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DEVI AHILYA VISHWAVIDYALAYA, INDORE

MAJOR RESEARCH PROJECT on
“To Study the Various factors that Influence Investor’s Perception towards Real Estate Investments” A Research Dissertation Submitted in Partial Fulfillment for the Award of the Degree of Masters of Business Administration (2010-2012)

Submitted to:
Prof.Vasanti Dutta

Submitted by:
Tarun Thakur MBA II Year Section ROLL NO.

CERTIFICATE FROM INTERNAL & EXTERNAL EXAMINER

This is to certify that ―Tarun Thakur‖ of MBA (Full Time) Semester IV in Sanghvi Institute of Management and Science, Indore has carried out a Major Research Project titled ―To Study the Various factors that Influence Investor’s Perception towards Real Estate Investments‖. The work done by him/her is genuine and authentic.

The work carried out by the student was found satisfactory. We wish him/her all the success in career.

Internal Examiner

External Examiner

CERTIFICATE FROM CHAIRPERSON & FACULTY GUIDE

This is to certify that ―Tarun Thakur‖ of MBA (Full Time) Semester IV in Sanghvi Institute of Management and Science, Indore has carried out a Major Research Project titled ―To Study the Various factors that Influence Investor’s Perception towards Real Estate Investments‖.

The work carried out by the student was found satisfactory and it is as per the guidance of faculty guide.

Signature of Chairperson

Signature of Faculty Guide

DECLARATION
I, ―Tarun Thakur‖, a student of School of Management, Sanghvi Institute of Management & Science, Indore, hereby declare that the work done by me to do the Major Research Project titled ―To Study the Various factors that Influence Investor’s Perception towards Real Estate Investments‖ is genuine and authentic.

Signature of the Student

ACKNOWLEDGEMENT

I sincerely and religiously devote this folio to all the gem of persons who have openly or silently left an ineradicable mark on this research so that they may be brought into consideration and given their share of credit, which they genuinely and outstandingly deserve.

This expedition of research encountered many trials, troubles and tortures along the way. I am essentially indebted to my guide “Vasanti Dutta” for this sweating learning experience. He/She overlooked my faults and follies, constantly inspired and mentored via his proficient direction. It was a privilege to work under his/her sincere guidance.

I express my thanks to Dr Manoj Bhatia, Director (MBA / PGDM), Sanghvi Institute of Management and Science, Indore for his considerate support whenever and wherever needed. I honestly acknowledge the support provided by the Chairperson, Prof Gaurav Singh.

I express my indebtedness to the management of Sanghvi Institute of Management and Science, for inspiring us to grab and utilize this opportunity.

With profound sense of gratitude, I would like to truthfully thank a recognizable number of individuals whom I have not mentioned here, but who have visibly or invisibly facilitated in transforming this research into a success saga.

Above all, I would like to conscientiously thank the Omnipotent, Omnipresent and Omniscient God for His priceless blessings!

Signature of Student

CONTENTS

Topic

          

Introduction Literature of Review Rationale of study Research Methodology Data Analysis & Interpretation Scope of Real estate Factor Analysis Conclusion Bibliography Appendix Questionnaire

INTRODUCTION
Investment is putting money into something with the expectation of profit. More specifically, investment is the commitment of money or capital to the purchase of financial instruments or other assets so as to gain profitable returns in the form of interest, dividends, or appreciation of the value of the instrument. Investment is involved in many areas of the economy, such as business management and finance no matter for households, firms, or governments. An investment involves the choice by an individual or an organization such as a pension fund, after some analysis or thought, to place or lend money in a vehicle, instrument or asset, such as property, commodity, stock, bond, financial derivatives (e.g. futures or options), or the foreign asset denominated in foreign currency, that has certain level of risk and provides the possibility of generating returns over a period of time. When an asset is bought or a given amount of money is invested in the bank, there is anticipation that some return will be received from the investment in the future. Investment in Terms of Economics According to economic theories, investment is defined as the per-unit production of goods, which have not been consumed, but will however, be used for the purpose of future production. Examples of this type of investments are tangible goods like construction of a factory or bridge and intangible goods like 6 months of on-the-job training. Investment in Terms of Business Management According to business management theories, investment refers to tangible assets like machinery and equipments and buildings and intangible assets like copyrights or patents and goodwill.

Investment in Terms of Finance In finance, investment refers to the purchasing of securities or other financial assets from the capital market. It also means buying money market or real properties with high market liquidity. Some examples are gold, silver, real properties, and precious items.

Financial investments are in stocks, bonds, and other types of security investments. Indirect financial investments can also be done with the help of mediators or third parties, such as pension funds, mutual funds, commercial banks, and insurance companies.

Personal Finance According to personal finance theories, an investment is the implementation of money for buying shares, mutual funds or assets with capital risk.

Types of Investment
Equities Equities are a type of security that represents the ownership in a company. Equities are traded (bought and sold) in stock markets. Alternatively, they can be purchased via the Initial Public Offering (IPO) route, i.e. directly from the company. Investing in equities is a good long-term investment option as the returns on equities over a long time horizon are generally higher than most other investment avenues. However, along with the possibility of greater returns comes greater risk. Mutual funds A mutual fund allows a group of people to pool their money together and have it professionally managed, in keeping with a predetermined investment objective. This investment avenue is popular because of its cost-efficiency, risk-diversification, professional management and sound regulation. You can invest as little as Rs. 1,000 per month in a mutual fund. There are various general and thematic mutual funds to choose from and the risk and return possibilities vary accordingly. Bonds Bonds are fixed income instruments which are issued for the purpose of raising capital. Both private entities, such as companies, financial institutions, and the central or state government and other government institutions use this instrument as a means of garnering funds. Bonds issued by the Government carry the lowest level of risk but could deliver fair returns. Deposits Investing in bank or post-office deposits is a very common way of securing surplus funds. These instruments are at the low end of the risk-return spectrum.

Cash equivalents These are relatively safe and highly liquid investment options. Treasury bills and money market funds are cash equivalents. Non-financial Instruments Gold The 'yellow metal' is a preferred investment option, particularly when markets are volatile. Today, beyond physical gold, a number of products which derive their value from the price of gold are available for investment. These include gold futures and gold exchange traded funds.

Real Estate
In real estate, investment money is used to purchase property for the purpose of holding, reselling or leasing for income and there is an element of capital risk. Residential real estate Investment in residential real estate is the most common form of real estate investment measured by number of participants because it includes property purchased as a primary residence. In many cases the buyer does not have the full purchase price for a property and must engage a lender such as a bank, finance company or private lender. Different countries have their individual normal lending levels, but usually they will fall into the range of 70-90% of the purchase price. Against other types of real estate, residential real estate is the least risky. Commercial real estate Commercial real estate consists of multifamily apartments, office buildings, retail space, hotels and motels, warehouses, and other commercial properties. Due to the higher risk of commercial real estate, loan-to-value ratios allowed by banks and other lenders are lower and often fall in the range of 50-70%. According to real estate theories, investment is referred to as money utilized for buying property for the purpose of ownership or leasing. This also involves capital risk.

Indian Real Estate Scenario
India is the seventh largest country by geographical area, the second most populous country and the most popular liberal democracy in the world. India is now the fourth largest economy in the world and the second fastest growing economy. One of the noticeable recent developments has been in the field of Real Estate. India real estate market is booming. Some 80,000 Indians today have liquid assests greater than 5 cores and this

No. is increasing by 13 % a year. According to well-known source India’s large cities boasts 400-500 house listed at 5 crores+. India’s emergence as a hub for global outsourcing and the consumption-driven growth of India’s economy is contributing to its new found real estate investment image. For example upcoming glitzy shopping malls, entertainment centers, luxury hotels and multiplexes. Foreign Investment and the likes of Wal-Mart is already fuelling the demand for commercial property. Foreign companies can set up subsidiaries or joint-ventures to develop property, provided that their money is locked in for three years and that plots are of at least a minimum size. However, India’s property market remains unorganized and underdeveloped. This creates risks for investors. In the absence of clear title to property, the risk of litigation is high. For those foreigners who invest in India via real estate investment trusts, there are no rules on the marking of their stakes to market or on whether they must pay stamp duty on transactions. The growth was initially fuelled and subsequently sustained mainly by cheap housing loans. Years ago, when India was a closed economy with lots of government control and intervention, the interest rates for house loan used to be as high as 18% per annum. But the gradual liberalization of the Indian economy and opening up of the domestic market, unrestricted flow of FDI and full current account convertibility of Indian currency (Rupee) brought down the PLR (prime lending rate) substantially. Also there has been an increase in the income level of Indian middle class who are now considerably investing in new property in prime metro cities like Delhi, Mumbai, and Bangalore. Several mega projects offering international lifestyles are on the anvil in different cities in India. The most developed are the Bangalore Property, Mumbai Property and Delhi.For example Property market with luxury apartment and villas selling like hot cakes. The Indian stock market and Indian real estate are quite related. The stock market has been witnessing a nonstop bull run for an unusually long time. During last couple of years share prices have gone beyond all expectations.

One can draw parallels between that and Japan’s real estate crash in 1991. Prior to the crash, both the stock market and the property market were on fire. Profits from the stock markets used to be transferred to the property market, and vice versa. The same thing is happening in India as well.Several mega projects offering international lifestyles are on the anvil in different cities in India.

Types of Real Estate Properties
Real estate property comes in various types with each having its own distinctive structure. There are three major property types in the real estate business. 1.Vacant Land Property Vacant land is popular with ranchers and cultivators. The extent of property is considerable and the price high. 2.Residential Properties Residential property types include: 2.1Single Family Residence Property Single-family residences are single units, typically with a front and back yard, a driveway and an attached garage. 2.2.Duplex Property A duplex is a structure designed for residential use and contains two living blocks sharing a common wall. Duplex properties may be listed residential or commercial, depending on the purposes they serve. 2.3.Condominiums Property Condominiums, or condos, are apartments that are independently owned minus a yard and with common parking facilities and offer many amenities. 2.4.Town House Property Classic townhouses are doubled storied row of homes, with common sidewalls. The living room is situated below with the bedrooms above and there is a little fenced in yard.

2.5.Manufactured Home Property Manufactured homes are erected in a factory and set up on the dwelling site. They must conform to the federal construction regulations. 2.6.Patio Home A patio home is a single story home with one joint sidewall and a patio towards the back facing the common area. Patio homes normally contain 2-4 homes in each structure and may have a backyard. 2.7.Loft Property Lofts are usually found downtown and have high roofs, huge wide windows, metal staircase and cement floors, but no yard. 3.Commercial Properties Commercial property can refer to vacant land developed for commercial use, or an already existing commercial structure(s). Specifics about certain commercial property types: 3.1.Multi-Family Property Multi-family property comprises of buildings meant for numerous family groups, leased on a permanent basis. They typically contain five or more living units with shared amenities, such as doorways, foyers, lifts, staircases and walkabouts. 3.2.Rooming House Rooming house properties usually have no more than 20 furnished units with common bathroom and kitchen facilities given out on a temporary basis. 3.3.Mobile Home Parks Property Mobile park homes are a blend of single and double spacious homes, sited in decent neighborhoods and with at least three-fourth occupancy. Depending on the surroundings and facilities provided mobile home parks are given star ratings. 3.4.Retail Space Retail space comprises of single construction taken by single or multiple tenants and exclusively meant for retail use such as sales and display of garments and electronics. 3.5.Office Buildings & Complexes This type refers to a single structure intended for office use, or a set of offices in one structure or a group of buildings and are ideally located on the main road.

3.6.Mixed-Use Properties Mixed-use properties are a blend of residential and commercial units such as a retail store and a multi-family home in the same structure. 3.7. Healthcare Properties This property type includes hospitals and nursing homes, health care centers and assisted living facilities. A license is mandatory to run the facility. 3.8.Bed & Breakfast Properties Bed and Breakfast inns are normally single buildings family units meant for temporary boarding. 3.9.Restaurant Property Restaurants are built for the making and selling of food and drinks, and include canteens, pubs, and inns. 3.10.Hotel Properties Hotel properties are constructions that provide a suite of facilities and services, typical of the hospitality industry. Hotels are classified as either Complete Service or Restricted Service. Hotels can also be affiliated to a national franchise chain. 3.11.Day Care Centers Day Care centers provide childcare, disabled, and elderly care services; or are learning centers, such as kindergartens and nurseries. They have playrooms, rest rooms, and simple kitchen amenities. 4.Industrial Property Industrial property types are designed for industrial commercial functions. They include: 4.1. Self-Storage Properties These are mini-warehouses and comprise of tiny compartments that are rented for private storage. 4.2. Warehouse Properties Warehouses are commercial buildings built for holding goods and consist of massive open inner sections. 4.3.Flex Space Properties Flex space is a blend of industrial and office property. It is an arrangement that has a workplace and display area together with the industrial area.

5. Manufacturing Property Manufacturing property is designed for producing goods for sale or lease like factories.

5.1.Cold Storage Property Cold storage property is a specialized structure that makes available storage in a chilled or icy setting. 5.2.Automotive Property Automotive structures are built specifically for the automobile industry and usually have a small office cubicle, car lifts, and overhead doors. They include repair units, used car hubs, and tier fixing facilities. Detailed study of property types and their comparative values is crucial in deciding the best option to work with and the possible monetary benefits accruing from each.

Investment properties pros & cons
In general, property is considered a fairly low-risk investment, and can be less volatile than shares (although, this is not always the case). Some of the advantages of investing in property include: 1. Tax benefits A number of deductions can be claimed on your tax return, such as interest paid on the loan, repairs and maintenance, rates and taxes, insurance, agent's fees, travel to and from the property to facilitate repairs, and buildings depreciation.

2. Negative gearing Tax deductions can also be claimed as a result of negative gearing, where the costs of keeping the investment property exceed the income gained from it.

3. Long-term investment Many people like the idea of an investment that can fund them in their retirement. Rental housing is one sector that rarely decreases in price, making it a good potential option for longterm investments.

4. Positive asset base There are many benefits from having an investment property when deciding to take out another loan or invest in something else. Showing your potential lender that you have the ability to maintain a loan without defaulting will be highly regarded. The property can also be useful as security when taking out another home, car or personal loan.

5. Safety aspect Low-risk investments are always popular with untrained "mum and dad" investors. Property fits these criteria with returns in some country areas reaching 10% per year. Housing in metropolitan areas is constantly in demand with the high purchase price being offset by substantial rental income and a yearly return of between 6% and 9%.

6. High leverage possibilities Investment properties can be purchased at 80% LVR (loan to valuation ratio), or up to 90% LVR with mortgage insurance. The LVR is calculated by taking the amount of the loan and dividing it by the value of the property, as determined by the lender. This high leverage capacity results in a higher return for the investor at a lower risk due to having less personal finances ties up in the property (80% of the purchase price was provided by the mortgagee). By choosing a property intelligently, investors can make this form of investment work for them. However, as with all investments there are some disadvantages to be aware of.

Disadvantages of investment properties 1. Liquidity It's true; you can sell the property if things go bad. However this can take many months unless you're willing to accept a price less than the property is worth. Unlike the stock market, you will have to wait for any financial rewards. 2. Vacancies There will be times when mortgage payments will need to be covered out of your own pocket due to your property being untenanted. This could just be a result of a gap between tenants or because of maintenance issues.

3.Bad tenants It's every investment property owner's worst nightmare: problem tenants. They can significantly damage your property, refuse to pay rent and refuse to leave. Disputes can sometimes take months to resolve.

4. Property oversupply In recent years, inner-city builders have created a glut of high-rise apartment blocks, resulting in fierce competition and many units being increasingly difficult to rent out.

5.Ongoing costs In addition to the standard costs associated with a property, ongoing maintenance costs, especially with an older building, can be substantial. 6. Putting all your eggs in one basket If you have all your money tied up in property, overexposure to one particular type of investment can be a dangerous thing. If the property market crashes you can stand to lose significantly. 7. Capital Gains Tax It is imposed by the Federal Government on the appreciation of investments and payable on disposal. 8. Other costs Negative gearing may offer tax deductions each financial year, however ongoing payments to cover the shortfall need to be budgeted for every month. Also, costs involved in purchasing and disposing of the property can be substantial.

Factors Affecting Investment
1.Management Outlook If the management is progressive and has an aggressively marketing and growth outlook, it will encourage innovation and favor capital proposals which ensure better productivity on quality or both.

2. Frequency of return The frequency with which the individual gets return on his investment is also very important. These have to be very carefully followed for efficient reinvestment and also for the use of the returns for various needs of the individual. 3.Liquidity The investor has to understand the needs to have money in hand for either an emergency or even a sudden change in investment strategy to earn a high rate of return on the investment.

4. Inflation Each of the persons investments have to beat the inflation rate present at that time for the return on investment to be positive. If the inflation rate is more than the return on the investment of a person, then the return is negative when inflation is taken into consideration. Any investment has to beat the inflation to be efficient. 5. Rate of Return The main reason for people investing money is to earn a high return on the investment. An individual may have various investments. Some may be fixed investments and others may be high risk equity investments. 6. Age and risk taking ability: All investment and insurance needs changes based on stage of life. Younger are able to invest in every field and able to taking risk but in old age every investor wants to invest in securities.

7. Investment horizon The length of time a sum of money is expected to be invested. An individual's investment horizon depends on when and how much money will be needed, and the horizon influences the optimal investment strategy. In general, the shorter the investor's horizon, the less risk he/she should be willing to accept.

Sources and acquisition of investment property
Real estate markets in most countries are not as organized or efficient as markets for other, more liquid investment instruments. Individual properties are unique to themselves and not directly interchangeable, which presents a major challenge to an investor seeking to evaluate prices and

investment opportunities. For this reason, locating properties in which to invest can involve substantial work and competition among investors to purchase individual properties may be highly variable depending on knowledge of availability. Information asymmetries are commonplace in real estate markets. This increases transactional risk, but also provides many opportunities for investors to obtain properties at bargain prices. Real estate investors typically use a variety of appraisal techniques to determine the value of properties prior to purchase. Typical sources of investment properties include: • Market listings (through a Multiple Listing Service or Commercial Information Exchange) • Real estate agents • Wholesalers (such as bank real estate owned departments and public agencies) • Public auction (foreclosure sales, estate sales, etc.) • Private sales Once an investment property has been located, and preliminary due diligence (investigation and verification of the condition and status of the property) completed, the investor will have to negotiate a sale price and sale terms with the seller, then execute a contract for sale. Most investors employ real estate agents and real estate attorneys to assist with the acquisition process, as it can be quite complex and improperly executed transactions can be very costly. During the acquisition of a property, an investor will typically make a formal offer to buy including payment of "earnest money" to the seller at the start of negotiation to reserve the investor's rights to complete the transaction if price and terms can be satisfactorily negotiated. This earnest money may or may not be refundable, and is considered to be a signal of the seriousness of the investor to purchase. The terms of the offer will also usually include a number of contingencies which allow the investor time to complete due diligence and obtain financing among other requirements prior to final purchase. Within the contingency period, the investor usually has the right to rescind the offer with no penalty and obtain a refund of earnest money deposits. Once contingencies have expired, rescinding the offer will usually require forfeit of earnest money deposits and may involve other penalties as well.

Sources of investment capital and leverage
Real estate assets are typically very expensive in comparison to other widely-available investment instruments (such as stocks or bonds). Only rarely will real estate investors pay the entire amount of the purchase price of a property in cash. Usually, a large portion of the purchase price will be financed using some sort of financial instrument or debt, such as a mortgage loan collateralized by the property itself. The amount of the purchase price financed by debt is referred to as leverage. The amount financed by the investor's own capital, through cash or other asset transfers, is referred to as equity. The ratio of leverage to total appraised value (often referred to as "LTV", or loan to value for a conventional mortgage) is one mathematical measure of the risk an investor is taking by using leverage to finance the purchase of a property. Investors usually seek to decrease their equity requirements and increase their leverage, so that their return on investment (ROI) is maximized. Lenders and other financial institutions usually have minimum equity requirements for real estate investments they are being asked to finance, typically on the order of 20% of appraised value. Investors seeking low equity requirements may explore alternate financing arrangements as part of the purchase of a property (for instance, seller financing, seller subordination, private equity sources, etc.) Some real estate investment organizations, such as real estate investment trusts (REITs) and some pension funds, have large enough capital reserves and investment strategies to allow 100% equity in the properties they purchase. This minimizes the risk which comes from leverage, but also limits potential ROI.

Risk management
Management and evaluation of risk is a major part of any successful real estate investment strategy. Risk occurs in many different ways at every stage of the investment process. Below is a tabulation of some common risks and typical risk mitigation strategies used by real estate investors

Risk
Fraudulent sale Adverse possession

Mitigation Strategy
Verify ownership, purchase title insurance Obtain a boundary survey from a licensed surveyor

Environmental contamination

Obtain

environmental (lead

survey,

test

for soil

contaminants

paint,

asbestos,

contaminants, etc.)

Building component or system failure

Complete full inspection prior to purchase, perform regular maintenance

Building component or system failure Overpayment at purchase

Obtain third-party appraisals and perform discounted cash flow analysis as part of the investment pro forma, do not rely on capital appreciation as the primary source of gain for the investment

Cash shortfall

Economic downturn

Tenant destruction of property

Underestimation of risk

Market Decline Fire, flood, personal injury Tax Planning

Maintain sufficient liquid or cash reserves to cover costs and debt service for a period of time, Purchase properties with distinctive features in desirable locations to stand out from competition, control cost structure, have tenants sign long term leases Screen potential tenants carefully, hire experienced property managers Carefully analyze financial performance using conservative assumptions, ensure that the property can generate enough cash flow to support itself Purchase properties based on a conservative approach that the market might decline and rental income may also decrease Insurance policy on the property Plan purchases and sales around an exit strategy to save taxes.

Scope of Real Estate
In India, small real estate investors currently do not have as much scope as institutional investors. They can hold multiple properties, but banks will generally not fund beyond a second home loan. That does not mean they cannot invest beyond that from their personal accruals. They certainly have the option of investing in rent-generating assets, which can fetch very decent returns if they have been purchased wisely.

Despite the present limitations for small investors, a property investment can give the buyer protection against inflation. Like gold, real estate tends to retain its intrinsic value. However, unlike with gold, it is possible to earn a regular income on it.

REVIEW OF THE LITERATURE
Sullivan and Ross (1999) the senior investment market is expanding as a large segment of investors. Age is predictive of investment clients' attitudes and behavior. They concluded that older clients tend to be frugal, regard investing in the stock market as an emotionally threatening experience, and want firm recommendations from their financial advisors. Kaplan (1999) indicated that most seniors want help and information in order to understand their investment choices. Different asset allocations have been recommended across age groups (Stovall, 1997). Likewise, Weil (1999) and Bakshi and Chen (1994) investigated life-cycle investments. Less risk was recommended for older investors. Moreover, the literature seems to suggest that conservative investing and guidance from the financial advisor are needed for older clients.

Greco (1991), Marsh (1998), and Schumell (1996) that the women's investment market is increasing although men have traditionally controlled most of the wealth but women's financial holdings are on the rise. Smith Barney noted that the percentage of women clients jumped from 28% in 1995 to 40% in 1997. Marsh, 1998; Schumell, 1996). Greco (1991) and West (1996) reported that women are often unprepared to manage finances. They need education and want to trust and learn from their investment advisor. Women may also be more cautious and trade less than men (Barber &Odean, 2001). Thus, the women's market may require substantial time and service from financial advisors and brokers.

Wang (1994) according to this study, sales representatives at brokerages take female investors less seriously than men. The brokers studied tended to spend more time with men and recommend higher risk and return investments to men. Jacobius (2001) reported that women are less involved with their retirement accounts than are men. Conversely, Friedman (1996) contended that baby boomers and women are gaining financial sophistication. Women are developing the ability to distinguish between levels of investment service quality. Inadequate broker attention and recommendations could lead to dissatisfaction on the part of knowledgeable women clients, which in turn may cause brokers to lose clients from this market segment.

Shukla Ravi (2004), analyses the value of interim portfolio revision, an integral component of active management of mutual funds by comparing the returns on actively managed mutual fund portfolios with the returns the fund portfolios would have earned had there been no interim revision. The results show that, on an average, excess returns from interim portfolio revision do not cover the incremental trading costs, even over holding periods as long as 6 months. Across mutual funds, we find evidence of a positive relationship between the excess returns and mutual fund expense ratios suggesting that those managers who generate higher excess returns charge higher fees from the stockholders.

Robert A. Olsen , 2001, O'Barr and Conley according to the author this article suggests that, even with equivalent training, experience and information, investment managers make different decisions based on identifiable cultural differences. This study focuses on professional men and women investment managers who perceive and respond to risk differently. Author suggests cultural factors may be responsible for this risk related gender effect. There is extensive evidence that when faced with social and technological hazards, women are more risk averse than men.

Tahira K. Hira and Cazilia Loibl,2008, Gender Differences in Investment Behavior The objectives of this chapter are to identify significant personal and environmental factors that influence investment behavior and to specify the investment decision-making process, particularly with respect to female investors. It is expected that the results presented here will help readers to consider new approaches to investment education. Specifically, this chapter aims to: (a) explore differences between men and women in a variety of financial behaviors, investment decision-making process; (b) identify patterns of investment involvement and learning preferences; and (c) determine socio-economic and behavior factors that explain gender differences in specific investment behavior (portfolio diversification).

According to Ronald &lisa (1998) This paper examines the extent to which real estate returns are driven by continental factors. This subject is relevant for determining the country allocation of international real estate portfolios. If returns are driven by a continental factor, investors should look for diversification opportunities outside their own continent. This paper finds strong continental factors in North America and especially in the United States. For the Asia–Pacific

region, real estate returns are not driven by a continental factor. The results suggest that, for European, North American and Asia—Pacific real estate portfolio managers, the Asia—Pacific region provides attractive international diversification opportunities.

According to Robert A. Nagy and Robert W. Obenberger (1994) Previous studies of retail investor behavior have examined motivation from economic perspectives or studied relationships between economic and behavioral and demographic variables. Examination of the various utilitymaximization and behavioral variables underlying individual investor behavior provides a more comprehensive understanding of the investment decision process. These variables can be grouped into seven summary factors that capture major investor considerations. Data collected from a questionnaire sent to a random sample of individual equity investors with substantial holdings in Fortune 500 firms reveal that individuals base their stock purchase decisions on classical wealth-maximization criteria combined with diverse other variables. They do not tend to rely on a single integrated approach.

RATIONALE OF THE STUDY
There are various segments of investors according to age, occupation, annual income etc. Different type of investors wants to invest indifferent sectors such as gold, insurance policies, mutual funds, silver, , national saving certificate, fixed deposit, real estate etc. The real estate investor has a bit more control over the risks to that cash flow also and property is considered a fairly low-risk investment, and can be less volatile than shares. This research will help us to understand investor’s perception toward the real estate investments. And the factors in which attention should be focused to increase number of investors in real estate.

OBJECTIVE OF THE STUDY
To Study the factors Influencing Real estate Investment decisions.

RESEARCH METHODOLOGY
1. THE SAMPLE The present research is to be conducted on a sample of 100 prospective customers.

Population:Our populations are the investors of real estate in Indore.

Sample Size:We have used a small number of items or a small portion of a population to draw conclusions regarding the whole population. Our sample size is 100 respondents.

2. THE TOOLS FOR DATA COLLECTION  Collection of Data As there are several research techniques, there are a number of data collection methods as well. 

Secondary Data- A secondary data is concerned with the analysis of already existing data that is related to the research topic. We have gathered data from books, journals, articles, through internet.

Primary Data- Primary data is that data which is collected directly from respondents using data collection methods like survey interviews, questionnaires, direct observation, or charts. We have collected primary data through questionnaires.

For the analysis of the data collected, various statistical tools as well as SPSSsoftware was used as per the requirements.

LIMITATIONS
In spite of every care taken on the part of the researcher there are certain limitations which could not be overcome: • • Sample size is limited to 100 customers and may not adequately represent the whole

market. The research is confined to a certain part of Indore.

The above are some of the aspects which posed real problems in the way of completion of the research work but the majority of respondents were cooperative.

Data Analysis & Interpretation

Graph Analysis
The present research is conducted on a sample of 100 of prospective customers. The brief diagrammatic descriptions of each of respondents are as follow:Q1. Are you interested to invest money in Real Estate?
0% 8% 22% 32% Strongly Agree Agree Neutral 38% Disagree Strongly Disagree

After study we found that 0% investors are strongly disagree, 8%people are disagree, 22%people are neutral, 38%people are agree and 32%people are strongly agree with the statement.

Q2. Investment based on profit percent?

5% 1% 15% 30% Strongly Agree Agree Neutral 49% Disagree Strongly Disagree

After study we found that 1% investors are strongly disagree, 5%people are disagree, 15%people are neutral, 49%people are agree and 30%people are strongly agree with the statement. Q3. Real Estate is better option for investors?

3% 8% 22% Strongly Agree Agree Neutral 35% Disagree Strongly Disagree

32%

After study we found that 3% investors are strongly disagree, 8%people are disagree, 32%people are neutral, 35%people are agree and 22%people are strongly agree with the statement.

Q4. Real Estate investment giving high return.

0% 12% 24% 32% Strongly Agree Agree Neutral 32% Disagree Strongly Disagree

After study we found that 0% investors are strongly disagree, 12%people are disagree, 24%people are neutral, 32%people are agree and 32%people are strongly agree with the statement. Q5. Real Estate investment is safe investment?

1% 15% 21% Strongly Agree Agree Neutral 40% Disagree Strongly Disagree

23%

After study we found that 1% investors are strongly disagree, 15%people are disagree, 23%people are neutral, 40%people are agree and 21%people are strongly agree with the statement.

Q6.Location influences the investor’s perception towards the investment?

4%

4% 39% Strongly Agree Agree Neutral 30% Disagree Strongly Disagree

23%

After study we found that 4% investors are strongly disagree, 4%people are disagree, 23%people are neutral, 30%people are agree and 39%people are strongly agree with the statement. Q7. Price play important role in Real Estate investment?

2% 7% 16% 30% Strongly Agree Agree Neutral 45% Disagree Strongly Disagree

After study we found that 2% investors are strongly disagree, 7%people are disagree, 16%people are neutral, 45%people are agree and 30%people are strongly agree with the statement.

Q8. Economy growth affects the Real Estate investment?

2% 12% 30% Strongly Agree Agree 30% 26% Neutral Disagree Strongly Disagree

After study we found that 2% investors are strongly disagree, 12%people are disagree, 30%people are neutral, 26%people are agree and 30%people are strongly agree with the statement. Q9. Volatile market affected investment decision in Real Estate.

11% 20%

20% Strongly Agree Agree 23% Neutral Disagree Strongly Disagree

26%

After study we found that 11% investors are strongly disagree, 20%people are disagree, 26%people are neutral, 23%people are agree and 20%people are strongly agree with the statement.

Q10. Real Estate is low risk investment?

1% 19% 18% Strongly Agree Agree 24% 38% Neutral Disagree Strongly Disagree

After study we found that 1% investors are strongly disagree, 19%people are disagree, 24%people are neutral, 38%people are agree and 18%people are strongly agree with the statement. Q11. Interest rate have major impact on the Real Estate Investment?

0% 11% 23% 20% Strongly Agree Agree Neutral 46% Disagree Strongly Disagree

After study we found that 0% investors are strongly disagree, 11%people are disagree, 23%people are neutral, 46%people are agree and 20%people are strongly agree with the statement.

Q12. Government policies affect the Real Estate investment?

8% 18%

23%

Strongly Agree Agree

17% 34%

Neutral Disagree Strongly Disagree

After study we found that 8% investors are strongly disagree, 18%people are disagree, 17%people are neutral, 34%people are agree and 23%people are strongly agree with the statement. Q13. Tax benefit is a very important aspect when a person invests his money.

10% 14%

7%

24%

Strongly Agree Agree Neutral

45%

Disagree Strongly Disagree

After study we found that 7% investors are strongly disagree, 10%people are disagree, 14%people are neutral, 45%people are agree and 24%people are strongly agree with the statement.

Factor Analysis
Total Variance Explained Initial Eigen values Component Total 1 2 3 4 5 6 7 8 9 10 11 12 13 2.625 1.888 1.550 1.248 1.031 .970 .842 .657 .593 .470 .425 .356 .344 % of Variance 20.195 14.526 11.927 9.601 7.931 7.463 6.475 5.056 4.558 3.614 3.266 2.738 2.648 Cumulative % 20.195 34.721 46.648 56.249 64.181 71.644 78.119 83.176 87.734 91.348 94.614 97.352 100.000 Extraction Sums of Squared Loadings Total 2.625 1.888 1.550 1.248 1.031 % of Variance 20.195 14.526 11.927 9.601 7.931 Cumulative % 20.195 34.721 46.648 56.249 64.181

Rotated Component Matrixa
Component 1 VAR00012 VAR00009 VAR00008 VAR00007 VAR00013 VAR00002 VAR00006 .805 .754 .725 .570 .155 -.061 -.248 2 .207 -.039 -.171 .112 .809 .683 .514 3 .031 .020 -.041 .149 -.146 -.066 .483 4 .048 -.016 .268 -.146 -.002 .135 -.294 5 -.042 .228 -.086 .159 -.127 .489 .156

VAR00011 VAR00005 VAR00010 VAR00001 VAR00003 VAR00004

.242 -.014 .184 -.076 .148 .195

.435 .084 -.343 .043 .035 -.016

.391 .719 .715 .156 .010 .111

.213 .326 -.053 .809 .688 .074

-.121 .176 -.038 -.104 .314 .852

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization a. Rotation converged in 8 iterations.

Variable Number
VAR00001 VAR00002 VAR00003 VAR00004 VAR00005 VAR00006 VAR00007 VAR00008 VAR00009 VAR00010 VAR00011 VAR00012 VAR00013

Variable Name
Interest Profit Percent Better Option High Return Safe Investment Location Price Economic Growth Volatile Market Low Risk Interest Rate Government Policies Tax Benefit

Grouping of Variables:
Groups Group 1 Group 2 Groups Variables Total load of Group Variable 12 + Variable 9 + Variable 3 + 0.356+0.593+0.657+0.842=2.448 Variable 7 Variable 13 + Variable 2 + Variable 6 + Variable 11 Variable 1+ Variable10 Variable 5 + Variable 8 Variable 4 0.344+1.888+0.970+0.425=3.627

Group 3 Group 4 Group 5

1.031+0.470=1.501 2.625+1.550=4.175 1.248

Analysis:On the above basis it can be concluded that all the variables of group 1, that is Government Policies, Volatile Market, better option , Price, have load of 2.448, and group 2 that is Tax Benefit, Profit Percent, Location and Interest Rate have load of 3.627 and group 3 that is interest, Low Risk have load of 1.501 and group 5 that is High Return have load of 1.248. But variables of group 4 that is economic growth and safe investment have been adopted more significantly with maximum load of 4.175. So we can understand from the result that variables like and economic growth and safe investment is more important while taking decision regarding real estate investment.

CONCLUSION
It can be concluded from the study that factors which can influence the decision regarding real estate investment are divided into five different groups and first group include four factors which highly affect the real estate investment decision. These are better option, Price, Volatile Market, and Government Polices. Most of the investors depend upon it. Second group also have four factors which affected the investor’s perception less than first group. These factors are Tax Benefit, Interest Rate, Location and Profit Percent. The third group is low affective then the second group. This group have only two factors. These are Low Risk and interest.Only two factors are present in fourth group that is safe investment and economic growth. Data analysis result shows that these factors are moreaffective in Real Estate investment. Group five have only single factor High Return. This has negligible affect because most of the investors know that it is possible only in long term investment. All the factors affects investment decision but economic growth and safe investment factor are more affective towards the real estate investment decision. For investors, a property investment can give the protection against inflation.From the research study It can beconcludedthat Real estate is a great investment option. It can generate an ongoing income source. It can also rise in value overtime and prove a good investment in the cash value of the home or land that you buy. However you need to be sure that you are ready to begin investing in real estate.

BIBLIOGRAPHY Books Referred:
Boo

 Dr. Jai Narain Sharma, The discipline and its Dimension, Deep & Deep Publications Pvt. Ltd., New Delhi.  R. Panneersevam, Prentice-Hall of India Pvt. Ltd, New Delhi, 2008.

 Dr. S. Shajahan, Research Methods for Management, 2nd Edition, 2004.

Websites:
 www.valueresearchonline.com  http://www.ebook3000.com/Investment-Analysis-and-Portfolio-Management--Solutions-Manual_html  http://www.wepapers.com/Papers/Investment_Analysis_and__Portfolio_Management  http://www.experiment-resources.com/research-methodology.html  http://www.saching.com/Article/Factors-that-can-affect-investment-decisions-formaximum-return-on-investment

Search Engines:
 www.yahoo.com  www.google.co.in  www.rediff.com

Appendix

QUESTIONNAIRE
We are approaching you with this questionnaire to know your Perception towards the Real Estate investment‖. The information provided by you would be kept confidential and will be used for academic purpose only. Kindly tick your choice against each statement. Name : ___________________________________________________________ Gender : __________________________________________________________ Age : ____________________________________________________________ Qualification : _____________________________________________________ Income Status : ____________________________________________________

S. NO. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

Statements

Strongly Agree (5)

Agree (4)

Not Sure (3)

Disagree (2)

Strongly Disagree (1)

Are you interested to invest money in Real Estate Investment based on profit percent. Real Estate is better option for investors. Real Estate investment giving high return Real Estate investment is safe investment Location influence the investors perception towards investment Price play important role in Real Estate investment Economy growth affect the Real Estate investment. Volatile market affected investment decision in Real Estate. Real Estate is low risk investment Interest rate have major impact on the Real Estate investment Government policies have a important affect to invest in Real Estate. Tax benefit is a very important aspect when a person investshis money.

13.

.