest
Economy in less than 30 years time from now. In order to achieve that level of
growth, it is imperative for the Housing Industry to continue its contribution to the
economy at an increased pace in the future as well.
INTERNAL ENVIRONMENT
The last three budgets have provided enough incentives and the drastic reduction in
interest rates, making easier for the common man to achieve his distant dream of a
home come true. But on the supply side very little has been done to ensure that
developers who are the producers of homes get access to the required funds. It is
conferences like these that helping us carve out solutions for a better tomorrow.
The trade and industry was fairly to blame in the 80s when there were not many
professionals in the building trade. It is still one of the largest unorganised sector in
the country, but slowly companies deeply committed to housing are becoming more
responsible, accountable and transparent.
Like other industries, real estate developers are also processors and producers of
goods (i.e. the home) which is a tangible product and has enormous cost from concept
to completion. It is impossible for any developer firm to bear the entire cost, hence the
need for real estate financing.
The customer preferences have moved away from under construction to nearing
completion or completed projects and hence the investments in the projects have
changed.
Strangely other industries get financed by the same financiers for process as well as
end product (i.e. the automobile industry). The banks and Financial Institutions have
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exposure to the producers and the purchaser but when it comes to developers the very
same Financial Institution shy away.
Now coming to the issue of funding developers norms have been laid out and rating
should be made mandatory.
The one time pure vanilla product construction finance is no longer available and it
has out lived its purpose. Now the time has come for innovative products as the
market conditions have changed in the past 5 years.
Receivable discounting - is one option where projects in advanced stages can be
financed. The balance amount receivable against sold flats can be financed by
Housing Finance Institutions/banks (practice which is being followed) to infuse
liquidity and enable developers to complete the project within stipulated time period.
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Position on project / Venture Capitals The financiers takes a position like private
placement of area to be constructed at discounted rates and funds the project. On
completion of the project or during the construction, the developer sells on behalf of
the institution and gets their investment back with return. All loans originating from
these sales should go to the institution which funded the project. This the financiers
can do after due diligence as listed below:
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renewable on a year on year basis. This covers all the projects of the developers. This
can be availed after the institution is satisfied about the following items-
USE OF IT IS VITAL
Here India has an opportunity of leapfrogging ahead of a number of other countries by
harnessing its comparative advantage in information technology. In some of the more
developed countries online databases of different kinds of real estate (office, retail and
industrial/warehouse) with data on city-wise vacancy rates, capitalization rates, the
local economic situation, job and household creation help firms, investors and
businessmen make informed choices.
THE DISCIPLINE
Links with urban planning and regional economics, on the one hand, and finance and
macroeconomics on the other would go a long way in a better understanding of the
economy, its monitoring, regulation, management and forecasting. It will also
promote appraisal and valuation techniques. In India, provision of housing credit may
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be a supply side issue since banks cannot properly evaluate lending risks in the
absence of development of credit and risk assessment systems, and databases on
credit benchmarks and credit scoring. It is vital to develop these risk management
systems on the basis of sound data and proper, widely available techniques. All these
steps will promote analyses and research that could inform domestic or foreign
investors to evaluate markets and carry out risk assessment for purposes of property
development and investment. The establishment of the discipline of real estate
economics would help in the dissemination of a common language of discourse and
promote standardised procedures, both necessary for national market development.
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good destination for the middle class, as far as accessibility, social and physical
infrastructure and growth perspective are concerned.
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To find out the reasons for transition of people from Delhi to National Capital
Region (NCR).
To find out the perception of people about the cities included in NCR namely
Gurgaon, Noida, Greater Noida, Faridabad and Ghaziabad
To know the degree of importance of various factors which people consider while
purchasing a house.
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RESEARCH METHODOLOGY
SAMPLING METHOD
Stratified method of sampling was used for face-to-face survey while snowball
sampling method was used while conducting telephonic survey.
SAMPLE SIZE
People living in Gurgaon Housing and Society Complexes, in Noida housing
complexes and in Ghaziabad (Indirapuram) Housing complexes were surveyed.
Total Number of people surveyed was:
Gurgaon Housing Complex
-----
200
-----
40
-----
56
-----
150
-----446
------
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PRIMARY METHOD
1) Face to Face interview
2) Questionnaires
3) Telephonic Survey
4) Survey through E-Mail
5) Survey through Reference
SECONDARY METHOD
1) Magazines on Property
2) Internet sites on Property
3) Internet websites of popular property developers of India
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TRAVELLING
TO
FAR-OFF
PLACES
FROM
DELHI
EVERYDAY.
Analyzing the perception of people about different cities of NCR was little difficult as
some respondents didnt have much knowledge about Ghaziabad and Faridabad.
FACTORS WERE
1. Brand name Brand name is something that immediately comes into your mind
when you think of any product. Even in case of purchase of property, brand name
plays a major role. Many people to prefer buy the property developed by wellknown and reliable developers. Moreover properties developed by established
developers help buyers in getting the best returns, as these properties can be sold
any time at a premium.
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2. Advertisements Its an old belief that advertisement can sell literally anything.
In order to ascertain whether its true for property or not, it was also included as a
first pull factor in the questionnaire.
3. Location This deals with property and connectivity to road links, airports,
railway stations and bus stops. The more approachable the property is to the
public transport terminal, the more value it holds. Proximity to the Central
Business District also plays an important role in this aspect.
4. Affordability Budget plays an important role in short listing the options
available in the market. Its only when the budget is decided, one starts looking for
the available options in the price range decided.
PARAMETERS WERE
1. Location - This parameter includes all the locational factors such as proximity to
central business district, to schools, to hospitals, existence of huge shopping malls,
etc.
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2. Business Hub This parameters helps in analyzing the perception that people
have about the job opportunities and business prospects available in different
cities included in NCR.
3. Quality of Living This parameter helps in analyzing what people think about
the style of living prevalent in the 5 cities included in NCR.
4. Law and Order This parameter helps in analyzing what people about the safety
and security situation prevalent in the 5 cities chosen for the survey.
5. Infrastructual Development This parameter helps in analyzing how
respondents rate 5 different cities chosen for the survey, on the basis of conditions
of road and highways, availability of public transport, etc.
In order to achieve the third objective of knowing the degree of importance of various
factors, which people consider while purchasing the property, two questions were
included in the questionnaire. One to find the degree of importance of external factors
(See Q2 of Housing Questionnaire given in annexure 1) and another to find the degree
of importance of in-locality factors (See Q3 of Housing questionnaire given in
annexure 1).
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IN LOCALITY FACTORS
1.Peaceful Locality
2.Pollution Free environment
3.Population/occupancy
4.Quality of Construction
5.Maintenance
6.Suitability of Home Type
7.Utilization of space
8.Water Availability
9.Power Backup
10.Safety-Security
11.Recreational facilities/Sports Complex
12.Car Parking facility
13.Club Membership
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DISCUSIONS
REAL ESTATE MARKET
Construction sector has been the focus sector for some time as its impact on the
economy is big by virtue of its being a huge employment generator. The real estate
market is booming. Its growing at around 12% per annum.
Today its boom time in the real estate market and homebuyers couldnt have asked for
a better opportunity to buy a home. Indian developers are now not talking of anything
less than world class. Infrastructure and economic development of some cities as well
as the housing shortages are driving the boom. There is a fundamental change in the
approach of the buyer, developer and the government. They all are seeking quality
development. The middle class demands the best that money can buy. With the
competition in the market, developers have to deliver the best within specified time
frames and the government, discharged from the duty of construction has to keep
everyones interest at heart.
The Major reasons for boom in the real estate market are:
AFFORDABILITY
Another major reason for boom is that housing in India has become more affordable
in recent times. A decade ago, a house cost nearly 15-20 times an individuals annual
salary. Today the cost of a house has come down to just about three to four times an
individuals annual pay package.
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in a joint family setup. Joint families are progressively getting included in the pages
of history book even in a country like ours. Not surprisingly the rise in the number of
nuclear families is pushing demand for housing further to cater to a generation that is
not averse to taking risks. Nor are they hesitant when it comes to paying a price to
realize their dreams
INVESTMENT OPTION
Competitive offers by home loan companies combined with good quality projects
developed by reputed builders having a number of amenities have made investing in
properties very attractive Wherever there is growth and opportunity, investors are
bound to be around and traditionally real estate has been a safe investment option.
Property is looked upon by many as an investment option that appreciates
substantially when compared to other traditional tools of investment.
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MIGRATION OF INDUSTRIES
Another major reason for boom in the real market is the migration of industries to
smaller towns leading to rural progress. With villages turning into towns and towns
becoming metros, the property market is growing steadily. This revolution has directly
resulted in greater demand for not just housing but also for the overall real estate
market with heightened demand for better infrastructure, transportation facilities,
entertainment zones, shopping malls, multiplexes and more.
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DATA ANALYSIS
Three tables and charts have been prepared for each of the three cities namely
Gurgaon, Noida and Ghaziabad to analyze what respondents from each of these cities
think about five cities included in NCR namely Gurgaon, Noida, Greater Noida,
Faridabad and Ghaziabad on the basis of five parameters namely Location, Business
Opportunity, Law and Order, Style of Living and Infrastructural Development and
also to know the reasons for which they bought the property.
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45
GURGAON
PERCEPTION OF PEOPLE ABOUT THE CITIES OF NCR
Location
Gurgaon
202
Noida
34
Greater Noida
1
Faridabad
2
Ghaziabad
1
Business
Quality of
Law and
Infrastructural
Opportunity
180
36
12
10
2
living
210
19
8
1
1
Order
184
25
17
1
4
Development
106
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2
5
Gurgaon
No. of People
Noida
100
Greater Noida
50
Faridabad
Ghaziabad
0
Location
Quality of
living
Infrastuctural
development
Parameters
FINDINGS:
1. Gurgaon buildings stand tall in each and every parameter. Gurgaon tops in all
the parameters among Gurgaon respondents.
2. Though in case of Infrastructural Development Greater Noida and Noida are
also ranked well by the Gurgaon residents. Probably the credit goes to DND
flyover.
3.
Location wise, people of Gurgaon feel only Gurgaon and Noida are good in
the entire NCR as Greater Noida, Faridabad and Ghaziabad could fetch only 1,
2 and 1 favourable response out of total 240 responses.
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Brand name
46
Advertisements
10
Location
140
Affordability
72
Brand name
Advertisements
Location
Affordability
52%
FINDINGS:
1. The basic reason for people buying property in Gurgaon in mass scale is its
locational advantage. It shares border with the Capital of India. Moreover huge
employment generating BPO companies are located in Gurgaon. Many Reputed
schools and colleges have also come up in Gurgaon. Some of Indias biggest
shopping malls having shops of international brands as well as famous national
brands are also situated here.
2. Second major factor which attracted people to buy property in Gurgaon was
affordability. Developers realizing that most of the people shifting to Gurgaon will
be from middle class society they constructed big towers with numerous
reasonable flats. Since the price of the property kept by the developers suited the
pockets of buyers they were able to buy it without any financial problem.
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3. Third major factor was brand name. According to 17 % of the total respondents
brand name was the prime reason for which they bought the property. In Gurgaon
Housing Complexes have been constructed by popular and leading property
developers of India like Unitech, DLF, Ansals, Omaxe, Etc.
4. Only 4 % of the total respondents feel that it was advertisements which made
them buy the property. Advertisements can actually put the name of the property
in the mind of the buyer but no one actually buys the property only on the basis of
advertisements. Thus it will be wrong to say that advertisements are useless since
they do help in selling though not directly.
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48
46
Lack of
Reasons
No. Of
facilities
people
18
Better
Better
Healthy
Location
Facilities
environment
84
Proximity to
54
43
38
11
Own house
Investment
Others
42
11
26
10
Increase in
Quality of
70
60
50
40
30
20
10
Others
Investment
Own house
Job transfer
Prox. to
workplace
Lack of
facilities
Quaity
construction
Increase in
living status
Healthy
environment
Better
Facilities
Better
Location
more space
Reasons
FINDINGS:
1. Among various reasons better location is the most important reason for the people
to shift to Gurgaon Housing and Society Complexes. Why location is most
important has become apparent till now.
2. Proximity to Workplace and Better Facilities are close second and third most
important reasons. Proximity to Workplace may become the most important
reason in few years time as industry migration to Gurgaon is happening quickly.
All the international brands are preferring Gurgaon over Delhi for their regional
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office. Moreover people in need of better facilities like water availability, Power
Backup, Safety and security, etc also prefer to shift to Gurgaon as Housing
complexes of Gurgaon provide all these facilities.
3. Need for more space, Need for Healthy Environment, Need for Own House and
Increase in Living Status can be considered as other major factors for people
shifting to Gurgaon Housing Complexes.
4. People also purchased property in Gurgaon for investment purpose. This reason
may not be seen in such a large number in any other city of NCR. Its so because
people consider investment in property in Gurgaon as a very safe bet and expect
high return on Investment.
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NOIDA
PERCEPTION OF PEOPLE ABOUT THE CITIES
Location
Gurgaon
2
Noida
54
Greater Noida
0
Faridabad
0
Ghaziabad
0
Business
Quality of
Law and
Infrastuctural
Opportunity
13
32
2
9
0
living
22
32
2
0
0
Order
22
27
7
0
0
Development
6
9
41
0
0
Gurgaon
40
Noida
30
Greater Noida
20
Faridabad
10
Ghaziabad
0
Location
Quality of
living
infrastuctural
Development
Parameters
FINDINGS:
1. In Location, Noida is a clear winner with 54 out of 56 respondents choosing it as
the best location in the entire NCR. That is a huge percentage around 96%. This
shows that Noida people are happy with its Location. Noida is located close to the
Capital of India and is also very closely located to Indirapuram, another upcoming
city.
2. In all parameters other than location, Gurgaon has also been ranked as no.1 by
many people.
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3. One significant thing in this chart is that Faridabad was selected by many Noida
respondents as no.1 in case of business opportunities available.
4. The most significant thing indicated by the chart is that people of Noida have
chosen Greater Noida as no.1 in Infrastructural Development.41 out of 56
respondents have favourably marked for greater Noida while only 9 have marked
for Noida.
27
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52
Advertisements
0
Location
40
Affordability
31
Brand name
Advertisements
43%
Location
56%
Affordability
FINDINGS:
1. In Noida just like in Gurgaon, location is the most important factor that pulls
the people to buy a new home.
2. Advertisements have no role in the sale of homes but as said before in the
report advertisements do add the advertised property as an option in the mind
of the prospective buyer.
3. According to respondents from Noida Brand name of the developer didnt
play a big role in making them buy the property. Its probably because Noida
doesnt have highly popular brands like Ansals, Unitech, Eros, DLF, etc.
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4. Affordability is another major reason for the buying the property in Noida. As
there is hardly any popular developer in Noida and the homes provided in
Noida are not as luxurious as that in Gurgaon, the prices are very low as
compared to the prices prevailing in Gurgaon. In Gurgaon Higher class and
Upper middle class people also buy homes in large numbers whereas in Noida
the number of high class and upper middle class people looking for new home
is very less.
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Better
Healthy
Increase in
Quality
Reasons
No. Of
More Space
Location
facilities
environment
people
31
Lack of
28
Proximity to
35
Job
11
13
Reasons
No. Of
facilities
workplace
transfer
Own house
Investment
Others
people
31
Others
Investment
Own house
Job transfer
Proximity to
workplace
Lack of
facilities
Quality
construction
Increase in
living status
Healthy
environment
Better
facilities
Better
Location
40
35
30
25
20
15
10
5
0
More Space
Number of people
Reasons
FINDINGS:
1. One of the most important thing found out in the survey was that the one of the
major reasons to buy the house was the desire of people to have their own house.
This reason was not at all important in case of Gurgaon. This goes on to show that
houses in Noida are very reasonable. Mostly people earlier living in rent have
bought properties in Noida either to avoid high rents prevailing in Delhi or due to
the desire of having an own asset.
2. Need for better facilities was tick marked by maximum number of people as a
reason for buying the property. This again proves the fact that people buying
property in Noida are generally from middle class who earlier used to live in less
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popular colonies of Delhi which are deprived of essential facilities like water,
power and safety.
3. Another major reason for buying the property in Noida is Need for more space.
Generally people earlier living in joint families or newly married couples prefer
buying property in Noida as they are affordable.
4. Only 1 out of 56 respondents have said that investment was the main reason to
buy the property, which is around 2 % of the total respondents. This goes on to
show that people dont generally buy property in Noida for investment purpose.
5. Another important point to notice is that in Noida proximity to workplace reason
is insignificant. Its probably because virtually non-existence of BPO companies in
Noida.
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GHAZIABAD
PERCEPTION OF PEOPLE ABOUT THE CITIES OF NCR
Gurgaon
Noida
Greater Noida
Faridabad
Ghaziabad
Quality of
Law &
Living
59
74
9
2
6
order
60
64
12
5
9
Infrastructure
40
49
48
0
13
Number of People
80
Noida
60
Greater Noida
40
Faridabad
20
Ghaziabad
0
Location
business
Opportunity
Quality of Living
Infrastucture
Parameters
FINDINGS:
1. 1.Respondents from Ghaziabad have chosen Noida as the best location in the
entire NCR. As many as 93 out of 150 respondents have marked favourably for
Noida which is around 60 % of the total respondents. This clearly goes to show
that Ghaziabad respondents have good image of Noida as far as location is
concerned.
2. In all other parameters there is a clash between Noida and Gurgaon but Noida
seems to lead in every parameter.
3. In business opportunity Noida have again been favoured while rest four have
almost same image in the mind of Ghaziabad respondents.
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4. In case of quality of living both Noida and Gurgaon have been marked by many as
number 1. Style of living in other three places do not have enjoy good reputation
in the mind of the Ghaziabad respondents.
5. In case of law and order Ghaziabad and Faridabad are clear losers. This fact has
been observed in all the three cities.
6. In Infrastructure Greater Noida enjoys good reputation.
1. 31
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Advertisements
Location
Affordability
14
11
85
92
5%
46%
42%
Brand Name
Advertisements
Location
Affordablty
FINDINGS:
1. In Ghaziabad affordability is the main reason for the people buying property out
there. The occupied Housing complexes of Ghaziabad are pretty old and very
reasonable. Developments in Ghaziabad started much before it started in Gurgaon
and Noida. So at that time prices were low. Now with the massive development of
Noida, Gurgaon as well as of Indirapuram price of property have increased like
anything.
2. Location is the second most important factor which makes people buy property in
Ghaziabad. Ghaziabad is located close to Noida as well as Delhi. Moreover
Indirapuram, the real upcoming area is its neighbour. Moreover Ghaziabads
development took place years ago so it already has lots of facilities available.
3. Advertisements and brand name did compel few to buy the property in Ghaziabad
but still they were not so important factors.
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More
Better
Better
Healthy
Increase in
Reasons
No. of
Space
Location
facilities
environment
People
49
Lack of
71
Proximity to
37
11
Reasons
No. of
facilities
workplace
Job transfer
Own house
Investment
Others
People
12
54
20
Quality
Number of People
70
60
50
40
30
20
10
Others
Investment
Own house
Job transfer
proximity to
workplace
Lack of
facilities
Quality
construction
Increase in
living status
Healthy
environment
Better
facilities
Better
Location
More Space
Reasons
FINDINGS:
1. Though Ghaziabad respondents have rated Affordability as the major reason for
buying the property in Ghaziabad but if we exclude affordability as a factor we
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find that location too was a very important factor as we can see in this chart. 71
out of 150 Respondents have marked location as a reason for buying the property
i.e. around 50 % of the total respondents.
2. Just like in Noida, the desire to have an own house is a major reason to buy a
property, in Ghaziabad too. This proves the reliability of the previous chart which
shows that the major reason to buy a property in Ghaziabad is affordability.
3. Third most important reason for buying property in Ghaziabad is requirement of
more space.
4. Same as Noida reasons like proximity to workplace and investment are almost
insignificant.
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Sales managers were asked to rank the above mentioned factors on the scale of 1-10
(where 1 stands for the most important factor and 10 stands for the least important
factor). After collecting the data, it was put in the excel sheet and then average for
each of the factors was calculated. In the above Bar chart averages have been shown.
Factor with the least average is the most important factor according to the developers,
that people consider while purchasing the property.
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FINDINGS:
1. It is clear from the above bar chart that Location is the most important factor
which people consider while purchasing the property.
2. After location, quality of construction and safety are second and third most
important factors respectively.
3. Healthy environment, Water availability, Maintenance, Power Backup and club
membership fall in the middle category with average ranking ranging between
3.5-7.
4. Car Parking and Sports complex are least important factors and according to
developers, people dont consider them much while choosing a property.
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RECOMMENDATIONS
As Unitech enjoys good brand name and have a battalion of brand loyal customers it
shall make sure that the maintenance of its occupied housing complexes is taking
place in the best possible manner.
Due to stiff competition in the market Unitech shall focus on the Quality of homes
provided and shall also try its best to meet different kind of requirement of
different buyers. Due to the current oversupply situation in the market Unitech
shall resist from increasing price of its property.
Unitech shall help and lure the prospective buyers by helping them in getting
housing loans. It shall collaborate with some popular banks for this purpose.
These days even banks are more than willing to provide home loans.
Unitech shall provide the right amount of greenery in its housing complexes, as
pollution free environment is a very important factor that people consider while
purchasing the property.
Gurgaon, Noida and Greater Noida are the places where Unitech shall come up
with new projects as they have been marked favourably by the all respondents.
Respondents do not have good image of Faridabad and Ghaziabad while
Indirapuram is yet to prove its worth.
Advertisement for selling property in Gurgaon can be Why drive for 45 minutes
to your workplace everyday, take a flat in Gurgaon today. As proximity to
workplace is the major reason for people buying flats in Gurgaon. Whereas for
Noida and Greater Noida advertisement can be like Fed up of paying rent. Now
realize your dream of having a house of your own-COME TO NOIDA as desire
of having an own house is the most important reason for the people buying
property in Noida.
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CONCLUSION
The major external factors which people consider while purchasing the property are
Price, Availability of loan and Proximity to workplace.
1. The major In-Locality factors which people consider while purchasing the
property are Quality of construction, Availability of water and Pollution-free
environment
2. Perception of people about different cities of NCR
Location wise Gurgaon and Noida are adjudged the best by the respondents
Business opportunity wise Gurgaon due to the mass presence of BPO
company and offices of MNCs and Noida due to its proximity to Delhi are
consider good by the majority of respondents.
In Quality of living again Gurgaon and Noida leads the pack but out of the two
Gurgaon is better due to the existence of Higher and upper-middle class
people in large number.
In Law and Order all the places are bad as per the respondents but out of the
five Gurgaon is the best.
As far as infrastructural development is concerned Greater Noida enjoys good
reputation among the respondents of all the three cities.
3. In totality, both Location as well as Affordability together account for more than
95 % of the total responses.
4. In Gurgaon major reasons other than affordability and location, to purchase the
property were proximity to workplace and healthy environment.
5. In Noida and Ghaziabad other major reasons were almost the same -desire to own
an own house as well as need for better facilities.
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BIBLIOGRAPHY
BOOKS & JOURNALS
Real Estate in India , JM PUJARI, Manav Publication, 2006
INTERNET LINKS
www.unitechgroup.com
www.dlf-group.com
www.ansalspropertiesltd.com
www.eros-group.com
www.eldecogroup.com
www.omaxe.com
www.parsvnath.com
www.ashianahousing.com
www.gurgaonproperties.net
www.realestatencr.com
www.gurgaonrealestate.com
www.estatedeveloper.com
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APPENDICES
ANNEXURE- 1
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ANNEXURE- 2
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72
72
73
73
74
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75
ANNEXURE -3
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