India – Attractive Real Estate

Investment Destination

Indian Economy – Strong Fundamentals

India is one the fastest Real GDP Growth / Per Capita GDP

growing economies in 15 8

the world 12
Per Capita GDP (000s)

6
GDP Growth (%)

Sustainable economic
4
6

growth is a key driver of

3

0 0

the Indian real estate

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Real GDP Grow th Per Capita GDP

(1)

industry (1) PPP adjusted

Source: Economist Intelligence Unit as at January 2008

India’s real GDP has grown at an average of c.8% p.a. in

the last 4 years
Expected average real GDP growth rate of c.9% p.a. in the
next 5 years going forward
GDP per capita has increased by c.35% in the last 5 years

2
(1)
CBRE Report as at March 2008

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India is the fastest growing free-market
democracy in the world…
Macro economic Sector Performance

indicators establish that 15

India is firmly on the 10

Real % Change
growth track 5

The Indian economy has 0

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012
reduced its dependence (5) (1)

on agriculture and
Agriculture Industry Manufacturing Services
(10)
Source: Economist Intelligence Unit as at January 2008

a growth in both manufacturing and services

shown
sectors
Agriculture’s contribution to the GDP fell from 21.9% in
2002-03 to 17.5% in 2007-08 (1)
Services & manufacturing sectors increased from 52.2%
and 25.9% respectively in 2002-03 compared to 55.7% and
26.8% in 2007-08 (1)
Note: (1) CBRE Report as at March 2008
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(2) ABN AMRO as at November 2007

Transformation of Investment
Landscape in India …
Confluence of multiple positive factors has made the ”India
Opportunity” a compelling long term proposition
Knowledge driven businesses are establishing significant
operations in key overseas markets
Global quality manufacturers, hitherto mere suppliers, are
creating cross-border presence
Skilled manufacturing players are scaling up to serve
international markets
Global scale commodity players are emerging
Domestic consumption driven businesses are robust
propositions driven by strong macro factors
Significant infrastructure improvements in some sectors eg.
Telecom, Budget Airlines, Ports

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 …making it a preferred investment
destination
Retail, Consumer Durables, FMCG,
Auto, Hospitality, Logistics, BFSI,
Domestic
Real Estate, Infrastructure & allied
Consumer-
services, Building material,
led Demand Commodities

Pharmaceuticals and healthcare,

auto comp, industrial products

The Auto and auto comp, textile,

Outsourcing engineering and IT services and IT
enabled services
Advantage

India Real Estate – An Exciting

Opportunity
Current estimates ~USD 50bn market in 2010
60

50
Others
USD Bn

40 12%
GR Retail
CA
30 %
33 14%
20

10

0 Housing
2004-05 2009-10E

Market expected to grow at 33% through 2005-10 to USD 50bn

Housing: Current shortage seen at ~19.8mn housing units
5x increase in office space over the next 3-5 years
Over ~200 mn sq. ft. for organized retail by 2010
Over ~50,000 new hotel rooms in the next 5 years

Source: Enam research

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 A. Favorable Demographics…
Rising income levels
Per capita disposable income has grown 2.6x in
past 10 years and 1.6x in past 5 years
Affordability
ratio of house price to no. of years of annual
income - improved to 5 years in 2007 as
compared to 20 years in 1995
ability to pay user charges for infrastructure
much better
Burgeoning middle class
Growing urban population
Growth in other sectors supporting real estate
(IT/ ITES, organised retail, hotels and logistics
and tourism) 7

B. Scarcity of Land…..A Growth Catalyst

Country Population (mn) Area of Country Population Density Urbanization

2007 2050 square km. per sq km.
China ex HK 1,318 1,437 9,571,785 138 44%
India 1,132 1,747 3,287,576 344 28%
Indonesia 232 297 1,904,561 122 42%
United States 302 420 9,629,047 31 79%
France 62 70 551,497 112 77%
United Kingdom 61 69 244,878 251 90%

Land is a scarce resource in India – driven by very high population

density, more than 10 times that of U.S. and more than twice that of
China
Projected population growth of 54% in next 43 years (CAGR. 1%) and
growing urbanization are expected to continue to drive the property
price increases in India

India population density is 11x that of the U.S.

Source: Population Reference Bureau, 2007 World Population Data Sheet

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 C. Favourable Regulatory changes

1997 2002 2004 2005 2006 -08

Repeal of FDI allowed Changes in FDI Real Estate

Urban Land in Real stamp duties regulations mutual
Ceiling Act Estate for by some further funds
removed – the first time states – liberalized (REMF) /
Restrictions – Selected Lower REITs
on supply of areas opened transaction expected to
land for up costs be
development introduced

… all attracting large volumes of capital

~ US$ 4 bn raised on the Indian stock exchanges in
2007
~US$ 2 bn raised by developers in the AIM market
overseas
Over US$ 6.7 bn of private equity real estate
investments in 2007, an increase from US$ 3.4 bn in
2006
113 PE deals concluded
37 active RE funds, of which 32 are overseas funds
Apart from early entrants like ICICI Venture, IL&FS,
HDFC, many more international players such as
Blackstone, Starwood, AIG are now active in India
Existing players like CVC & Warburg are also
widening focus from PE deals to Real Estate
investments
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Source: VC Circle

5
Markets witnessing a wide variety of
PE Transactions
Average deal size is over US$ 60 mn
While mega deals of US$ 500 mn are exceptions, several
deals are above US$ 100 mn
SPV level deals are common given the large
number of development projects in India
Joint Development and Enterprise level deals are
a reality
A new breed of large real estate related
infrastructure deals are foreseen
Deals have been across asset classes

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Strong domestic franchise and local

knowledge will be key success factors

Understanding of the
Indian developers psyche Conducive macro
economic
Appreciation of nuances
environment
of Indian real estate coupled with
industry judicious micro
Innovative structuring management
skills required to address abilities is a key
regulatory nuances determinant of
success
On the ground presence
critical to monitor
businesses
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 Opportunity…The Inevitable
Tremendous Increase Expansion plans of Money guzzling
in project sizes Real Estate Developers SEZ’s

Increased funding
requirement

Foreign REMF / REIT /

Local debt Foreign debt IPO & QIP
Listings RE Funds

Increased RBI Weak market Sub-prime

Restriction on Great appetite
Intervention to sentiments meltdown
External due to long
curb leading to leading
Commercial term funding &
domestic depressed to credit
Borrowings structuring
lending valuations crunch

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Thank you

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