Report on Data, Models, and Estimation of Market Share of Builders Operating in the Luxury (High-End) Residential Segment

of Gurgaon

by

QuBREX - QuBit Real Estate eXchange

(A Unit of QuBit Technologies Pvt. Ltd) Registered Office: 1/926, Naiwala, Karol Bagh, New Delhi – 110005 Branch Office: 3311, Sector 23, Gurgaon, Haryana – 122017 www.QuBREX.com 9811987371, 9871219911

May 08, 2011

Table of Contents
1. 2. 3. Objective of the Report ..................................................................................................................... 3 Context of the Report ........................................................................................................................ 3 Concept (and Mis-Concept) of Market Share of an Enterprise ......................................................... 4 a. Definition of Market Share............................................................................................................. 4 b. Mis-Concept of Active Stock to Measure Market Share in JLL & Genesis Models ..................... 4 c. Misrepresentation of Accuracy of Data In JLL’s “Active Stock” (Market Share) Calculations .... 8 d. Misrepresentation of Continuous Reality by Discrete Temporal Snapshots in Jones Lang LaSalle (JLL) & Genesis Models ....................................................................................................................... 9 e. Limitations of the JLL and Genesis Data & Models ...................................................................... 9 4. Relevant Geographic Market........................................................................................................... 11 5. Relevant Product Market ................................................................................................................. 16 f. Data Collection & Creative Commons License ........................................................................... 17 g. Accuracy of Data & Information Collected ................................................................................. 18 h. Definition of Luxury Product in Relevant Geographic market .................................................... 19 i. Luxury Market Share (i.e., above Rs 7000 psf) of Various Builders Over The Years ................. 22 i. Market Share By Completed Properties ................................................................................... 24 ii. Market Share By Launched (Incl. new launches, under construction property, and completed) Properties ...................................................................................................................... 35 j. Real Estate, Luxury, & Location .................................................................................................. 46 6. DLF's Pioneering “Walk to Work” Integrated Township of Gurgaon ............................................. 48 7. DLF & Consumer Preferences ........................................................................................................ 53 8. DLF & Sales Organizers Preferences .............................................................................................. 54 9. Conclusion of the Report ................................................................................................................. 55 10. About QuBREX ........................................................................................................................... 56 11. Appendices ................................................................................................................................... 57 k. Appendix A – List of Group Housing By Private Builders In Gurgaon ....................................... 58 l. Appendix B – DLF Takes Steps To Keep Speculators At Bay..................................................... 74 m. Appendix C – Check Out These Super Luxury Flats ............................................................... 75

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1. Objective of the Report
The report was made at the request of DLF Park Place Residents Welfare Association and Belaire Owners Association, with reference to Cases 18 & 19 of 2010 in the Competition Commission of India. The objectives of the report were to: 1. Collect specific data for residential projects in Gurgaon including launch dates, possession dates, number of apartments, current prices (March 2011) of accommodation, and their locations. The list of residential projects has been enumerated in Reports of Jones Lang LaSalle (JLL) (Mar 04, 2011) and Genesis (Mar 15, 2011). 2. Collect additional relevant data and information about the builders, their customers, and market forces that help describe the property eco-system in Gurgaon. 3. Study the models put forth by JLL and Genesis and provide expert comments on whether the models are in agreement with the property eco-system of Gurgaon.

2. Context of the Report
Cases 18 & 19 of 2010 have been filed in the Competition Commission of India, alleging that DLF is a dominant player in the relevant geographic and product market, and relief is sought from the august Commission. The Competition Act (2002) and the Competition (Amendment) Act (2007) lay down in Section 19 of the said Act the Duties, Powers And Functions of Commission, and this report is a study of the property market in light of Clauses 19 (4) (6) & (7).

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3. Concept (and Mis-Concept) of Market Share of an Enterprise
One of the major elements of this report is the estimation of the market share of the enterprises (Clause 19.4 (a) of the Competition Act) operating in the relevant geographic and product market.

a. Definition of Market Share
Market share (from Wikipedia.org) in strategic management and marketing is, according to Carlton O'Neal, the percentage or proportion of the total available market or market segment that is being serviced by a company. It can be expressed • as a company's sales revenue (from that market) divided by the total sales revenue available in that market. • It can also be expressed as a company's unit sales volume (in a market) divided by the total volume of units sold in that market. It is generally necessary to commission market research (generally desk/secondary research) to determine. Sometimes, though, one can use primary research to estimate the total market size and a company's market share.

b. Mis-Concept of Active Stock to Measure Market Share in JLL & Genesis Models
The first step in calculating the market share is to identify the relevant product and geographic market, and then the market share calculations can be done. Unfortunately, as noted in the JLL and Genesis reports, once the relevant product and geographic market is identified, the market share for Indian Property Markets is hard to compute if these calculations are to be based upon a company's unit sales volume, or on the company's sales revenue. The unit sales volume or the sales revenue is hard to obtain for Indian Real Estate enterprises. Thus, some proxy or estimator has to be used for the unit sales volume and sales revenue. The Genesis and Jones Lang LaSalle (JLL) Models use a proxy called “Active Stock” for calculating market share. This questionable (and with shifting definition) artifact from the JLL Model called "active stocks" (based on "active projects") is an intellectually formidable, but flawed and contrived, parameter. The “Active Stock” has at least 3 different definitions between the JLL and Genesis reports, and in some cases this "active" stock/ projects may actually be contradictory to what it is purporting to measure.

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Figure 1 Consider, for example, the sales data of two companies A & B in Figure 1 above. Company A has launched one project A1 in 2006 First Quarter, while company B has launched 4 projects B1 (in 2006 Quarter 1), B2 (in 2007 Quarter 1), B3 (2008 Quarter 2), and B4 (2009 Quarter 1). Company A sells only 620 units over the time period 2006 to 2009, and thus is holding an unsold inventory of 380 units at the end of 2009 Fourth Quarter. Company B has sold out each of the 4 projects B1, B2, B3 and B4 within the same calendar year of each project's launch. At the end of 4 years company B has sold out all the 4000 launched units, and is holding 0 inventory. The total market by unit sales volume in the example above is 620 + 4000 = 4620 units, out of which the share of Company A is 620/4620, i.e 14% while that of Company B is 4000/4620, i.e. 86%.. It is now relevant to ask as to how do the JLL and Genesis definitions of “Active Stock” represent these market shares?

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Definition 1 JLL1

JLL Report March 2011 – page 23

Definition 2 – JLL2

Genesis Report – March 2011 – page 19

Definition 3 Genesis

Genesis Report – March 2011 – page 20

Active Stock: A project which has been formally launched and has units available for primary sale (still with developer) at the end of a particular year is considered active during that year. Active stock is the total number of units in active projects at the end of a particular quarter/year. 74. In a second report, JLL calculated market share based on the estimated value of active stock. 74.1 Therefore the way the active stock for a year is calculated is that if the project is not completely sold out, all the units of the project are included as active stock. If a project is launched in a given year, and is sold out completely in the same year, it is still considered to be an active project for the year and the total number of units of the project is reflected in its market share for the year. Therefore, all developments including the ones which are completely sold out in the year of its launch get picked up by market share calculations using this method. 74.5 JLL's methodology is a valid approximation of the market share. However, in the methodology adopted, if an active project continues to be active in the subsequent year/years, the units thereof would be repeated in the subsequent year/years during which the projects remain active. In order to consider the effect of such duplication, we requested JLLS to calculate the market share on basis of the data of all four years 2007-2010 by taking the units of the active projects, only once, though the projects may have remained active in more than one year, so as to avoid duplication. There a footnote (number 29) to this definition in the Genesis report, that says "However, we were unable to audit the result obtained by this exercise due to reasons of confidentiality."

Based on these 3 definitions in the JLL and Genesis reports, the calculations of "active stocks" for companies A & B would be as in Figure 2.

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Figure 2 Thus, the market shares calculated for Companies A & B based on the three definitions JLL1, JLL2, and Genesis, would be as in Figure 3

Figure 3 Keeping in mind that the actual market shares over 4 years of A are 14% and of B 86%, it can be seen that • the original definition of JLL, i.e., Definition 1 (JLL1), shows that A's market share is 100% while that of B is 0% for all the four years ! • The second definition of JLL, Definition 2 (JLL 2), shows that the market share of companies A and B as being 50% each for all four years. Nothing could be farther from the truth. Thus, the various versions of "Active Stock" used by JLL as a proxy for the "market share" as enunciated in Section 19 (4) (a) the CCI Act of 2002 are wrong and misleading. Paucity of data should not be an excuse for creating loaded and biased metrics. The definition of Genesis is reasonably closer to the market share, but it is based on misleading data and biased analysis provided by JLL to Genesis, as discussed in the next section.

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c. Misrepresentation of Accuracy of Data In JLL’s “Active Stock” (Market Share) Calculations
Not only are the calculations by JLL in both its reports completely divorced from reality, they are based on data that has been presented in an intellectually dishonest way. For example JLL in its first report of March 2011, on pages 15 and 17 states,

• • • •

In 2007 the total active stock in the residential market was 24,997 units. Out of this Unitech had a market share of 14.71% …. In 2008 the total active stock in the residential market was at 37,846 units. Out of this DLF had a market share of 11.8% At the end of 2010, the total active stock of Gurgaon has grown to 54,205 units of residential apartments across categories. During the year 2007, the active stock of luxury residential market in Gurgaon was at 9,974 units. … Unitech had the largest market share accounting for 25.82% followed by Emaar MGF at 18.06% ….

The accuracy of numbers like 24,997, 37,846, 54,205, 9,974 etc, and percentage significant to the second decimal value like 14.71%, 11.8%, 25.82%, 18.06% without pointing out to the % error possible in these numbers is intellectually dishonest. Nowhere in the report are the possible errors in these numbers explained. Worse, as Genesis writes in footnote 29 of its report, the underlying data was not even shared with them by JLL for reasons of "confidentiality" ! We fail to understand what was confidential about the data. In any case, the claim that JLL could accurately find the “Active Stock” data, but not the sales data is specious. As Genesis writes in its report (page vi) "We understand that JLL was not able to calculate market shares on sales directly due to lack of definitive data on sales during any period. Developers and their agents were also unwilling to disclose how many units were unsold at any point of time – JLL could merely determine whether the development was sold out or not." No further explanation is given about how JLL determines when an active project ceases to be active, i.e. 1. Within how many days, week, or months is JLL's data accurate about cessation of the project being active? Even an inaccuracy of 15 days in the date of deciding when a project is no longer active can dramatically change the market share results, especially in JLL's Definition 1. 2. What percentage of units have to be sold by developer before JLL considers it to be no longer active? 75%? 80%? 99% ? 99.99% ? 100% ? What about a 500 unit project having 5 unsold units after the 1st calendar year of its launch for the remaining 4 years – will the active stock of it be 2000 units over 4 years? 3. What is the reliability of the sources of JLL about this cessation data given that developers and their agents are generally unwilling to share sales data? 4. Some builders have a deliberate strategy to sell only a part of the project in the beginning, and then sell it in phases over many years, at ever increasing prices, as they inch towards www.QuBREX.com Page 8 of 78

completion. This is especially true of builders who have small land-banks and may not have more land to launch another project after successfully completing the current project. Thus, instead of launching one project after another like developers with large land-banks, smaller developers may launch one phase after another within the same project. How was this addressed by JLL? Given that there are so many potential errors in the data, unless JLL's “Active Stock” data can be audited and verified, all such data and any analysis based on it must be thrown out with prejudice.

d. Misrepresentation of Continuous Reality by Discrete Temporal Snapshots in Jones Lang LaSalle (JLL) & Genesis Models
In addition to severe problems with the data on which JLL and Genesis have based their reports, there is also a major problem with the model and how both JLL and Genesis calculate market shares on a year-to-year basis. Given the fact that the time period from when an apartment is booked to the time it is completed (4 to 5 years) is almost the same as the time period of the current studies (2006 - 2010), taking momentary and discrete snapshots in time for market share is fraught with errors like the notion of “Active Stock” clearly shows. The major problem with calculation of market share based on “Active Stock” is that it takes a snapshot of the market during a very small period of time. You cannot rest content with the arbitrary digital snapshots in temporal space, but have to study the analog sweep of time in the marketplace. Thus, we must study the market as it grows, not study some isolated moments divorced from the past and the future.

e. Limitations of the JLL and Genesis Data & Models
The approaches taken by JLL and Genesis in their reports of March 2011 are erroneous and misleading. Neither can the data of JLL be relied on, nor can the methodology of JLL and Genesis be relied upon.

The reports of JLL and Genesis present a completely wrong and misleading concept of market share by basing their analysis on the "Active Project" and "Active Stock" notion. The data on which “Active Stock” calculations are done for market share is suspicious, and is presented with a façade of accuracy that is not possible because of the very opaque nature of the property market, and the inherent difficulty (almost impossibility) of collecting the “Active Stock” data accurately. The fact that the underlying data provided by JLL has not been audited or verified, nor shared by JLL with anyone (even with Genesis who were tasked with writing a report based on it!), gives the impression that the data has been fabricated and contrived. The model of taking arbitrary "market share" snapshots on a yearly basis without regard to the long and multi-year process by which apartments are marketed, booked, constructed, completed, and possession handed over, is erroneous. Also, the arbitrary snapshots in time are limited views, without context of the past and future of the marketplace. Further, by narrowly Page 9 of 78

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defining "market share" as newly "launched projects" from year-to-year, and ignoring the "completed projects" market share over the years, JLL & Genesis give a partisan picture of the market share.

As we shall show in a later section, all these errors lead JLL and Genesis to use the wrong quantitative criteria about "Luxury" in Gurgaon – they claim it to be Rs 4000 psf or Rs 80 lakhs (assuming a normal luxury apartment will have a size of about 2000 sq.ft). Most importantly, the models of JLL and Genesis bias the study by ignoring the importance commercial property has in influencing the purchase decision of a residential property. This is done by asking the wrong rhetorical question about "substitutability" of commercial vs. residential properties (page 10 para 29 of the Genesis report), and then summarily ignoring the commercial market by glibly concluding that commercial property is not substitutable with residential property. This wrong way of looking at the commercial property and residential property relationship leads both JLL and Genesis to conveniently ignore the role commercial property plays in the decision of buying residential property, and consequently leads them to underplay the importance of Gurgaon being the Relevant Geographic Market.

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4. Relevant Geographic Market
For most buyers wanting to invest in the DLF brand and its market strength, especially their dominance in office and retail space market, the only option is to invest in the residential properties and it cannot be in the commercial properties. Because, DLF as a business strategy, has pioneered the concept of "Leased Grade A Office" spaces (see Figure 4), and does not sell a large part of its commercial properties.

Figure 4 From www.dlf.in – accessed on May 01, 2011 DLF does sell the residential properties that it builds in the vicinity of these leased commercial spaces. It is also well known that people like to live in reasonable proximity of where they work, or where they www.QuBREX.com Page 11 of 78

think the tenant of their apartment will most probably work, or where they think the eventual buyer of their residential investment might be working. Majority of the commercial office and retail spaces built by DLF in the NCR region, are located specifically in Gurgaon. They are not homogeneously spread over the National Capital Region but concentrated in Gurgaon. DLF Cyber City in Gurgaon itself may have close to 20 million square feet of DLF's Grade A office space (page 2 of the DLF Red Herring Prospectus) providing a working space for over 2 lakh high paying jobs. In addition to office buildings in Cyber City, DLF has many other commercial office spaces in Gurgaon. For perspective of the magnitude of DLF office space holdings, it must be noted that the total population of Gurgaon, from the lowly rickshaw puller to the jet-setting CEO, is estimated to be around 20 lakhs. A corporate presentation by DLF dated Jan 2011 (See Figure 5) shows that of DLF's total 56 million sq.ft of under-construction office space in Q3 2011 over 22 million sqft of office space development is in Gurgaon itself – which is almost 40 % of the total commercial properties being developed by DLF all over India. For context, DLF has presence in over 30 Indian Cities (See Figure 6). This underscores the importance of Gurgaon to DLF.

Figure 5: From DLF Analyst Presentation Q3 FY 11 From the buyer's perspective, the attraction to buy in Gurgaon, in the proximity of the office spaces is, thus, very high. Many people working in Gurgaon would find South Delhi too expensive and Noida too far away for comfort. Majority of them will want to buy something in Gurgaon itself. The buying decisions amongst various regions of NCR are also influenced by factors like: a. law & order issues, b. quantum of investment required, and c. proximity to airport or railway stations etc, www.QuBREX.com Page 12 of 78

which are very different amongst Noida, Faridabad, Ghaziabad, Greater Noida, Delhi and Gurgaon. Further, the nature of property ownership is also different - e.g. properties in Gurgaon are sold as freehold, whereas in Noida it is leasehold.

Figure 6: From www.dlf.in – accessed on May 01, 2011 From the builders & developers perspective, there are some local advantages that builders & developers have in certain regions of NCR which are not available to them in the other regions. The advantages for different builders vary as they move from Noida to Ghaziabad to Delhi to Faridabad to Gurgaon. To naively imagine that any entity has similar strengths in all regions or places of NCR is www.QuBREX.com Page 13 of 78

likely to be a wrong assumption, and buyers would be very well aware of the relative strengths and weaknesses of the respective builders in different regions like a. b. c. d. Existing Land Banks, Ability to Manage Local Administrations, Favorable Political Equations and Track Record of Completed Projects.

DLF is the founder of New Gurgaon, and it has special strengths in this geographic market. To any investor wanting to invest in Gurgaon, the first question is whether to buy a DLF or non-DLF property. And to any buyer wanting to invest in DLF the question is where in Gurgaon – not where in NCR. Figure 7 shows the DLF residential and commercial properties in Gurgaon on a Map. The Green pins indicate DLF's commercial property & the red pins indicate a residential property. It can be seen from the map that the DLF Land banks are close to the Delhi border, and have the residential properties located in the orbit of the commercial properties.

Figure 7: Approx Map of Commercial Properties & Residential Properties of DLF in Gurgaon with DLF City (3000 acres) very roughly outlined, and DLF's New Gurgaon (4000 acres) shown in the horizon near Manesar. This view is as if looking from a plane in Delhi heading to Jaipur, flying over the central artery of Gurgaon, i.e. the National Highway-8. www.QuBREX.com Page 14 of 78

JLL and Genesis reports have wrongly ignored the importance of commercial spaces during the decision making process of a buyer, by raising a misleading rhetorical question and then summarily dismissing it. Genesis in its report on page 10, Section 3.1.1, asks "Is residential property separate from commercial property?" Paras 29 & 30 go on to say, "From a demand perspective, a buyer or renter in India would not view commercial and residential properties as substitutable (emphasis added) … It is reasonable to conclude that these markets are sufficiently differentiated such that they should constitute separate product markets." The issue of commercial property is wrongly framed by Genesis as whether a buyer in the market considers buying commercial space "substitutable" with buying residential space. Substitutable means that a buyer can buy one or the other. And it is surprising that Genesis poses this question of “substitutability” in the DLF context because DLF rarely sells its commercial spaces. In fact DLF has pioneered the leasing of “Grade A Commercial Space,” and does not sell them. So, for someone wanting to invest in the DLF brand and its strengths, there are negligible options for investing in the "commercial properties” of DLF. The only choice is to invest in residential properties of DLF, many of which are around these commercial properties of DLF. It would be more appropriate to frame the commercial property versus residential property issue as whether they are complementary or synergistic, i.e., does presence of commercial property in a neighborhood increase the demand of residential properties too? The obvious answer is yes. It can be safely concluded, for the reasons stated above, that the Relevant Geographic Market for the study in Cases 18 & 19 of 2010 (DLF Park Place Resident's Welfare Association & Belaire Owners Association) is Gurgaon.

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5. Relevant Product Market
The petition (Cases 18 & 19 of 2010) has been brought to the august Commission by the owners of DLF Belaire & Park Place Apartments. The product in question are the services provided by the builder to build an apartment, specifically the DLF Belaire and DLF Park Place apartments located in Gurgaon.

The DLF Belaire and DLF Park Place property has been identified by DLF in their Corporate Presentation (May 2008-2009) and on their website (as shown in Figure 8) as falling in the Luxury category, and in the same presentation DLF defines super-luxury properties as those which fall above the price point of Rs 35,000 Per sq.ft.

Figure 8: From www.dlf.in – accessed on May 01, 2011

The current effective market price (inclusive of car parking and all additional charges) as of March end 2011 of DLF Belaire is around Rs 9000 psf, and DLF Park Place also commands a similar price per sq.ft in the current market. The Director General's Report (Report of Director General in Case of DLF Belaire – Vol I of III – Case No. 19 of 2010 Page 58, Section 5.4.6) also mentions the relevant product as high-end property costing in excess of Rs 200 - 250 lakhs. JLL and Genesis also accept that the relevant market is "Luxury" and have done market share analysis using this criterion.

Though qualitatively all are in agreement about the relevant market being "Luxury," JLL and Genesis quantitatively define the "Luxury category" as anything above Rs 80 lakhs, or Rs 4000 psf (assuming an apartment size of about 2000 sq.ft). The DG report defines high end or luxury as something costing over 200-250 lakhs.

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We undertook a comprehensive study to collect the data about all high rises in Gurgaon, and to analyze the data for identifying the segments of affordable, mid-income, luxury, and super-luxury (segmentation as per various corporate presentations of DLF) in Gurgaon. The aim was to identify what could reasonably be considered as Luxury based on the price. It is accepted by Genesis (on page no. 13, para 44), “We believe, on the basis of our discussion with JLL and DLF, the most effective and most workable indicator of whether a residential property should have luxury status is price.” We, in this report, have used PRICE as our working parameter for identifying “Luxury Properties,” despite the fact that luxury involves other parameters like ‘amenities’, ‘location’ or ‘size’.

f. Data Collection & Creative Commons License
The procedures of collection of data in Indian real estate market are not well established, and much of the data is hard to collect because of the very nature of the ways transactions happen. This has been noted by both the JLL and Genesis reports, and is reiterated by us. But, there is specific data that can be collected with a reasonable accuracy. The data includes 1. Name of Builder, 2. Name of Project 3. Launch Year of the project 4. Completion Year of the project 5. Approximate Number of Apartments in the Project 6. Common Sizes (sq.ft) of Apartments (or Configurations) 7. Current Approximate Market Price (in Rs or Rs psf) as in March-end 2011. We have a fairly comprehensive list of high rise apartments offered by Private builders like DLF, Unitech, and Ansals in Gurgaon, launched in the time period from 1990 onwards till last quarter of 2010. Unlike JLL which has hidden its data under a cloak of confidentiality even from Genesis, we are making this data available under the Creative Commons License Attribution-NonCommercial http://creativecommons.org/licenses/ (This license lets others remix, tweak, and build upon our work non-commercially, and although their new works must also acknowledge us and be non-commercial, they don’t have to license their derivative works on the same terms.) Any non-commercial usage should be attributed to www.QuBREX.com The List of Group Housing projects by Private Builders like DLF, Ansals, and Unitech etc. is attached in Appendix A.

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g. Accuracy of Data & Information Collected
As with any large scale exercise of data collection, and especially with so many developers and brokers not easily sharing data, there are some parameters that are pretty accurate and some that are approximations in Appendix A. The approximations and minor inaccuracies in the data should not have any major effect on the conclusions that are drawn from the data.

1. Name of builder - Accurate 2. Name of project - Accurate 3. Launch Year of project (as there are pre-launches, soft launches, launches by invitation and hard launches, so the launch dates may have error of a few months plus or minus). In case of multiple phases, or in some cases re-launches, the errors in months of assigning a single date to the project may be larger. 4. Completion Year of project – As possession is offered in phases, there might be an error of few months plus or minus. 5. Total Number of Apartments (As sometimes they might have been calculated based on the floor plans and the site layouts, the accuracy may be off by tens of apartments in larger complexes). 6. Common Sizes (sq.ft) of Apartments (or Configurations) – We chose a set of configurations (area in sq.ft of the various options like 2BR, 2BR+Study, 3BR, 3BR+SQ, etc) that represented almost all price points in the project at which an apartment could typically be purchased. We collected data on the common apartment sizes available in that projects so that the actual cost to a buyer could be calculated for the actual options (i.e. 2BR, 2BR+Study, 3BR, 3BR + SQ, 4BR etc) that a buyer would encounter while buying into that project. 7. Current Prices as of March 2011 - These are generally the market averages, and options a little higher and little lower may be found in the market. 8. The Equally Weighted Average Number of Apartments by Configuration While we were able to improve upon just low-high range of prices by getting the actual discrete prices, we were not able to collect the breakdown of the number of apartments according to each configuration in the project. It is a tedious and a very time consuming process of finding out, how many apartments are 2BR, 3BR, etc but is doable for anyone interested in conducting this exercise. So, we had to make an approximation about the number of apartments per configuration. We knew the total number of apartments in the project, and then we made the assumption that each configuration has the same number of apartments – i.e. if the total number of apartments was 1000, and there were 4 configurations (2BR, 3BR, 4BR, 5BR), then the number of apartments in each configuration was one-fourth, i.e. 250. This exercise was necessary to be able to calculate the market share by both the capital value and the number of apartments. 9. The Effective Market Price in Rs psf was calculated by dividing the Market Price of the apartment in Rs by its area in sq.ft., where the Market Price includes Basic Sales Price + EDC/IDC + Parking Charges + Club Membership + other charges as payable. 10. The Effective Market Value of Builders Project By Configuration (Rs crore) was calculated by multiplying the Market Price of the apartment by the number of apartments for that configuration.

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h. Definition of Luxury Product in Relevant Geographic market
We first plotted all the 420 configurations in Appendix A in ascending order of the Effective Market Price in Rs psf in Figures 9 & 10. This was done for all options available in 2006 and for all options available in 2010 in Figure 9 & 10 respectively.

Figure 9

Figure 10

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It can be easily seen that in 2006 only 3 options (with an effective market price of Rs 4000 psf or less as in March 2011) were available in all of Gurgaon out of a total of 207 options. In 2010 the total number of options had increased to 420 and the options of effective market price below Rs 4000 psf had also increased to 99. This increase in options of apartment configurations below Rs 4000 psf happened after 2007 because on Feburary 05, 2007 the new Masterplan of Gurgaon Urban Complex 2021 was notified and many new sectors were brought under the ambit of R-Zone. It was possible to launch low price residential options in these newer sectors (Sector 58 onwards, and including Sectors 37 C & D) because these newer sectors have low priced land compared to the Sectors 1 to 57 (which includes DLF City, Ansal's Sushant Lok, Unitech's South City etc). These newer sectors also have no urban infrastructure, no roads, no sewerage, no electricity, no schools, no hospitals, no malls, etc. Table 1 below shows that the number options that have a current market value of Rs 4000 psf in Gurgaon were 3 in 2006, 19 in 2007, 67 in 2008, 77 in 2009, and 99 in 2010. This represents only 1.4% of the total options in 2006, 8.1% of the options in 2007, 22.7% of the options in 2008, 21.4% of the options in 2009, and 23.5% of the options in 2010. Thus, if the JLL and Genesis contention that everything above Rs 4000 psf is to be considered a luxury apartment is to be believed, then 98.6% of all the options available to a buyer in 2006 were falling in the "luxury" segment. Or that 91.9% in 2007, or 77.3% in 2006, 78.6% in 2009 and 76.4% of all the available options in 2010 fell in the luxury category in Gurgaon. This is of course not right. One would expect the affordable, normal, and mid-income range of the housing to dominate the market place, and luxury to be a small subset of the whole market. Table 2 shows the options in Table 1 as percentages of total availability.

Table 1: Price points are at current market value as of Mar 2011.

Table 2: Price points are at current market value as of Mar 2011.

In the Tables 1 & 2 we have also shown the number and % of apartment configurations, during the years 2006 to 2010, that were available then and have an Effective Market Price today of less than Rs 7000 psf and Rs 8000 psf. The same data is shown in Figure 11. www.QuBREX.com Page 20 of 78

Percentage of Options Available Yearwise For Various Price Points in All of Gurgaon
100.0% 90.0% 80.0% 70.0% 60.0% less than Rs 4000 psf less than Rs 7000 psf less than Rs 8000 psf 40.0% 30.0% 20.0% 10.0% 0.0% 2006 2007 2008 2009 2010 50.0%

Figure 11 In 2006 when the owners of the luxury apartments DLF Park Place & DLF Belaire purchased their apartments, only 3 out of 207 options were available below the price point of Rs 4000 psf. It would be wrong to claim that only 3 options in 2006 fell in the affordable, normal, and mid-income housing category while 204 options were falling in the luxury category, but that is exactly what choosing Rs 4000 psf as the price point for starting of the luxury options in Gurgaon by JLL and Genesis implies. Another reason why Rs 4000 psf cannot be considered as the starting point for luxury apartments is because the circle rate or Collector's Rate in March 2011 for Group Housing Societies by private builders like DLF, Ansals, Unitech etc is Rs 4000 psf. (http://gurgaon.gov.in/sro_ggn_apr2011.htm as accessed on April 01, 20011). So if the Govt. Authority has the lowest rate as Rs 4000 psf in Gurgaon for multistory apartments, this could be considered as the starting price for affordable and mid-income housing and cannot be, in any case, the price of luxury housing. The price of Rs 4000 psf is where we could assume affordable, normal, and mid-income housing to start. Thus, the notion of JLL and Genesis as taking Rs 4000 psf, (or Rs 80 lakhs for a typical 2000 sq.ft apartment) as Luxury in Gurgaon is not only wrong but also illogical. In fact, based on the circle rates and actual options available in Gurgaon, the price of Rs 4000 psf may be taken as the starting point for affordable, normal, and mid-income housing. www.QuBREX.com Page 21 of 78

What then should be the starting point for Luxury? We believe a reasonable answer is provided in the Genesis report on Page 14, para 45, where Genesis states that "an own-use buyer of normal residential properly is unlikely to consider luxury residential properly as substitutable as prices can be more than DOUBLE (emphasis added), with significant implications for affordability." Using the metric that the luxury housing prices are atleast double that of normal housing, we could state that the luxury housing prices in Gurgaon should be atleast double of Rs 4000 psf, i.e Rs 8000 psf, and atleast double of Rs 80 lakhs, i.e 160 lakhs. This tallies well with the segmentation as described in the DLF Corporate presentation (May 2008-2009) where it is mentioned that DLF Belaire falls in the Luxury category - the effective market price of DLF Belaire in Mar 2011 was around Rs 9000 psf, while the total value of the smallest apartment size of about 2900 sq.ft would be (approx.) Rs 286 lakhs. Similarly, the price of DLF Park Place is approx. Rs. 9000 psf and the total value of the smallest apartment size of about 1850 sq.ft. would be (approx.) Rs. 166 lakhs. The Director General's Report also mentions Luxury being above the price range of Rs 200-250 lakhs. Thus, we can safely consider “Luxury Apartments” as those that have an effective market price in excess of Rs 8000 psf. For the purpose of this report, we have been a little more conservative and have decided to set Rs 7000 psf as the lower price limit for the “Luxury Apartments.”

i. Luxury Market Share (i.e., above Rs 7000 psf) of Various Builders Over The Years
Market share analysis based on the number of properties that are currently valued more than Rs 7000 psf for DLF and other builders has been done. The market share analysis has done for both

• •

Completed properties and Launched properties (which includes new launches, under construction property, and completed property)

and has been done on basis of the

• •

Total Number of apartments completed or launched and Total capital value of apartments completed or launched (at current Market Price as of March 2011)

Every completed property was launched at some time, but every launched property has not yet been completed. Thus, the completed properties are a subset of the launched properties. Completed properties are a track record of the builder, and is one of the major factors that a buyer in the residential market considers. In some way, every completed apartment is a de facto sample flat for any project that the builder may launch in the future. It may be said that the completed properties strongly influence the consumer preferences in purchasing. www.QuBREX.com Page 22 of 78

An analysis of the launched properties is also necessary to capture the new entrants in the Residential Market, and also to look at the medium-term future of the market shares. But, every launched property may not be completed, or may be completed after delays from the promised completion time. We present market shares of both completed and launched properties (which includes new launches, under construction property, and completed property).

By Number of Apartments: Market shares have been calculated on the basis of number of apartments, by determining the luxury configurations (2BR, 2BR + S, 3BR, 3BR+SQ etc) which have and effective price more than Rs 7000 psf. The number of apartments of an eligible configuration was calculated by equally weighting all the configurations in the project as described in a previous section. By Capital Value of Apartments: Market shares have also been calculated based on the capital value of apartments, by multiplying the number of apartments of a certain configuration by the total market value of that apartment and then finding the percentage of the total market's capital value.

The following is the list of charts for Market Shares for Luxury Apartments (costing in excess of Rs 7000 psf).

1. Market Share by Number of Apartments Completed by 2006 2. Market Share by Number of Apartments Completed by 2007 3. Market Share by Number of Apartments Completed by 2008 4. Market Share by Number of Apartments Completed by 2009 5. Market Share by Number of Apartments Completed by 2010 6. Market Share by Capital Value of Apartments Completed by 2006 7. Market Share by Capital Value of Apartments Completed by 2007 8. Market Share by Capital Value of Apartments Completed by 2008 9. Market Share by Capital Value of Apartments Completed by 2009 10. Market Share by Capital Value of Apartments Completed by 2010 11. Market Share by Number of Apartments Launched by 2006 12. Market Share by Number of Apartments Launched by 2007 13. Market Share by Number of Apartments Launched by 2008 14. Market Share by Number of Apartments Launched by 2009 15. Market Share by Number of Apartments Launched by 2010 16. Market Share by Capital Value of Apartments Launched by 2006 17. Market Share by Capital Value of Apartments Launched by 2007 18. Market Share by Capital Value of Apartments Launched by 2008 19. Market Share by Capital Value of Apartments Launched by 2009 20. Market Share by Capital Value of Apartments Launched by 2010

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i.

Market Share By Completed Properties

Based on Data in Appendix A, we have calculated the various market shares of the builders over the years, by both the number of apartments completed and the capital value of the apartments completed. As can be seen from Figure 12 below, in the years 2008 & 2010 no apartments with effective price in excess of Rs 7000 psf were completed. Hence, the market shares were the same in 2007 & 2008 and 2009 & 2010.

Number of Luxury Apartments (Rs 7000+ psf) Completed By Year
2009

2007

2006

2004

2003

2002

2001

2000

1998 0 500 1000 1500 2000 2500 3000

Figure 12

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1. Market Share by Number of Apartments Completed by 2006

Market Share of Luxury Apartments (Rs 7000+ psf) by Number of Apartments Completed By 2006
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

DLF

59.84%

Unitech

23.08%

Ansal

4.32%

Mahindra Gesco

3.93%

Ambience

3.34%

Vipul

2.98%

ITC

2.51%

Figure 13

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2. Market Share by Number of Apartments Completed by 2007

Market Share of Luxury Apartments (Rs 7000+ psf) by Number of Apartments Completed By 2007
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

DLF

58.39%

Unitech

20.84%

Vipul

7.38%

Ansal

3.46%

Mahindra Gesco

3.16%

Ambience

2.68%

Vatika

2.07%

ITC

2.02%

Figure 14

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3. Market Share by Number of Apartments Completed by 2008

Market Share of Luxury Apartments (Rs 7000+ psf) by Number of Apartments Completed By 2008
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

DLF

58.39%

Unitech

20.84%

Vipul

7.38%

Ansal

3.46%

Mahindra Gesco

3.16%

Ambience

2.68%

Vatika

2.07%

ITC

2.02%

Figure 15

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4. Market Share by Number of Apartments Completed by 2009

Market Share of Luxury Apartments (Rs 7000+ psf) by Number of Apartments Completed By 2009
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

DLF

55.05%

Unitech

21.74%

Vipul

8.97%

Ansal

3.17%

Mahindra Gesco

2.89%

Ambience

2.45%

Raheja (Saket)

2.00%

Vatika

1.89%

ITC

1.84%

Figure 16

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5. Market Share by Number of Apartments Completed by 2010

Market Share of Luxury Apartments (Rs 7000+ psf) by Number of Apartments Completed By 2010
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

DLF

55.05%

Unitech

21.74%

Vipul

8.97%

Ansal

3.17%

Mahindra Gesco

2.89%

Ambience

2.45%

Raheja (Saket)

2.00%

Vatika

1.89%

ITC

1.84%

Figure 17

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6. Market Share by Capital Value of Apartments Completed by 2006

Market Share of Luxury Apartments (Rs 7000+ psf) by Capital Value of Apartments Completed By 2006
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

DLF

54.09%

Unitech

20.61%

ITC

7.26%

Mahindra Gesco

6.20%

Ambience

5.97%

Vipul

3.82%

Ansal

2.06%

Figure 18

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7. Market Share by Capital Value of Apartments Completed by 2007

Market Share of Luxury Apartments (Rs 7000+ psf) by Capital Value of Apartments Completed By 2007
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

DLF

62.62%

Unitech

16.29%

Vipul

5.78%

ITC

4.76%

Mahindra Gesco

4.06%

Ambience

3.92%

Ansal

1.35%

Vatika

1.23%

Figure 19

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8. Market Share by Capital Value of Apartments Completed by 2008

Market Share of Luxury Apartments (Rs 7000+ psf) by Capital Value of Apartments Completed By 2008
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

DLF

62.62%

Unitech

16.29%

Vipul

5.78%

ITC

4.76%

Mahindra Gesco

4.06%

Ambience

3.92%

Ansal

1.35%

Vatika

1.23%

Figure 20

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9. Market Share by Capital Value of Apartments Completed by 2009

Market Share of Luxury Apartments (Rs 7000+ psf) by Capital Value of Apartments Completed By 2009
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

DLF

57.01%

Unitech

19.37%

Vipul

8.00%

ITC

4.16%

Mahindra Gesco

3.55%

Ambience

3.42%

Raheja (Saket)

2.22%

Ansal

1.18%

Vatika

1.07%

Figure 21

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10. Market Share by Capital Value of Apartments Completed by 2010

Market Share of Luxury Apartments (Rs 7000+ psf) by Capital Value of Apartments Completed By 2010
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

DLF

57.01%

Unitech

19.37%

Vipul

8.00%

ITC

4.16%

Mahindra Gesco

3.55%

Ambience

3.42%

Raheja (Saket)

2.22%

Ansal

1.18%

Vatika

1.07%

Figure 22

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ii.

Market Share By Launched (Incl. new launches, under construction property, and completed) Properties

We have also done the market share calculations based on all the Launched properties (which includes new launches, under construction property, and completed property). Not all launched projects have yet been completed, so there are many more builders compared to analysis of Completed Properties, and also the new entrants in the Gurgaon Market will show up in these market share calculations. As can be seen from Figure 23 below, no Luxury Apartments that cost more than Rs 7000 psf were launched in 2007, hence the market share in 2006 & 2007 were the same.

Number of Luxury Apartments (Rs 7000+ psf) Launched By Year
2010 2009 2008 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 0 500 1000 1500 2000 2500 3000 3500

Figure 23

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11. Market Share by Number of Apartments Launched by 2006

Market Share of Luxury Apartments (Rs 7000+ psf) by Number of Apartments Launched (New, Under Construction & Completed) By 2006
0% DLF Unitech Vipul Parsvnath Ambience Ansal Mahindra Gesco MGF Bestech Raheja (Saket) Emaar MGF Vatika ITC Salcon Silverglades 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

52.34% 16.85% 6.95% 4.30% 3.22% 2.46% 2.24% 1.98% 1.77% 1.55% 1.54% 1.47% 1.43% 1.06% 0.86%

Figure 24

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12. Market Share by Number of Apartments Launched by 2007

Market Share of Luxury Apartments (Rs 7000+ psf) by Number of Apartments Launched (New, Under Construction & Completed) By 2007
0% DLF Unitech Vipul Parsvnath Ambience Ansal Mahindra Gesco MGF Bestech Raheja (Saket) Emaar MGF Vatika ITC Salcon Silverglades 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

52.34% 16.85% 6.95% 4.30% 3.22% 2.46% 2.24% 1.98% 1.77% 1.55% 1.54% 1.47% 1.43% 1.06% 0.86%

Figure 25

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13. Market Share by Number of Apartments Launched by 2008

Market Share of Luxury Apartments (Rs 7000+ psf) by Number of Apartments Launched (New, Under Construction & Completed) By 2008
0% DLF Unitech Vipul Parsvnath Ambience Ansal Mahindra Gesco MGF Tata Housing Bestech Raheja (Saket) Emaar MGF Vatika ITC Salcon Silverglades 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

51.89% 16.38% 6.76% 4.18% 3.13% 2.39% 2.18% 1.93% 1.76% 1.72% 1.51% 1.50% 1.43% 1.39% 1.03% 0.83%

Figure 26

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14. Market Share by Number of Apartments Launched by 2009

Market Share of Luxury Apartments (Rs 7000+ psf) by Number of Apartments Launched (New, Under Construction & Completed) By 2009
0% DLF Unitech Vipul IREO Parsvnath Ambience Ansal Mahindra Gesco MGF Tata Housing Bestech Raheja (Saket) Emaar MGF Vatika ITC Salcon Silverglades 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

51.43% 15.11% 6.24% 4.19% 3.86% 2.89% 2.20% 2.01% 1.78% 1.63% 1.59% 1.39% 1.38% 1.32% 1.28% 0.95% 0.77%

Figure 27

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15. Market Share by Number of Apartments Launched by 2010

Market Share of Luxury Apartments (Rs 7000+ psf) by Number of Apartments Launched (New, Under Construction & Completed) By 2010
0% DLF Unitech Vipul IREO Parsvnath Ambience Emaar MGF Ansal Mahindra Gesco M3M MGF Tata Housing Bestech Raheja (Saket) Vatika ITC Salcon Silverglades 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

49.49% 14.54% 6.00% 4.64% 3.71% 2.78% 2.60% 2.12% 1.93% 1.90% 1.71% 1.57% 1.53% 1.34% 1.27% 1.23% 0.91% 0.74%

Figure 28

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16. Market Share by Capital Value of Apartments Launched by 2006

Market Share of Luxury Apartments (Rs 7000+ psf) by Capital Value of Apartments Launched (New, Under Construction & Completed) By 2006
0% DLF Unitech Ambience Vipul Parsvnath ITC Salcon Emaar MGF Mahindra Gesco Bestech MGF Raheja (Saket) Silverglades Ansal Vatika 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

53.09% 12.60% 7.37% 5.21% 4.66% 2.71% 2.67% 2.31% 2.31% 1.57% 1.56% 1.45% 1.02% 0.77% 0.70%

Figure 29

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17. Market Share by Capital Value of Apartments Launched by 2007

Market Share of Luxury Apartments (Rs 7000+ psf) by Capital Value of Apartments Launched (New, Under Construction & Completed) By 2007
0% DLF Unitech Ambience Vipul Parsvnath ITC Salcon Emaar MGF Mahindra Gesco Bestech MGF Raheja (Saket) Silverglades Ansal Vatika 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

53.09% 12.60% 7.37% 5.21% 4.66% 2.71% 2.67% 2.31% 2.31% 1.57% 1.56% 1.45% 1.02% 0.77% 0.70%

Figure 30

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18. Market Share by Capital Value of Apartments Launched by 2008

Market Share of Luxury Apartments (Rs 7000+ psf) by Capital Value of Apartments Launched (New, Under Construction & Completed) By 2008
0% DLF Unitech Ambience Vipul Parsvnath ITC Salcon Emaar MGF Mahindra Gesco Bestech MGF Tata Housing Raheja (Saket) Silverglades Ansal Vatika 54.25% 11.89% 6.95% 4.92% 4.40% 2.56% 2.52% 2.18% 2.18% 1.48% 1.48% 1.47% 1.36% 0.97% 0.72% 0.66% 20% 40% 60% 80% 100%

Figure 31

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19. Market Share by Capital Value of Apartments Launched by 2009

Market Share of Luxury Apartments (Rs 7000+ psf) by Capital Value of Apartments Launched (New, Under Construction & Completed) By 2009
0% DLF Unitech Ambience Vipul Parsvnath IREO ITC Salcon Emaar MGF Mahindra Gesco Bestech MGF Tata Housing Raheja (Saket) Silverglades Ansal Vatika 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

53.98% 11.16% 6.53% 4.61% 4.13% 3.09% 2.40% 2.37% 2.05% 2.05% 1.39% 1.38% 1.38% 1.28% 0.91% 0.68% 0.62%

Figure 32

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20. Market Share by Capital Value of Apartments Launched by 2010

Market Share of Luxury Apartments (Rs 7000+ psf) by Capital Value of Apartments Launched (New, Under Construction & Completed) By 2010
0% DLF Unitech Ambience Vipul Parsvnath IREO Emaar MGF M3M ITC Salcon Mahindra Gesco Bestech MGF Tata Housing Raheja (Saket) Silverglades Ansal Vatika 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

52.01% 10.75% 6.29% 4.44% 3.97% 3.21% 2.85% 2.55% 2.31% 2.28% 1.97% 1.34% 1.33% 1.33% 1.23% 0.87% 0.66% 0.60%

Figure 33

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j. Real Estate, Luxury, & Location
Based on all the Market Share Figures presented in this chapter, it is apparent that DLF was and is the most dominant player in the Luxury Residential Market with its market share being in excess of 50% no matter how you slice and dice the data. A large part of the success of DLF in the residential market is due to its almost absolute dominance in the commercial sector. This is an outcome of DLF's "walk to work" concept which as DLF says on its website, it pioneered. By building world class office spaces that it does not sell but leases to top companies, it creates a magnet in its land-banks, in and around which people desire to have a residential property – whether for self use or investment. The proximity of over 3000 acres of its land to the Delhi border is a plus, and combined with office spaces that draw companies out of Delhi into Gurgaon, it creates a chain effect of drawing the employees of the companies to Gurgaon too. This is of relevance to the commission as it comes under the Competition Act Section 19.6 (b), i.e. location specific requirements. The location, the proximity to commercial office and retail spaces, social infrastructure like the DLF Golf course, and now with its own rapid metro, own flyovers, and even its own roads DLF is heading to solidify its lock on Gurgaon. In its corporate presentation of May 2008 on Integrated townships, DLF has disclosed that in addition to the 3000 acres that it has in established Gurgaon, it has another 4000 acres of land that falls in the region of "New Gurgaon," (see Figure 34) i.e. the new sectors of Gurgaon that were notified on February 05, 2007 in the Gurgaon Manesar Urban Complex Masterplan 2021. Thus, DLF will have atleast 7000 acres of land in Gurgaon, of which 4000 acres is a clean canvas on which it will create another integrated township like the 3000 acre one in Gurgaon called the DLF City. A large chunk of the upscale Gurgaon is morphing into a tight integrated city with DLF at its center and helm. And this is by design, and one more step in the direction of DLF's pioneering activity – the integrated township.

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Figure 34: DLF's Corporate Presentation of May 2008 discloses its plans for New Gurgaon: A 4000 acres township falling in the new masterplan for Gurgaon, with all segments of residential, commercial, and retail.

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6. DLF's Pioneering “Walk to Work” Integrated Township of Gurgaon
DLF city is a part of DLF pioneering Integrated Township concept, as described on their website.

Figure 35: From www.dlf.in – Accessed on May 01, 20011 As DLF's website www.dlf.in says, DLF has the unique ability for "creating the right mix of high quality housing, state-of-the-art offices, IT parks, world-class shopping malls, digital entertainment, leisure and recreation, efficient infrastructure, schools, hospitals and other community spaces like parks and clubs. One of the lynchpins of the integrated township is the "walk to work" concept that DLF claims to have pioneered. See Figure 36 which is a screen grab from DLF's website. It says that "DLF has pioneered the "walk-to-work" concept in the 3000 acre DLF city where well planned residential developments are integrated with modern businesses and commercial complexes." It is this integration of the commercial and residential that is the key to DLF's astounding success, and hence very strange that JLL and Genesis in their reports should discount DLF's strength in the commercial space as being relevant to understanding DLF's dominance in the Gurgaon residential market.

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Figure 36: From www.dlf.in – Accessed on May 01, 2011

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The residential, commercial (office and retail) are inter-linked like nowhere else in the DLF integrated township of Gurgaon. DLF has pioneered the retail revolution as the screen grab from their website shows (see Figure 37), they have pioneered integrated townships, pioneered golf course living, and pioneered Grade A office space leasing.

Figure 37: From www.dlf.in – accessed on May 01, 2011

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DLF has pioneered many aspects of the real estate business in Gurgaon, which indicate its strength, and its ability to almost act independently of what the competition may or may not do. Some of the business practices pioneered by DLF that the commission may consider under Section 19.4 (m), i.e. any other factor Commission may consider relevant for inquiry are

Delay penalty – It is hard to pin down when this started, but Mr. TC Goyal, Managing Director of DLF, during the launch of their project Express Greens (Manesar) at the DLF offices in Delhi mentioned that the "Rs 5 per square feet per month" penalty was started by DLF. It was not meant to penalize DLF or be looked as a penalty, but was just a good gesture on DLF's part to make their own employees realize the cost of delay. Today of course, this Rs 5 per sq.ft penalty is too paltry compared to the time-value of money from the buyer's point of view. This Rs 5 per square feet per month penalty has found its way into the Buyers Agreement of every builder that operates in Gurgaon. Early payment discount. This is different from the down payment discount that is given when the buyer makes almost 90% of the payment towards an apartment within 30 days of booking the apartment. Early payment was introduced by DLF during the launch of Express Greens residential project in Manesar, and was 13% compared to 11% for the down payment discount. In the early payment, the buyer could make any payment in advance before it was raised by DLF, and DLF would pay 13% interest on it till the time the payment became due as part of the construction-linked payment plan. Timely payment Discount – This is another innovation by DLF that has been copied by builders like Emaar MGF. Here if a buyer were to make payments in a timely fashion, as and when demanded, then towards the possession of the flat DLF would give a 5% discount on the price at which the property was originally booked. Investor lock-in: In 2009, DLF came up with an innovative idea to keep out investors from buying into their projects. DLF incorporated into the Buyers Agreement a clause that prevented the buyer of the DLF property from selling the property for 1 year. This is market power that few builders have. See Appendix B for a news item regarding this. ONE PAN one FLAT: DLF also decided that they did not want to sell more than one property to a single buyer. So they instituted a check of the PAN number, and one PAN number was eligible for buying only one flat. Other developers would be envious of such market power. SELLING BY invitation only: DLF pioneered the concept of “sale-by-invitation” for DLF Aralias, its pioneering Golf course living project. In this concept you did not apply to buy an apartment from the company, but the company reached out to you if they thought you were deserving of living in the complex. DLF would invite you to buy into it. See Appendix for a news item on the same. Forced resale back to company before registry of flat: In DLF Aralis and DLF Magnolias the company restricts the resale of its apartments. If at any time you want to exit the project, before the project is ready and registered in your name, the company forbids you to sell it in the open Page 51 of 78

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market. The buyer had to surrender the apartment to DLF if they for any reason had to exit this investment, and DLF would buy the same at a lower rate than what it was selling its apartments for. No other developer in Gurgaon has been able to impose such onerous conditions on their buyers. In addition to showing the market power, it also shows how DLF is able to restrict the buying selling in the secondary market which should be of interest to the august Commission. Even though Section 3.4 (e) is applicable to Combinations, the concept of "resale price maintenance" can be investigated by the Commission under Section 19.4 (m).

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7. DLF & Consumer Preferences
Consumer preferences in an important part of the Competition Act, and is referred to in Section 19.6 (g), and Section 19.7 (c). Consumer preferences are geography dependent, and also dependent on the brand and market strength of an enterprise – until the enterprise turns on the consumers themselves. Buyers of residential property want to be near the place of work (to be able to "walk to work"), want to be near malls, near social infrastructure like clubs, and in general are very aware of location advantages of any property that they invest in. To think buyers in DLF properties, or any builders properties are location–agnostic as the JLL and Genesis reports suggest is wrong. The strength and its land bank of the most prime land available that DLF holds in Gurgaon is an attraction to the buyers in selecting their residential properties, as is the proximity to the commercial office spaces. To have to buy far away from the place of work is to invoke costs in travelling, or transporting self, and in terms of time expended. The commission can consider these issues under Section 19.6 (e) i.e. transport cost. In addition, the buyers of any residential property look to the past track record of the builder, and how the completed properties of any builder are holding up. Buying a residential property is probably the biggest purchase of their lifetime, for many buyers. The market structure and size of market (Section 19.4 (j) of the Competition Act) from the point of view of the buyer is very large. Many buyers will be spending almost half of their monthly salary on this purchase for the next 15 to 20 years. Also once they move into DLF City, maintenance, security, electricity, water, malls, etc are all going to be provided by DLF or by the DLF approved agencies. Thus from the buyer's perspective the size of the market is huge, and at the same time the structure of the market is opaque. As JLL and Genesis have in their reports pointed out, it is hard for even professionals like them to get any meaningful information from the developers and their agents – just imagine the plight of the residential buyer. Thus, the buyers are very interested in the track record of the builder, and that is why in this report we have also computed the market shares for completed properties. An additional benefit for the developers of completed properties is that all the properties that a Developer completes become a sort of "sample flat" for them, which help them in selling any project that the developer might bring out in the future. Because the apartments are not consumed like consumer items, are not hidden like many of the goods, are not invisible like many services, but are there for all to see for all times, the commission may look at the special nature of the apartment under the Section 19.7 (a), i.e. Physical characteristics or end-use of goods.

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8. DLF & Sales Organizers Preferences
DLF has a strange arrangement with its Sales Channel, i.e. Independent Brokers.. After getting authorization with DLF the broker has to commit to giving DLF at least 6 bookings in a year, or else none of the commission will be released for any booking in that year. After selling to one or two buyers on behalf of DLF, the broker is then tied into making 6 more compulsory bookings quota – and in all likelihood the chances are that the Broker may not suggest the best investment to the client, but suggest to client what is good for the broker. This is one such practice that no other developer or builder has so far not been able to impose upon its brokers in Gurgaon. In addition, as mentioned earlier DLF restricts sales of certain properties like DLF Magnolias (and earlier DLF Aralias) by forcing the buyer to surrender their units to DLF only (which then it sells it at a higher price). They buyers are not allowed to take help of brokers to sell their units in the secondary market, thus restricting the resale market.

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9. Conclusion of the Report

DLF has a strong presence in Gurgaon. The contrarian picture painted by Jones Lang LaSalle & Genesis in the reports submitted by them on behalf of DLF are based on false data, wrong proxy for market shares, misleading methodology, and illogical assumptions. DLF has the ability to leverage its huge strengths in the commercial spaces into its sales of residential properties in the integrated township of Gurgaon called DLF City. DLF also currently has a dominating market share in completed and launched properties in the luxury market of Gurgaon. And it is in a position to act independently of the market and competitive forces in the geographic market of Gurgaon and product market of "luxury" apartments. DLF has also been a pioneer in many concepts and business processes – some to the benefit of the consumers and some to their detriment.

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10.

About QuBREX

QuBREX (QuBit Real Estate eXchange) is a division of QuBit Technologies Pvt. Ltd. (QBTPL) The Managing Director of QBTPL, Dr. Sanjay Sharma, has done his B.E. (Chemical Engineering) from University of Roorkee (now IIT Roorkee), his M.S. (Chemical Engineering) from North Carolina State University, Raleigh, and Ph.D. from North Carolina State University. The Ph.D. thesis was in Computer Science. Dr. Sharma is also a Co-Inventor for US Patent Number 6,490,569 B1 dated December 03, 2002 "System for Combining Life Cycle Assessment With Activity Based Costing Using Relational Database Software Application." Dr. Sharma, and his team have been running Real Estate Consultancy & Brokerage Services for the last 6 years in the National Capital Region (NCR). They run community websites like www.GurgaonScoop.com, www.NoidaScoop.com, and www.DelhiScoop.com, and have been collecting and publishing real estate data about NCR on their website www.QuBREX.com for the last 6 years. Dr. Sharma also hosts a weekly TV program called Property Watch on Sahara Samay TV Channel, and regularly appears on the Money Guru – Property Show of Zee Business TV Channel. Team Members Ms. Sonia Vaid & Mr. Sanjeev Kumar helped in collecting and analyzing the data for the report.

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11. Appendices

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k. Appendix A – List of Group Housing By Private Builders In Gurgaon

Launch Year 2008 2008 2008 2008 2007 Builder Pal Pal Pal Pal Tulip SARE Group SARE Group SARE Group SARE Group SARE Group Raheja (Saket) Raheja (Saket) Raheja (Saket) Piedmont Raheja (Saket) Raheja (Saket) Raheja (Saket) Raheja (Saket) Pal Raheja (Saket) ILD Mapsko Sector 37 C Sector 92 Sector 108 Sector 92 Sector 108 Sector 70 A Sector 92 Sector 37 C Sector 82 Sector 92 Sector 92 Sector 108 Sector 108 Sector 92 1416 1180 2350 2780 2490 2219 1990 1795 1100 1365 2650 1498 3450 3500 Sector 92 1712 Sector 92 1665 Sector 92 1900 5,382,500 4,738,875 4,879,600 4,072,800 3,441,500 7,029,750 8,409,300 7,558,150 6,826,670 6,190,150 5,608,075 3,478,500 4,324,525 8,513,750 4,871,330 11,221,000 11,387,500 2,833 2,846 2,850 2,876 2,917 2,991 3,025 3,035 3,076 3,111 3,124 3,162 3,168 3,213 3,252 3,252 3,254 Location Sector 95 Sector 95 Sector 95 Sector 95 Sector 69

Completion Year

Equally Weighted Average Number of Apartments By Configuration 119 119 119 119 336 Approx Area sq.ft 2100 1690 1500 1375 1550 Market Price in Rs (Lumpsum or Approx Calculated) 5,326,500 4,315,850 3,847,500 3,539,375 4,047,500 Effective Market Price Rs psf 2,536 2,554 2,565 2,574 2,611 269 237 244 204 172 79 63 57 341 70 42 39 32 74 55 269 256

Effective Market Value of Builder's Project By Configurations (Rs crore) 63 51 46 42 136

2009

500

2009

500

2009

500

2009

500

2009 2007 2007 2007

500 113 75 75

2008 2007 2007 2007 2007 2008 2007 2008 2008

500 113 75 113 75 88 113 240 225

Project City Park City Park City Park City Park Petals Royal Gardens Royal Gardens Royal Gardens Royal Gardens Royal Gardens Navodaya Vedaanta Vedaanta Taksila Heights Navodaya Vedaanta Navodaya Vedaanta Aquapolis Navodaya Spire Greens Casa Bella

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To get the full data table call 9811987371 9871219911 or write to Qubrex@gmail.com

2010 Ardee Tulip Sector 52 Sector 69 1850 1550 8,945,000 7,496,250 4,835 4,836 128 96

143

ABW

Sector 76

1500

7,252,500

4,835

103

2004 2008

143 128

2006 2010 2004 Bestech ABW Bestech Bestech BPTP Godrej Frontier Spaze Sector 66 Sector 66 Sector 80 Sector 72 1750 1600 1475 1900 8,631,250 7,904,320 7,302,757 9,438,000 Sector 3 1780 8,725,260 4,902 4,932 4,940 4,951 4,967 Sector 66 Sector 76 1850 1250 9,016,250 6,093,750 4,874 4,875 94 87 148 90 92 73 165

2010

2010

170 100 250

Bestech Godrej Frontier JMD

Sector 3 Sector 80 Sohna Road

1920 1950 2020

9,312,000 9,477,373 9,842,980

4,850 4,860 4,873

158 95 246

2009 2010

105 143

2006

2010

170

2009 2009 2010 2007

105 117 100 175

2010

2006 2004 2007 2009 2009 2009 2009 2004 1991 2009 2009 2007 Malibu Estate Sohna Road 2940

1997

170 163 175 117 295 295 117 163 250 117 100 175

Bestech Clarion Spaze BPTP Tulip Tulip Unitech Clarion DLF Unitech Unitech Spaze

Sector 3 Sector 57 Sector 72 Sector 66 Sector 69-70 Sector 69-70 Sector 69 Sector 57 DLF Phase I Sector 69 Sector 70 Sector 72

1565 2587 1800 1275 1437 1137 1337 2370 1950 1501 1530 1600

7,806,775 12,976,300 9,046,000 6,433,599 7,255,375 5,792,875 6,822,747 12,150,000 10,000,000 7,706,481 7,857,680 8,232,000 15,200,000

4,988 5,016 5,026 5,046 5,049 5,095 5,103 5,127 5,128 5,134 5,136 5,145 5,170

133 212 158 75 214 171 80 198 250 90 79 144 131

1996

2002

86

2006 2009 2009 2004

2010

2009

170 100 117 171

Bestech Unitech Unitech Vatika

Verona Hills Palm Grove Heights Purple Park View Residency Garden Vista Gardens Park View Next Verona Hills Park View Residency Park View Next Park Prime Garden Vista Privy Park View Residency The Legend Privy Park Prime Orange Orange Sunbreeze The Legend Silver Oaks Sunbreeze Vistas Privy Malibu Towne Park View Residency Vistas Sunbreeze Jasminium Sector 3 Sector 70 Sector 69 Sohna Road 1415 1560 1100 3000 7,324,905 8,084,360 5,709,100 15,800,000 5,177 5,182 5,190 5,267 125 81 67 270

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2002 Ansal Unitech Ansal Malibu Estate Emaar MGF Malibu Estate Malibu Estate Emaar MGF Ansal Ansal Ansal Unitech Unitech Sector 33 Sector 33 1870 1545 1153 977 627 3,448,500 5,373,500 6,350,000 10,338,000 8,583,000 1280 7,006,600 Sohna Road 1616 8,800,000 Sohna Road 1586 8,600,000 5,422 5,446 5,474 5,500 5,500 5,507 5,528 5,555 Sector 65 1395 7,537,150 5,403 Sohna Road 2430 13,000,000 5,350 112 14 74 76 13 192 299 61 186 154 1545 8,200,000 5,307 79 1756 1115 9,306,800 5,912,440 5,300 5,303 517 59

2005

556

Ansal

1300

6,890,000

5,300

383

2002 2009

2005

556 100

1998

2004

96

Faridabad Road Faridabad Road Sector 70 Sushant Lok 1

1996

2002

86

2009

19

1996

2002

86

1996

2002

86

2009

19

2002

2005

556

2002

2005

556

1998

2004

96

Sector 65 Faridabad Road Faridabad Road Sushant Lok 1

2009

180

2009

180

2004 2005 2005 2003 2003 2004

2010 2010 2010 2010 2010

482 14 14 123 123 467

Sweta Estates Vatika Vatika Parsvnath Parsvnath Orchid

Sohna Road Sohna Road Sohna Road Sohna Road Sohna Road Sohna Road

2950 1936 2086 2125 1886 2337

16,508,750 10,841,600 11,681,600 11,950,000 10,611,600 13,178,284

5,596 5,600 5,600 5,624 5,627 5,639

795 15 16 146 130 615

2004 2004 TDI Unitech

2009

482 467

Sweta Estates Orchid

Valley View Estate Valley View Estate Vistas Sushant Apartment Malibu Towne Emerald Estate Malibu Towne Malibu Towne Emerald Estate Valley View Estate Valley View Estate Sushant Apartment The Residences The Residences Central Park II Acacia Acacia Greenville Greenville Petals Central Park II Petals 2350 1805 Ourania Exquisite 4000 4612 13,313,750 10,235,260 22,700,000 26,227,200 5,665 5,671 5,675 5,687 641 478 77 273 Sohna Road Sohna Road Golf Course Road Sector 71

2007 2010

34 104

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To get the full data table call 9811987371 9871219911 or write to Qubrex@gmail.com

2005

64

Salcon

Sector 54

5330

65,043,500

12,203

416

2005 1997 DLF DLF 9175 5825 87,855,625 15,083 137,519,375 14,988 DLF Magnolias Magnolias - II Magnolias 9175 137,519,375 14,988 2799 1286 1788

2002

64 130

Salcon ITC

Verandas The Verandas The Verandas Laburnum 4495 3300 57,312,750 42,500,000 12,750 12,879 367 553

2005

204

2008

94

2005

204

2008 1997 5825 3800 7244 6333.5 5850 5600 109,660,000 96,002,500 150,000,000 150,000,000 87,855,625 57,500,000 Ambience Ambience DLF DLF Aralias Aralias Caitriona Caitriona

2002

94 130

DLF ITC

Magnolias - II Laburnum

15,083 15,132 15,138 15,158 25,641 26,786

821 748 1316 1152 1890 1890

2006

120

2006

120

2002

2007

126

2002

2007

126

Sector 54 Sector 28 Golf Course Road Golf Course Road Golf Course Road Golf Course Road Sector 28 DLF Phase III DLF Phase III Golf Course Road Golf Course Road

l. Appendix B – DLF Takes Steps To Keep Speculators At Bay

http://www.mydigitalfc.com/real-estate/dlf-takes-steps-keep-speculators-bay-921

DLF takes steps to keep speculators at bay Page 74 of 78

By Shilpa Shree Jun 17 2009

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The company insists on lock-in clause for new buyers, besides selling only one flat to a PAN in PAN-card holder

DLF, India’s largest publicly traded real estate company, has begun taking measures to keep speculative buyers away. It has incorporated a one-year lockone in period for all new buyers. The company is also offering only one flat to a person and using the buyer’s PAN number as a check. ch

tor Rajeev Talwar, executive director of DLF, told FC Estate that his company has initiated a slew of measures to be included in the contract that is to be signed between the buyer and developer to ensure that the units are sold to genuine buyers.

PAN-card “We have introduced a few self-regulatory measures. We issue only one unit for a PAN card holder. This is to ensure that the buyer is genuine. We have also introduced a one-year lock-in period to ensure that someone just does not buy and sell it immediately to make quick bucks,” said Talwar. He said the in s company would not transfer the title of the property in the name of the buyer for a year after a property is booked.

Over last few months, the company has clarified that speculative buyers are partially responsible for the downturn, as the pr property market was overheated y due to many speculative buyers artificially inflating prices.

“We have seen some good response for our projects in the recent past. The market is firming up, buyer interest was always there and interest rates on there loans are low,” added Talwar.

based While a few Mumbai-based developers have increased the prices of their projects in the recent past, Talwar says DLF has not increased the prices of units in any of its projects. “We are watching the market. We may not increase the prices in nea future but may do it later,” he said. near

Commenting on DLF’s initiatives, Anuj Puri, country head of Jones Lang LaSalle Meghraj, a property consulting company, said, “Developers are not encouraging bulk bookings these days. Moreover, if a buyer is selling at a premium, the developers are asking for 15-20 per cent of the premium at which 20 the customer is selling. This discourages the person from selling. These clauses are included in the contract that is signed between the buyer and developer.”

m. Appendix C – Check Out These Super Luxury Flats

Check out these super luxury flats

January 21, 2006 19:59 IST

http://www.rediff.com/money/2006/jan/21spec4.htm

Sitting on his tenth floor office in New Delhi's [ Images ] Connaught Place, Dr Vijay Vancheswar, vice-president - corporate communications, DLF Universal, vice is jubilant. "Look at this building!" he says of DLF Place, where his office is located.

"Built in 1992, but doesn't it look new? It's easily the best-looking building in Connaught Place. It's because we're all about maintenance and upkeep. We looking

don't build something and then go away and leave it alone - we invest in community."

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This is one way of describing their latest projects, the super-luxury apartment complexes 'The Aralias' (launched in 2004, it is expected to be finished late

this year) and 'The Magnolias' (launched last year, it is expected to be finished late-2006).

Short of shooting people as they walk through the gates, DLF has done almost everything else to keep up an almost superhuman aura of exclusivity

around these two projects.

All the flats are offered out on invitation only; there is no marketing to speak of; and if you wander into the DLF office in your shorts and ask about them,

you will more likely be met with the cold shoulder than the glad eye.

According to Vancheswar, 'The Magnolias', which started out with a price tag of Rs 4,500 per sq ft when it was launched last September, has now reached

a price of Rs 6,000 per sq ft for an apartment, and Rs 6,500 per sq ft for a penthouse. Despite the fact that the project is not even half done, all of the flats

have been leased out. Why is it so popular?

"First of all, these are among the first really high-segment luxury accommodation that is available. And people who buy in this super-luxury segment are

often looking for exclusivity," says Vancheswar, "This is exactly what we offer. We screen all our candidates very closely, so that we can make sure each

and every resident is someone we want to be part of this community. There is no re-selling policy, that is, when someone buys a flat, we don't allow them

to sell it to anyone but DLF. This keeps up a sense of community, and keeps speculators out. And of course, DLF is a known name in property

development."

DLF has a fixed price at which they buy back their flats; for instance, the buy-back price now is Rs 5,000 per sq ft for The Aralias, "compared to the starting

selling price of Rs 1,800 back in 2004," according to Vancheswar.

So how do you get on to one of these exclusive lists? There are only 252 flats in The Aralias, and 300 (although many more are planned) in The

Magnolias, so chances are the likes of you and I will have to sit this one out.

"After we had started this by-invitation-only scheme with The Aralias," says Prerna Aggarwal, chief manager - marketing, "there was a lot of pent-up

demand for the Magnolias. We catered to this clientele first, and there was really no way other than word of mouth for anyone else to find out about it.

Even the section on our website was password-protected."

So letters are sent out, along with an application form that asks about your profession, age, and income ("although a lot of people left that one blank!"

laughs Vancheswaran). People are then short-listed, depending on how the management at DLF feels they would fit into the community ("it's not just about

money, but also class", according to Aggarwal). It is only once you have signed on the dotted line that the one piece of marketing does go out to you.

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This is where Gopika Chowfla, of Gopika Chowfla Graphic Design, comes in. If you're one of the lucky people who do get a flat, you will also get sent to

you a lovely concept book full of pictures - a flower here, a golf ball there (The Magnolias will overlook the to-be-extended DLF golf course), and park

benches covered in red autumn leaves.

"There is really nothing concrete in this book," says Chowfla of her creation. "It doesn't tell you what kind of a flat you'll get, whether you'll get a golf

membership - it doesn't commit to anything at all. Rather, it tries to sell a lifestyle, a way of thinking. It also helps word spread, adds to the intrigue and the

feeling of exclusivity."

In fact, it isn't really clear what kind of a flat you will get until the last minute - this is because you can play a large part yourself in the final design. There

are three main kinds of apartments at The Magnolias; the standard apartment (which is 5-bedroom), the duplex and the penthouse.

But this is all you can know; when you buy the apartment, you can pull down the walls and redesign the layout according to your own tastes, and you have

to put in the walls and floors by yourself, because the price of the apartment is only for the empty shell.

Of course, there is an option where you can ask DLF to do the interiors for you (at a price of Rs 1,500 per sq ft), but you can do it yourself as well, if you

want to give your apartment an individual feel.

What is the impact on the industry of this kind of never-seen-before endeavour? "There is a lot of hype around luxury these days," says Chowfla. "No one

wants to interview the property developer who is doing middle segment work; everyone wants to talk of superlatives - this is just natural."

Vancheswaran, by his own admission, only talks of the "premium, super-premium and luxury segments." DLF doesn't deal in property below this line. But

given the opportunity, he says, he doesn't think that DLF would be averse to getting into the middle segment.

"We're on sound ground right now with Gurgaon," he says, "given the new stable government that has established itself. This is really vital. They have

promised to plough the External Development Charges that have accumulated back into infrastructure.

They have pledged crores into creating 10 lakh jobs over the next five years. You really need this kind of public-private partnership. When it comes to the

economically weaker segments, the government should provide subsidies on land.

Otherwise the margins are just too wide; costs would have to be cut somewhere, and no one would want to risk quality." "But," argues Chowfla, "you'd

have huge volumes as well. And all you'd have to do is provide housing with a little imagination, cut all the frills that you put on the luxury segment, but

design it with care and quality in mind. That's really what's needed today."

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At the end of the day, of course, businesses do need to think of the bottomline, and given the near-hysterical response to The Magnolias and The Aralias,

DLF is probably wise to invest in super-luxury.

There is clearly a market to tap into. Their clientele want peace, central air-conditioning, twenty-four hour power back-up, a nine-hole golf course outside

their bedroom window, and neighbours just like themselves. And they're willing to pay for it.

Samyukta Bhowmick in New Delhi

Source:

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