BALAJI INSTITUTE OF INTERNATIONAL BUSINESS

PROJECT REPORT
ON
A STUDY TO UNEARTH FACTORS AND CHALLENGES FACED BY CBRE’S
RESIDENTIAL TEAM TO TAP PUNE’S RESIDENTIAL MARKET.

PREPARED FOR

CBRE
SUBMITTED IN THE PARTIAL FULFILLMENT OF THE PGDM DEGREE
COURSE OF BALAJI INSTITUTE INTERNATIONAL BUSINESS (BIIB)

Submitted by:
JAICE JACOB
PGDM-IB
(IB1816114)
2018-2020

BALAJI INSTITUTE INTERNATIONAL BUSINESS (BIIB) S. No. 55/ 2-7, Tathawade,

Off Mumbai Bangalore, Bypass, Tathawade, Pune, 411033.
INTERNSHIP COMPLETION CERTIFICATE
 CERTIFICATE

This is to certify that the report titled “A STUDY TO UNEARTH FACTOR AND
CHALLENGES FACED BY CBRE’S RESIDENTIAL TEAM TO TAP PUNE’S
RESIDENTIAL MARKET.” that is being submitted by “JAICE JACOB” is in
partial fulfilment of the requirements for the award of POST GRADUATE
DIPLOMA IN MANAGEMENT, is a record of bona fide work done under
my guidance. The contents of this report, in full or in parts, have neither been
taken from any other source nor have been submitted to any other Institute or
University for award of any degree or diploma and the same is certified.
 ACKNOWLEDGMENT

I would like to express my deepest appreciation to all those who provided me the
opportunity to complete this report. I would like to give a special gratitude to CBRE,
for providing me opportunity to conduct research study, Mr. Vikram Singh
(Director, Residential Team, Pune), Mr. Gourav Gupta (Primary Sales Head,
Pune), and important Team Members of Residential Verticals i.e. Mr. Yogesh
Yadav, Ms. Priyanka Nidhalka Mr. Ravi Rupak Sinha, Mr. Prakar Tandon,
Mr. Rakshit Singh, and also Mr. Rahul & Mr. Harsh who gave necessary
guidance and information to complete the research study.
 DECLARATION

I, JAICE JACOB, student pursuing PGDM under Balaji Institute of

International Business (BIIB) of Sri Balaji Society, Pune (2018- 2020)
hereby declare that all the information furnished in this internship report
is based on my own intensive research and is genuine.

This report does not, to the best of my knowledge, contain any part of my
work, which has been submitted for the award of degree either of this
institute or any other institute/university without proper citation.

Date: JAICE JACOB

Place: Pune (BIIB-IB1816114)
 1. Executive Summary

This study is an attempt to unearth factors and challenges encountered by CBRE,

Pune’s residential team while attempting to capture Pune’s residential consultancy
market.

Using secondary data in the initial stages it is shown that how huge the real estate
consultancy world is, by mentioning the revenues of all the big real estate
consultancy giants, also known as International Property Consultants (IPC). Then it
mentions the contribution that APAC (All countries in Asia and Australasia and the
Pacific island nations) is making to the whole revenue so generated. Then it’s been
analyzed that Indian market of real estate is very substantial and overlooking
residential sector of India’s market would be a blunder, as 80% of the Indian real
estate market constitutes residential sector. Thus, initial stage of the report the
showcase the importance of residential sector of India.

Second stage of study is to understand the challenges faced by CBRE, Pune’s

residential vertical to tap the specified market. In order to analyze the situation, the
satisfaction level of existing customers who used the services of CBRE within last
3-4 months is checked by collecting primary data. The satisfaction level of
customers will prove whether there is any fault from the part of team who is working
in residential vertical of CBRE Pune or not. While analyzing that it was found that
customers are more than satisfied with the CBRE team they dealt with.

As the customers were more than satisfied therefore study further was trying to
detect the actual pain areas. And it was found that more than 90% of the existing
customers who recently took CBRE’s services were the ones who took CBRE’s
services for the first time.
So awareness was a crucial factor that CBRE was lacking in Pune’s residential
sector. Further analysis showed that the local competitors were very much equipped
and were aggressive towards capturing this residential market. A glimpse of it is
shown in the report, where SMS, calls, follow ups and feedback mechanism were
greatly supporting them, ultimately taking over Pune’s residential real estate
consultancy market. All these analysis and the study done points out the area which
should be concentrated to capture the Pune residential market.
 2. INDUSTRY SCENARIO

The real estate (RE) industry seems to be on an accelerating disruption curve highlighted
by rapid changes in tenant dynamics, customer demographic shifts, and ever increasing
needs for better and faster data access to allow improved service and amenities.

Operating in a new world

The regional Emerging Trends in Real Estate reports, published towards the end of 2018,
all shows that obsolescence is a growing concern for asset owners across the globe, against
the backdrop of rapid changes in technology, demography and social norms.
Technology, particularly mobile technology, has put much more power in the hands of the
consumer, which is driving change across all sectors. And as new generations become
workers and consumers, different social values and choices are influencing where and how
people work and shop – and underpinning the rise of the shared economy.

Assets will need to be adapted to meet the needs of the people using them more effectively,
or converted to entirely new uses. Real estate owners will need to become operational
businesses, and learn very different skills than they required even five years ago. At the
heart of this will be understanding what the person using a building wants and delivering
it seamlessly.

The challenges do vary, according to sector, but all are affected by the possibility of
accelerated obsolescence. Retail and hospitality have been in the eye of the storm for some
time; offices are closer to the beginning of the revolution. The residential and industrial
sectors seem to be more insulated from change because of the positive balance between
supply and demand. Industrial is perhaps storing up problems for the future around the
design of buildings in sectors where the technology of the occupier is advancing rapidly.
INDIA

Government’s renewed focus on affordable housing, game changing regulatory reforms,

and infrastructure status to warehousing, business sentiment has been positive. The private
equity investments in Indian real estate improved 15 per cent year-on-year in January-
March 2018 reaching USD3 billion1 billion and are estimated to grow to USD100 billion
by 20262 with tier 1 and 2 cities benefiting the most in future.

Indian Real Estate market size

RS. 8, 53, 080 Cr. (2017)

Real estate sector is estimated to grow to USD 650 billion by 2025 and surpass USD850
billion by 2028 – driven by emerging asset classes such as affordable housing and co-
working spaces.

The Indian Real Estate sector is one of the most globally recognized sectors. It
compromises sub sectors like – Housing, Retail, Hospitality and Commercial. The growth
of this sector is well complemented by the growth of the corporate environment and the
demand for office space as well as urban and semi-urban accommodations.
The construction industry ranks 3rd among the 14 major sectors in terms of direct, indirect
and induced effects in all sectors of the economy. It is also expected that this sector will
incur more non-resident Indian (NRI) investments in the near future, as a survey by an
industry body has revealed a 35 percent surge in the number of enquires with property
dealers. Pune is expected to be the most favored property investment destination for NRI’s,
followed by Ahmedabad, Bangalore, Chennai, Mumbai, and Delhi.

The real estate sector is a critical sector of our economy. It has a huge multiplier effect on
the economy and therefore, is a big driver of economic growth. It is the second largest
employment generating sector after agriculture. Growing at a rate of about 20% per annum
and this sector has been contributing about 5-6% to India’s GDP.
Stabilization of the formation and implementation of the Real Estate (Regulation and
Development) Act, 2016 (RERA), exemption of inventory tax from one to two years in the
Annual Union Budget of 2019 and the Goods and Services Tax (GST) rate rationalization
have together contributed to boosting the current stakeholder sentiments.

FUTURE SENTIMENT SCORE

The future sentiment score maintains its positive spell and has come back to 63 points in
our survey findings of Q1 2019. The stakeholders are of the opinion that the transparency
brought in by the enormous structural reforms have fundamentally changed the dynamics
of the real estate sector for the better. The stakeholders are positive of the outcome of the
governments’ efforts to ease the burden of developers by acknowledging the slowdown in
the sector. This has boosted the stakeholder sentiments for the coming six months. The
rationalization of the GST rate to 5% for under-construction flats and 1% for the affordable
housing sector has also played a significant part in bolstering real estate sentiments for the
coming six months.
The future sentiment score for north has
regained optimisms and is in the positive in
Q1 2019 after going in the red in the
preceding quarter. • The stakeholders opine
that though the market is reeling under
inventory pressures and low buyer
confidence, what brings respite to the
matter is that now all developers have
aligned their business with RERA and GST,
which is leading to the rapid consolidation
and filtering of the market in Gurugram in
Haryana and Noida and
Greater Noida in Uttar Pradesh, which form
the major portion of the real estate chunk of
the National Capital Region.
• Stakeholders from south, east and west
zones have always remained in the
optimistic zone for the past many quarters
and continue their momentum in the first
quarter of 2019 as well.

The sentiment score of the developers regards the real

estate scenario for the coming six months has
significantly inched upwards in Q1 2019. Over the past
quarter the real estate sector has witnessed changes like
the implementation of the new GST structure,
exemption from paying notional rent and the
incentivized push to affordable housing that has helped
in positively impacting the market sentiments. • Coupled
with this, the stakeholders see the reduced repo as a
positive move by the banking regulator, which will
provide the developers with the much-needed funds to
execute their projects and give a boost to sales by
attracting the fence sitting buyers. • Sentiments of the
financial institutions for the real estate scenario for the
coming six months has remained somewhat steady in Q1
2019 and is in line with the preceding quarters.

# Source: 2018 Real Estate Outlook: Optimize opportunities in an ever-changing environment-Deloitte

report.
Reforms taken by Indian government:

RERA: Real Estate Regulatory Authority, 2016

Indian Accounting Standard (Ind. AS) 115
Insolvency and Bankruptcy Code
 MARKET SCENARIO

Developers splitting their projects into smaller phases in order to reduce completion
time, inventory overhang and manage cash flows. Additionally, end buyers are
seeking security in their investments, hence prefer to choose a developer with strong
credentials and track record of delivery.

Real estate is also a deeply local business and each market operates with its own set
of idiosyncrasies, hence, it is important to understand these further. The market has
observed a steady increase in sales as buyers seem to prefer well designed and
planned compact apartments. A few developers are going the extra mile to provide
furnished units with fixture to drive sales. Today, developers are embracing
technology to reach their target audience and increasingly sales are taking place
through digital and social platforms.

Additionally, real estate broking and advisory firms are playing a key role in aiding
developers outsource their sales function so that they can focus on their core
developmental expertise. Moreover, sometimes when the buyers offer to pay large
amounts of cash, they get huge discounts. The cash input in property transactions is
expected to go down now with the governments – surgical strike- on black money.
In the short run, this is going to result in a fall in both the land prices and the deals
that take place. Over time, the property developers could very well be forced to slash
down property prices due to the high inventory and corresponding cash crunch. This
suits all buyers and in the long term is expected to bring in the sense of stability in
the ever fluctuating property market.
Indian real estate sector has witnessed lot of changes due to spate of structural
changes and policy reforms done by Government of India in past few years. We can
get its glimpse by understanding the numbers. Around 1.26 Lakh housing unit were
launched and there was 2.03 Lakh unit sales in 2017. This state was all time low
since 2012. However this turmoil was not unexpected as the Indian residential real
estate sector has been witnessing a downward pressure since 2015 and the
developers have been grappling with subdued demand since then. Indian
government took decision of introducing RERA for transforming real estate market,
making it transparent and buyer-friendly.

Transparency has increased in a remarkable scale due to RERA and GST, by making
this sector more organized and curbing black money inflow in the ecosystem.

RERA was a real game changer for Indian real estate. This Act not only aims to
promptly resolve the issue of long-suffering homebuyers but also to do away with
the multiple layers of information-often inaccurate or misleading-on project details,
delivery timelines, developer's track record, litigations, etc. available in the public
domain. Moreover, the stringent execution norms under RERA have put developers
on the back foot; subsequently, 2017 witnessed fewer launches and a higher
emphasis on timely delivery of under-construction projects.

The continued thrust on affordable housing showed visible results in 2017. The top
7 Indian cities recorded almost 44% new supply of units priced within the budget of
INR 40 lakh. 41% of the overall sales in 2017 were in this vital segment.
The Government’s 'Housing for All by 2022 initiative took center-stage in 2017 and
enticed several stakeholders to participate in this ambitious mission.

Residential sector is crucial:

Residential segment contributes nearly 80 per cent5 to the overall real estate development
in the country. So far, 2018 has been a mixed year for the segment, while on one hand the
policy push for affordable housing is reviving the segment from the downfall witnessed
over the last few years in terms of both new launches and sales, but buyers are still being
cautious while investing money in residential properties. Lifestyle or premium housing
remains sluggish while affordable housing, as a segment, is increasingly gaining traction.
Launches within the price range of INR4 million were the highest during 2017 and 20186.

Affordable Housing, Housing For All:

The housing shortage in India stood at 63 million units in 201220. While the overall
demand continues to swell, affordable housing has emerged as a trigger for the sector’s
overall growth, driven by the Central Government. The government has taken an
aggressive stance to promote affordable housing in the country. It launched an initiative,
’Housing for All by 2022’, or Pradhan Mantri Awas Yojana (PMAY, Urban and Grameen)
with a goal of building 20 million affordable houses by 31 March 2022 for urban poor
through financial assistance of INR2 trillion (USD29 billion)21. As part of the initiative,
the government granted infrastructure status to enable affordable projects to avail benefits
such as lower borrowing rates, tax concessions (100 per cent tax immunity for developers)
and increased private investment.

List of RERA registered projects and agents in Pune

Approved projects 5,151
Approved agents 3,020

The company will hire more people and set up offices in new cities to expand presence and
tap huge opportunities in India's housing brokerage market estimated at about RS. 18,000
crore, he added.
Our aim is to capture 10 per cent of housing brokerage market in the next five years,
India residential market

Pune
Notes: LIG – low income group, MIG - middle income group, HIG - high income group

Source: Cushman and Wakefield, ANAROCK property consultants

 COMPETITORS ANALYSIS

Particulars CUSHMAN AND COLLIERS INTER- KNIGHT FRANK

CBRE JLL WAKEFIELD NATIONAL
(Jones Lang LaSalle)

Formed 1906 1783 1917 1972 1896

Mr. Robert E. Sulentic Mr. Christian Ulbrich Mr. Brett White Mr. Jay S. Hennick Mr. Alistair Elliott
Leadership
(President and CEO, (President and Chief (Executive (Chairman & CEO) (Group chairman
CBRE Group, Inc.) Executive Officer) Chairman & CEO) and senior partner)

Global $ 21.34 Billion $16.3 Billion $8.22 Billion $3.3 Billion $ 0.738 Billion
Revenue RS. 1, 51,706.69 Cr. RS. 1, 15,876.7 Cr. RS. 58,435.98 Cr. RS. 23,459.7 Cr. RS. 5,246.158Cr.

* * *
Revenue- $ 0.42 Billion $0.58 Billion Not able to Get Not able to Get Not able to Get
India RS. 2,974.34 CR. Rs.4,126.06 CR. (8.9% data data data
(2.0% of total Global -Global revenue)
revenue)

Geographi Americas-61.54% Americas - 55.41% Americas- 69.40% Americas- 56.00% *

cal EMEA - 25.61% EMEA - 21.44% EMEA -12.20% EMEA - 22.00% Not able to Get
Segments APAC - 10.34% APAC - 19.9% APAC -18.40% APAC - 19.00% data
Global Invest. LaSalle, Invest.
Mang. - 02.04% Investment Mang. - 03.00%
Develp. Management
Services - 00.47% - 3.25%

Employees
(Global) 90,000 + 90,000+ 51,000 + 17,300+ 18,000+

Offices in
World 480 299 400 311 523

Presence in
no. of 100 80 70 68 60
countries (35 countries. Not (territories)
including affiliates)

 2018: 1USD = Rs.71.09 (Average of July-December 2018)

 Americas- US, Canada, other Latin America.
  EMEA-Europe, Middle East and Africa,
 APAC/ Asia-Pac/ AsPac- all countries in Asia and Australasia and the Pacific island nations (Marshall Islands, Solomon Islands).

COMPARISON ON THE BASIS OF REVENUE:

 Company’s Profile

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in
Los Angeles, is the world’s largest commercial real estate services and investment firm
(based on 2018 revenue). The company has more than 90,000 employees (excluding
affiliates), and serves real estate investors and occupiers through approximately 480 offices
(excluding affiliates) worldwide. CBRE offers a broad range of integrated services,
including facilities, transaction and project management; property management;
investment management; appraisal and valuation; property leasing; strategic consulting;
property sales; mortgage services and development services.

It has risen to #146 on the Fortune 2019 list of the 500 largest U.S.-based public companies.
The company’s position rose from 2018, when it was ranked at #207.

“Our continued rise on Fortune’s prestigious list is a testament to our people and their
intense focus on delivering great outcomes for our clients,” said Bob Sulentic, president
and chief executive officer of CBRE.
CBRE provides a broad range of commercial real estate services on a global basis. The
company was responsible for more than $380 billion of property sales and lease
transactions in 2018 and manages more than 6.1 billion sq. ft. of commercial properties
and corporate facilities. The company also operates the largest commercial real estate
development company in the U.S. (Trammell Crow Company), one of the world’s largest
real estate investment management businesses (CBRE Global Investors) and a growing
flexible-space solutions business (Hana).

CBRE was the first International Property Consultancy to set up an office in India in 1994.
Since then, the operations have grown to include more than 8,000 professionals across 10
offices with a presence in over 80 cities in India. As a leading international property
consultancy, CBRE provides clients with a wide range of real estate solutions, including
Strategic Consulting, Valuations/Appraisals, Capital Markets, Agency Services, Asset
Services and Project Management.

The guiding principle at CBRE is to provide strategic solutions that make real estate
holdings more productive and economically efficient for its clients across all service lines.
With this development, CBRE became the first real estate services firm with a platform to
deliver integrated real estate services-through one commonly owned, commonly managed
company-across the world’s major business capitals.

In 2003, CBRE acquired Insignia Financial Group and became the leading real estate
services firm in New York and London.

In June 2004, CBRE completed a successful initial public offering and began trading its
Class-A Common Stock on the New York Stock Exchange and was added to the S&P 500
in 2006.

In late 2006, CBRE acquired Trammell Crow Company to create a real estate services firm
with unprecedented scale, scope and service offerings. In particular, CBRE became the
global leader in the provision of outsourcing services to major occupiers, including
corporations, healthcare organizations and public-sector institutions. The company has
been consistently ranked the #1 provider of real estate outsourcing services by the
International Association of Outsourcing Professionals.

In 2011, CBRE attained leadership in another key business segment acquiring the majority
of the real estate investment management business from Nether lands based ING Group,
N.V. The acquisition created an enterprise with approximately $90 billion of investment
assets under management. The company also changed its name to CBRE Group Inc. that
year in order to better align its identity with its industry leading brand.
 Let’s analysis the brokers dealing mainly in residential sector and analyze the service
provided by them.

Comparative Analysis (Residential Sector)

Particulars Prop tiger ANAROCK Square Yard 360 Realtors

(an online real estate

advisor)

Incorporation 2006 2011 2013 2017

Mr. Dhruv Agarwala, Mr. Anuj Puri Ms. Kanika Gupta & Mr. Ankit
Mr. Kartik Varma, Tanuj Shori Kunsal
Leadership Mr. Prashan
Agarwal (Group chairman and (Co-founders of Square
Former chairman and Yards.)
(Co-Founders) country head of JLL
for (10 years) )

No. of
Employees 1,750 1,500 1,400 1,000

Unit sold 73,691 units 12,000 units Not able to get data 4,023 units

Units worth RS. 2,500 Cr. RS.10,000 Cr. RS. 5,000 Cr. RS. 2,682cr

Offices 8+ 15 32 50

Revenue RS. 56.87 Cr. RS. 188Cr. RS. 156Cr. RS. 152Cr.
(Approx.) (2018-19)

Revenue 40% 119% 107% 46%

Growth (During H1 2018) (Comparing 2018-19 to (international real
2017-18) estate arm)
*H1- Half
According to Colliers International report on “Digital real estate: Winning the Indian
market with Data”, following findings are revealed:

(i.) Average age of a home buyer:

The average age of a home buyer has come down to about 30 years from the
earlier 50 years. This has happened majorly due to improvement in monthly
income and lowered cost of borrowing.
(Source: Colliers market research)

(ii) Millennials make up a sizeable portion of the Indian population. 82% of

Indian millennials stay with their parents and more than 23% of these are likely
to move out of their family homes within the next two to five years. 65% of
the millennials aspire to buy a property in the future.
(iii) More than ever, people are heading online to find homes and offices to
rent and buy. With the ever increasing opportunity, realtors and builders simply
cannot miss the opportunity to get themselves in front of a high-value audience.

(iv) It’s crucial to use analytics to predict and meet the demands of the
expanding digital audience, and get your brand in front of them in the correct
digital channels.

 More than 70% of the respondents found the reality of the project to be
fairly same and even exactly same (7 out of 56) with the expectations
 that was build up by the CBRE team. However 12 respondents out of 56
were having different views.

Therefore the team was able to build correct image about the project.
And less gap was there between expectation and reality of the project.

 The team was having all the major qualities. As majority of the
respondents gave 4 stars to Activeness, Comfort, Knowledgeability, and
Promptness. And even the Promptness and Convincing skills of the team
was awarded 5 stars by 11 and 19 respondents respectively.

So required by a sales team. However a little area of building trust with

customer is there.

 Promptness and brand name is considered as important factors by the

buyers while they choose the consultancy firm or individual consultants.

 The customers were more than satisfied with the services given by
CBRE. They have given overall rating of 7.2 out of 10 to CBRE for their
services.

 Despite being the giant real estate consultant, only 7% of people who
purchased the property in Skyways Scerino, were aware about CBRE.

As per the study there will be huge demand of residential apartments as
65% of the millennials will be aspiring to buy property and that to a
major clunk (i.e. 23% of them who stay with their parents ) of them
would likely to move out in next few years.


Aggressive strategies were been adopted by other consultants of
residential sector like 360 realtors and Square Yard:
 As they were focusing on digital media, tele calling, feedback
mechanism and technical systems. (Within fractions of seconds:
Welcome SMS, Call, Thanks giving SMS, Follow up, feedback options,
tracking the experience.

Even though 61.54% revenue of CBRE is been generated, from US, Canada,
other Latin American countries but APAC region is also contributing 10.34%
of the total revenue.

India being a prominent growing economy (in terms of investments,

population, government reforms (RERA) etc.) will be giving ample amount of
opportunities to real estate players to grow in very high velocity and thus may
contribute more in generating higher revenue.

Looking up the fact that Residential segment contributes 80% of real estate
sector of India, more focus should be given to support and equip the
residential vertical of CBRE (India and Pune particular as study is based on
Pune market) so that they can unleashing their full capacity and flourish to their
maximum growth.
Associating with more digital media agencies to aggressively working on
spreading awareness among the potential buyers, about CBRE. However
consider the following facts:

* Pay per Click (PPC) advertising taking in consideration that even though the
Cost for this kind of advertisement is highest in Maharashtra compared to other
states but the overall cost of Google Ads for real estate are cheaper than other sectors.

According to the response of digital media campaigns, gradually develop a tele

calling team to facilitate the need to address each lead so generated for the
company, after considering the following main factors:
  Technology - voice and data networks, wiring, and systems (including CRM, PBX/ACD,
interactive voice response (IVR), computer telephony integration (CTI), quality
monitoring (QM), workforce management (WFO), knowledge management (KM), desktop
PCs, etc.)
 Customer service reps (CSRs), supervisors, managers, support staff for operations, support
staff for other areas such as HR, IT, etc.

13. REFERENCES

*Annual report 2018 - Cushman & Wakefield, CBRE, colliers international, JLL,
* Report on “digital real estate: winning the indian market with data” by colliers
International.
*IBEF report on real estate.
*residential market overview | jan 1, 2018 to dec 31, 2018
*Industrial Scenario -Knight Frank Real Estate Sentiment Index | Q1-2019
* Real Estate Sentiment Index | Q1-2019- -Knight Frank

*Https://Www.Ibef.Org/
*Http://Fortune.Com/Fortune500/Cbre-Group/
*Www.Economictimes.Com
*Http://Realtyplusmag.Com/Pune-Realty-Growth-Analysis/
*Https://Www.99acres.Com/Articles/How-To-Do-Effective-Marketing-Inreal-
Estate.Html
*Https://Www.99acres.Com/Articles/How-To-Do-Effective-Marketing-Inreal-
Estate.Html