Construction and Built Environment

Introduction to Real Estate

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 Understanding Real Estate
• The real estate industry is divided into five main product types:
• residential,
• office,
• commercial,
• industrial, and
• land.
• The market for each product type can differ dramatically by region
and by location relative to
• employment centres,
• transit stops, or
• other location factors.

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 Understanding Real Estate

Real
Estate

Residential Commercial

Single-
Multi-
Family Land Office Retail Industrial Hotel Land Other
family
Homes

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 Single-Family Homes
• Typically a single-family home is a one- or two-story building
surrounded by a garden in which a single family resides.
• In some cases, multiple single-family units may share one or more
common walls.
• These are called attached or semi-attached houses.
• Groups of these homes may also share recreational amenities.
• Single-family residencies are typically owner occupied but may also
be rented from a non-occupant owner.

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 Multifamily
• Multifamily housing consists of single or clustered structures that are divided into many
separate housing units.
• Multifamily property is typically classified by structure height into
• low-rise (fewer than four floors),
• mid-rise (between four and ten floors), and
• high-rise (more than ten floors).
• In the most prevalent form of low-rise housing, a number of low-rise structures are grouped
around shared recreational amenities such as playgrounds, pools, and community rooms.
• In more densely populated areas, multifamily development centres on apartment house
complexes.
• Apartment house complexes consist of a number of mid-rise or high-rise structures that are
clustered and share amenities such as shopping centres, medical offices, and recreational
spaces.

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 Office
• Office properties are generally classified by
• type of location,
• quality of construction
• gradient, and
• tenancy.
• The key factors in determining the value of an office building are its
location and its quality level.
• Office market locations are typically classified as being
• central business district (CBD) or
• suburban.

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 Office
• Within most major cities, the CBD is further broken down into smaller
submarkets.
• A large city may also have a number of distinct suburban submarkets. A
submarket can be a very important factor, impacting property
desirability.
• Submarkets differ in access to transportation, amenities such as
shopping, restaurants, and cultural institutions and co-location with
companies in similar or dependent businesses.
• Suburban properties are also classified by location and quality. In many
cases, suburban properties are either part of a planned development
such as an office park or located in an increasingly common “edge city,”
which is a crowded developed commercial area on the outskirts of a
densely populated urban core city.
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 Office
•A
• The properties with the highest level of construction quality (“finish”),
services, and amenities in a market. These will have newly renovated
elevators, lobbies, bathrooms, and sophisticated climate control and
security systems.
•B
• “B” buildings are yesterday’s “A” buildings with nice but not state-of-the-art
amenities.
•C
• “C” buildings are not only lacking in a full complement of amenities and
services but are typically in less-attractive locations than the higher-grade
buildings
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 Retail
• Retail properties are differentiated by format and size. There are five
common retail formats:
• malls,
• shopping centres,
• power centres,
• lifestyle centres, and
• street retail.
• Depending upon the size of the property and its complement of
merchants, a retail property is classified as
• neighbourhood,
• community,
• regional, or
• super regional.

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 Retail: Malls
• Malls typically consist of two or more major department stores
linked by indoor common areas featuring smaller specialty shops.
• The department stores typically offer a wide range of merchandise
and are referred to as “anchor stores” because they are the key
merchants.
• The specialty stores are typically focused on a single type of
merchandise and are referred to as “in-line” stores because they
line the interior corridors of the mall.

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 Retail: Shopping centres
• Shopping centres offer stores with individual outdoor entrances.
• In most cases, these stores surround an outdoor parking area
where shoppers can drive and park close to the store entrance.
• The most common merchants in shopping centres are grocery
stores and drugstores.

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 Retail: Power centres
• Power centres and lifestyle centres are relatively new retail property
configurations.
• Both of these concepts offer outdoor drive-up shopping but differ in
their line-up of merchants.
• Power centres are anchored by large-format, value oriented stores
such as Wal-Mart. These anchors are complemented by a number
of medium-format stores focused on a single merchandise
category.

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 Retail: Lifestyle centres
• Lifestyle centres are outdoor drive-up shopping centres featuring a
collection of specialty merchants that offer higher-priced products
that help the customer achieve their aspirations.
• Many of these properties feature restaurants, cafés, and
entertainment venues that complement the shopping experience.

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 Retail: Street retail
• Street retail refers to collections of stores located along a highly
trafficked urban street.

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 Industrial
• Industrial real estate is a broad category including
• warehouse,
• manufacturing, and
• assembly space.
• Flexible space can combine a number of industrial activities, such as
• light manufacturing,
• assembly,
• logistics, and
• office space in a single property.
• Industrial properties can stand alone or as part of large developments
with many similar properties known as industrial “parks.”

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 Hotel
• Hotel properties are classified by
• location,
• intended usage, and
• level of services.
• Resort hotels cater to vacation travellers and feature leisure
amenities. These properties are typically located in a tourism-
focused destination with location amenities such as beach or ski
are access.

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 Hotel
• Resort hotels cater to vacation travellers and feature leisure amenities. These
properties are typically located in a tourism-focused destination.
• Hotels oriented to the business traveller are typically distinguished by level of
services and amenities.
• Full-service hotels feature restaurants, 24-hour room service, concierge
services, and fitness centres.
• High-end luxury hotels offer many ancillary services such as spas and
business centres.
• Convention hotels focus on hosting meetings for large numbers of guests.
• In contrast, limited service hotels may not offer any food service or staff
assistance other than basic room cleaning.
• A limited-service extended stay hotel caters to guests who stay at the property
for long time periods perhaps a month at a timed and may feature larger
rooms with kitchen facilities.
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 Who Is Involved, and When, in the Development
Process?
• SITE SELECTION
• Brokers
• Title companies
• Market consultants
• Transactional attorneys
• FEASIBILITY STUDY
• Market consultants
• Economic consultants
• Construction estimators
• Surveyors
• Mortgage brokers and bankers
• Land use attorneys
• Engineers

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 Who Is Involved, and When, in the Development
Process?
• DESIGN
• Architects
• Land planners/landscape architects
• General contractors/construction managers
• Surveyors
• Soils engineers
• Structural engineers
• Environmental consultants
• MARKETING
• Brokers
• Public relations firms
• Advertising agencies
• Graphic designers
• Internet service firms

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 Who Is Involved, and When, in the Development
Process?
• FINANCING
• Mortgage brokers and bankers
• Construction lenders
• Permanent lenders and syndicators teams
• SALE
• Brokers
• Appraisers
• THROUGHOUT THE PROCESS
• Attorneys (title, transactional, land use, litigation)

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 Indian Scenario
Real Estate

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 Indian Real Estate
• The Indian real estate sector has traditionally been dominated by a
number of small regional players with relatively low levels of
expertise and/or financial resources.
• Historically, the sector has not benefited from institutional capital;
instead, it has traditionally tapped high net-worth individuals and
other informal sources of financing, which has led to low levels of
transparency.
• This scenario underwent a change with in line with the sector’s
growth, and as of today, the real estate industry’s dynamics has
started reflecting consumers’ expectations of higher quality with
India’s increasing integration with the global economy.
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 Indian Real Estate
Fourth largest sector in terms FDI in the sector is estimated to
of FDI inflows grow to USD 25 billion by FY22

The number of Indians living in

Rapid urbanisation bodes well urban areas will increase from
for the sector the 434 million in 2015 to about
600 million by 2031

India’s real estate sector’s

India’s real estate sector’s
market size is expected to be
market size is expected to
USD 180 billion by 2020 from
Increase 1.92 times by 2020
USD 93.8 billion in 2014

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Source: Ministry of Tourism, KPMG, World Bank, Census 2011, TechSci Research
Note: E- Estimated FY16*-Data till September 2015
 Indian Real Estate
Robust Demand Attractive opportunities
• Demand for residential properties has surged due to • Growing requirements of space from sectors such as
increased urbanisation and rising household income education and healthcare
• About 10 million people migrate to cities every year 35 • Growth in tourism providing opportunities in the
per cent of the population is in young age bracket (15- hospitality sector
35 years)
• Growing economy driving demand for commercial and
retail space

Increasing investments Policy support

• FDI in construction development of USD24.156 billion • The government has allowed FDI of up to 100 per cent
between April 2000 and September 2015 for townships and settlements development projects
• During April 2000–September 2015, the real estate • Under the Housing For All scheme, 6 crore houses are
sector accounted for 9 percent of total FDI inflows into to be built in which 4 crore in rural areas and 2 crore in
India urban area by 2022
• The Government of India has brought into force the
Real Estate (Regulation and Development) Act, 2016
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Source: KPMG, Report on Real Estate Sector in India – Corporate Catalyst India Pvt Ltd, Department of Industrial Policy and Promotion, TechSci Research, News articles
Notes: FDI - Foreign Direct Investment, NHB: National Housing Bank, 2020E - Estimates for 2020; Figures mentioned are as per latest data available
 Indian Real Estate: Growing Market
• Real estate contribution to India’s GDP is
estimated to Market size of real estate in
India (USD billion) increase to about 13 per
cent by 2028
• The market size of real estate in India is
expected to increase at a CAGR of 15.2 per
cent during FY2008 – 2028E and is
estimated to be worth USD853 billion by
2028
• Increasing share of real estate in the GDP
would be supported by increasing industrial
activity, improving income level, and Market size of real estate in India (USD billion)
urbanisation
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Source: KPMG, Report on Real Estate Sector in India – Corporate Catalyst India Pvt Ltd, CBRE, TechSci Research
Notes: CAGR - Compounded Annual Growth Rate; E-Estimates
 Demand for Residential Space

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 Demand for Commercial Space

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 Demand for Retail Space

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 Demand for Hospitality Space

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