PROJECT REPORT ON

A STUDY ON THE IMPACT OF PROJECT MANAGEMENT STRATEGY ON

REAL ESTATE
SEMESTER-VI

AS A PARTIAL FULFILMENT FOR THE DEGREE BACHELOR OF

MANAGEMENT STUDIES (BMS)

Submitted By
AARTI AMRUTRAO BUBAL
Roll No.48

Under the Guidance of

PROF. DEVANJALI DUTTA

K.M. AGRAWAL COLLEGE.

ADDRESS: GANDHARE, PADGHA RD, KALYAN (W) 421-301, DIS- THANE
2021-22
 DECLARATION

I am AARTI AMRUTRAO BUBAL the student of T.Y.BMS

Semester (2021-22) hereby declare that I have
completed the project A STUDY ON THE IMPACT OF PROJECT
MANAGEMENT STRATEGY ON REAL ESTATE The
information submitted is true and original to the best of my
knowledge.

AARTI AMRUTRAO BUBAL

ROLL NO:48
 3

K.M. AGRAWAL COLLEGE.

ADDRESS: GANDHARE, PADGHA RD, KALYAN (W) 421-301, DIS-
THANE

Certificate
This is to certify that AARTI AMRUTRAO BUBAL studying
in the Third year of Bachelors of Management Studies (BMS)
program at K.M Agrawal College of Arts, Commerce and
Science, Kalyan has completed the “A STUDY ON THE IMPACT
OF PROJECT MANAGEMENT STRATEGY ON REAL ESTATE ”
as a part of the curriculum requirement for Bachelor of
Management Studies (BMS) under the guidance of PROF.
DEVANJALI DUTTA

Signature of the project guide e

Name:
Date:

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ACKNOWLEDGEMENT
To list who all have helped me is difficult they are so numerus and the depth is so
enormous. would like to acknowledge the following as being idealistic channels
and fresh dimensions
in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance
to do this project.
would like to thank my Principal, DR. ANITA MANNA for rewording the
necessary facilities required for completion of this project.
I take this opportunity to thank our Coordinator, PROF. SUJEET SINGH for
his moral support and guidance.
I would also like to express my sincere gratitude towards my project guide
PROF. DEVANJALI DUTTA whose guidance and care made the project
successful.

I would like to thank my Library, for having provided various books and
magazines related to my project.
Lastly. I would like to thank each and every person who directly or indirectly
help me in the completion of the project especially my Parents and Peers who
supported me throughout my project.

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TABLE OF CONTENTS

1. INTRODUCTION 5-31

2. REAL ESTATE FINANCE 18-30

3. OBJECTIVE OF THE STUDY 32

4. RESEARCH METHODOLOGY 33-38

5. DISCUSIONS 39

6. DATA ANALYSIS 42

7. RECOMMENDATION 62

8. CONCLUSION 63

9. BIBLIOGRAPHY 64

10. APPENDICES 65

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INTRODUCTION

REAL ESTATE:

The term real estate is defined as land, including the air above it and the group below
it, and any building or structure on it is also referred to as realty. It covers residential
housing, commercial offices, and trading spaces such as theater, hotels, and restaurant
retail outlets, industrial buildings such as factories and government buildings. Real
estate involves the purchase, sale and development of land, residential and non-
residential buildings. The main players in the real estate market are the landlords,
developers, builders, real estate agents, tenants, buyers etc. The activities of the real
estate sector encompass the housing and construction sectors also. The real estate
sector in India has assumed growing importance with the liberalization of the
economy. The consequent increase in business opportunities and migration of the
labor force has, in turn, increased the demand for commercial and housing space,
especially rental housing. Developments in the real estate sector are being influenced
by the developments in the retail, hospitality and entertainment (e.g.: Hotels, resorts,
cinema theater) industries, economies services and information technology (IT)
enabled services etc. The real estate sector is a major employment driver, being the
second largest employer next only to agriculture. This is because of the chain of
backward and forward linkage that the sector has with the other sectors of economy,
especially with the housing, construction and commercial sector. About 250 ancillary
industries such as cement, steel, brick, timber, building material etc are dependent on
the real estate industry.

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REAL ESTATE IS A GROWING SECTOR IN INDIA

Real estate in India will continue to rock. Profound economic suggest that the realty
sector would grow at 30% per annum to reach to $45 to 50 billion by 2010 from the
existing $12 billion. To achieve this growth real estate in India would require huge
investments over the next five years. By 2015 it is projected that the market size
would grow to $ 90 billion.

Estimated suggest that the urban housing sector would require investments to the tune
of $25 billion (Rs 1.10 lakh crore) over the next five years. Prices have remained
buoyant as new construction lags. According to surveys there is a shortage of 19.4
million units (12.7 million units in rural areas and 6.7 million units in urban areas) in
the country about three years ago, which will require real estate in India. Real estate
in India will trigger economic growth infrastructure development and enabling
government policies would help trigger growth. Real estate in India will help high
economic growth has fuelled the demand for real estate. Cities continue to attract
interest from IT and ITES companies that are either establishing a base or are looking
to expand which will give rise to real estate developer in India. It is the suburban
locations that are witnessing development activity due to easier availability of land
construction of large floor plate and offer of built to suit facilities thus helping
housing construction company in India. According to one estimate the IT and ITES
sector are creating 200,000 jobs per annum which itself will create a demand in
commercial space of 15 million square feet. Besides it will generate a huge demand
for residential flats. So more need for luxury residential apartments in India.

Real estate in India assumes that 25 % of the work force joining the IT/ITES sector
required independent housing there would be demand for 50 million sq ft of
residential accommodation every year to meet the need of the workforce joining the
IT/ITES sector alone. The demand has been aided by the ease in documentation and
formality of property registration in India. It leads to boost property developer in
India. The Indian realty sector would see unchanged interest from N R Is aided by the
relaxation in FDI norms in real estate. The government has also helped by permitting
banks to advance home loans to N R Is. The report acknowledges that the government

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had also played a pivotal role in the development of this sector .It had aided the sector
by giving income tax benefits to consumer and benefits to developers. It initiated the
rationalization of stamp duty and repealed the Urban Land Ceiling Act in 9 states. A
number of state governments are moving towards computerization of land records.

Real estate in India has a bright future .The report also pointed out certain issues,
which need to be addressed by the government to ensure rapid growth. Some of the
issues are absence of large listed companies in these sectors, which has affected fund
flow. Foreign still cannot buy or sell undeveloped land, and reassessment of the legal
aspect to stamp duty and rent control. At last, changing demographics, low interest
rate regime, rising disposable income, and fiscal incentives have provided huge
demand for housing. Further nuclearization of Indian families has accelerate the
demand for mortgages and for fresh housing thus give rise to more real estate
developer in India.

Political reforms in relation to real estate: The government is quite rational when it
comes to infrastructure and development in the country as it is required to achieve and
maintain a growth rate for the economy. The real estate sector being directly related to
it, is being given due importance. The government has made suitable amendments in
the FDI regulations, taxation structures and various land acts in order to attract more
foreign investment into the country.

Economic factors: The lower interest rates and ease of credit availability is fueling
the demand for real estate in the country. This scenario coupled with the huge
potential for consumer credit penetration in India is favoring the real estate sector.

Demographic factors: Demographic factors like increasing literacy rates, higher

disposable incomes, and increasing urbanization in the country are important factors
propelling the demand for real estate in the country. The above factors are going to
generate huge demand for residential space, which comprises 80% of the total real
estate demand in the country.

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PRESENT SCENARIO OF REAL ESTATE IN INDIA

The real sector in India today witnesses a wide spectrum of changes that slowly but
surely is expected to make India in to a preferred destination for real estate activity.
The real estate market in India is opening up. There are still some barriers to real
estate development like unclear titles, tenancy reforms and low property taxes. Two
major steps taken by the Government will however be key catalyst in fueling growth
in real estate sector in INDIA. Now with reputed builders like DL, ANSAL API etc
and international property consultants joining the fray, this image has strengthened
and evolves into a professional corporate image. Recent moves to allow 100%
Foreign Direct Investment in India. FDI would be in integrated township which would
include housing, commercial premises, hotels and resorts, while the urban
infrastructure would comprise roads and bridges mass rapid transit system and
manufacture of building material. The minimum average that can be developed is 100
acres designed keeping into consideration the local byelaws and regulations. FDI is
not allowed in retail sector. Currently, real estate prices have stabilizes to a great deal
as a role played by speculation has started declining. There a lot of change being
introduce in the Indian real estate sector especially with the cheap labor, pool of
people. Other major event is the introduction of real Estate Investment Trust (REIT).

Currently mutual fund are not allowed to have direct exposure in real estate but can
make debt and equity investment in the company. The Indian version of REIT-REIS
(Real estate investment scheme) would enable investment by small investors in the
real estate sector and thus earn dividends on the rental income being paid. The fiscal
incentives introduce by government introduce 3 years ago have unleashed the market
forces. The credit of housing has gone up and interest rates have come down to 8-9%
average. With fiscal incentives and factoring inflation the real interest rates on
housing loans is very less. This has brought in a sea change in the profile of the home
purchaser across the spectrum. The average age of the home buying customer has
been drastically reduced. It has been found that young working people in early and
mid 20 also buying residential flats. The other major changes witnesses in the real
estate industry currently are the reorganization of country status itself. The
Government of India has made it mandatory that 3% of the incremental deposits of
the banks would be deployed to the housing industry. Today real estate office market

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is booming IT AND ITE ‘s segment. With lower operating costs being the driver
office property have moved from Central Business Districts to suburbs to Class I
cities and this market is continue to expand in Tier II and tier III cities. Real estate
sector is still facing the main problem of high stamp duty in Indian states. These range
in most Indian cities between 10% to 15% Some states even have double stamp
incidence first on land and then on its developments even National Housing and
Habitat Policy 1998 recommend stamp duty of 2-3%. Its needed to be reduced by
taking the recommendation into consideration which is mentioned in the report
otherwise this increasing rates of stamp duty and land cost will give rise to parallel
economy which lead to huge loss of government revenue.

FUTURE SCENARIO OF REAL ESTATE IN INDIA

In future the real estate sector will be in very good shape as the demand for both
residential and non-residential property is increasing and in future more houses need
to be developed in urban and rural areas as census of 2001 indicates that urbanization
rate of 27.78% is expected to go up to 41%(550 million) in the next 20 years
(population of 1350 million by 2021).However, Indian government Habitat
Policy(NHHP) envisages that by the year 2012 the housing shortage should be
removed and everybody should have a house of his own and to meet this target the
estimated investment involved is approximately Rs 400000 crore or say US $800
billion by 2012.In future the demand for real estate will likely to touch around1055
million sq ft by 2010 and by this date capital requirement will have bloated to $68
billion and market will require $ 30-40 billion more in future with most companies
tying up their expansion plan. The C&W says urban India alone require 12 million
housing units with scope of 400 townships in 5 years across 30-35 cities each with 5
lakh population and Indian has potential to grow to those levels as FDI flows into
more land intensive sector like retail and manufacturing as there is a shortage of 20
million housing units till 2010.Cushman&Wakefield says smaller towns like Patna,
Surat, Lukhnow, Coimbatore, Vijayawada etc have immense potential in commercial
and residential sector and by 2015 there will be 45 such cities from 25 odd cities. The
US alone committed $ 2 billion for Indian real estate over next 18-30 months. In real
estate sector 23 million sq ft of new space came in to market with additional 50
million sq ft expected by 2009.

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AMAZING BOOM IN COMMERCIAL SECTOR:

Future of commercial sector is boom. There is a great demand for office building in
India. The demand for new office space alone has grown from estimated 3.9 million
sq ft in 1988 to over 16 million sq ft in 20045.Cumulative demand for office space in
India between 2005-2008 is estimated to be in excess of 85 million sq ft. This
represent annual growth rate of 14.5% over the next 3 years or approx.20 million sq
ft/year and approx 80% of demand is created by IT AND BPO sector. ITES & BPO
segment register a growth of 54%. NASSCOM & Mckinsey study has predicted that I
T Es sector in India will provide additional job for over 1.1 million people by 2008,
which translate into space requirement of approx.100 million sq ft. Retail is
considered the world largest private industry with total sales of over US $ 6.6 trillion
with close to 12 million outlets. India has the largest retail density in the world .It is
estimated that presently additional 46 million square feet for malls, multiplex is being
added in India out of which 32 million sq ft is spread over across 7 major cities. In
future 45 malls with over 9.5 million sq ft of retail real estate is expected to come up
in Tier II cities like Jaipur, Chandigarh, Ludhiana, Nagpur, Baroda, Kochi etc by end
of 2007.It is expected that government will soon permit FDI in retail and this would
further increase the demand for shopping malls, multiplex etc. However opening up of
FDI in retail trading will not necessarily cause rent to rise as their demand will be
offset by additional stock.

Spiraling land prices (sign of overheating and excessive speculation): The land
prices have really shot up in the last 2-3 years. Builders continue to get enough buyers
for whatever absurd prices they quote. Now, that is a very strange thing when seen in
the Indian market perspective. India is a very price-sensitive market. Whatever you
sell you have to give the consumer a good value for money. So, when such people
make a beeline for things priced exorbitantly, there may be large amounts of
speculative investment money entering the market. Also, people now assume that
property prices moving up is a sure thing. There is nothing called a sure thing in
investing and this is a sign of overheating.

Uneven price growth: Prices of real estate across the country, or even within cities,
will have their own unique demand and supply factors. This needs to be understood in

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detail. A number of transactions and also corporate land bank values are ignoring this
basic tenet of real estate investing.

Questioning the capability to deliver: Although there have been huge plans of
development in all the areas of real estate development whether residential,
commercial, office, retail or SEZ, various questions have been raised on the execution
capability of the developers in delivering the promised product within the specified
time period.

Oversupply: With the real estate story getting big in India, major plans are afoot for
various types of real estate developments in big cities and small towns. There have
been concerns of an oversupply situation arising 2-3 years from now.

Still unorganized: India's property market remains unorganized and underdeveloped.

This creates risk for investors. In the absence of a 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.

Relation to the stock market: The true origin of this bubble-like situation may be
traced to the stock market boom. The Indian stock market has been witnessing a non-
stop bull run for an unusually long time. During the last couple of years, share prices
have surpassed all expectations. The present situation can be compared to 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.

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MAJOR PLAYERS OF REAL ESTATE MARKET IN

DELHI

UNITECH LIMITED

Unitech is the largest listed real estate company in India with a market capitalization
of over US$5bn. It operates in India and exports engineered construction products to
the Middle East. Unitech was among the first players to enter organized infrastructure
development. Unitech works closely with various state governments to develop SEZs
across the country. New Kolkata International development project is one of the
largest infrastructure development project undertaken in the country. Unitech has tied
up with International Amusement to create "E-city" in Noida. Its business strategy is
to build a Pan-India presence while maintaining a leadership position in each city of
India.

DLF UNIVERSAL LIMITED

DLF is a leading player in Indian real estate industry with six decades of experience.
Since its establishment in 1946, it has developed 21 urban colonies aggregating 5,816
acres, as well as an entire integrated 3,000-acre township which is popular as DLF
City. Future projects include development of 100,000 acres over the next few years
and it aims to become the single largest real estate company in the country.

ANSAL PROPERTIES & INFRASTRUCTURE LIMITED

Ansal Properties & Infrastructure Limited (APIL), one of the major players in real
estate industry, is promoted by the Delhi-based Ansal Group engaged in civil
construction and real estate development in India and overseas. In March 2006, APIL
tied up with Malaysia-based facilities management company Faber Group Berhad in a
joint venture to foray into healthcare facilities management. HDFC realty bought 33%
of Ansal SPV. APIL has big plans to invest Rs.30,000cr in the next 3-4 years to build
16 townships.

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As the focus on infrastructure development by the government has been

strengthening, growth prospects of Indian real estate sector looks bright. A study by
housing development finance reveals that India is short of 20 million housing units.
Deutsche Bank researchers forecast that by 2030 India will need up to 10 million new
housing units per year. Another driving factor for the industry is SEZs, which come
with tax exemptions like 10-year corporate tax holiday. Besides this, the fifth most
attractive market in the world, the retail market of India, has also been contributing
significantly on a large scale for the growth of the sector. Leading national and global
players have big plans to invest in the infrastructure and construction of the retailing
business.

All these positive signals indicate that there is huge growth potential for the real estate
industry. Joint ventures and consolidations will become the order of the day in realty
space. However, there are challenges like fragmented industry with less transparency
and high transaction costs. The condition can be improved with the increase in the
professionalism of the industry and flow of organized money into the sector. Given its
huge growth potential, real estate can be vindicated as the best investment avenue for
long-term investors.

The following is the overall assessment about the real estate industry in India-
Real estate sector is a major contributor to GDP (Gross domestic product of
India), over the last decade, the average household income in urban areas has grown
at a CAGR of 5%. According to estimates, 80% of the real estate developed in India is
residential space and the remaining 20% comprises of offices, shopping malls,
restaurants and hospitals. According to the 10th Five Year Plan, there will be a
shortage of 22.7 million housing units by the year 2007. The changing lifestyles of
Indians and better incomes have led to the development of retail and hyper malls.
This, in turn, has led to the demand for space from the retail sector.

Real estate has proved to be a real engine of growth The real estate sector in India
is emerging as the next engine of economic growth going by the fact that it is the
second largest employer next only to agriculture. It has significant linkages with
several other sectors and over 250 associated industries. According to estimates, every

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rupee invested in this sector results in 78 paisa being added to the GDP. Accordingly,
a unit increase in expenditure has a multiplier effect and the capacity to generate
income is as high as five times. For instance, if the economy grows at the rate of 10%,
the sector has the capacity to grow at 14% and generate 3.2 million new jobs over a
decade. The sector size is close to $12 bn and grows at 30% per annum. Presently, it
is contributing 5% of the country's GDP and is expected to rise up to 6% within three
to four years. Along with the residential property, the sector has also witnessed a spurt
in demand in commercial property mainly driven by fast-growing IT and ITES
services along with BPO boom. According to estimates, 42 million sq. ft. of space
will be required every year till 2010 only in these services in cities like Delhi,
Bangalore, Chennai, Hyderabad and Pune. As the cost of land in leading metros is
skyrocketing, developers are getting interested in developing townships in Tier II
cities and industrial towns where the growth of real estate is relatively slow. It is
expected that in the very near future, even these cities will witness abnormal prices.

THE KEY DRIVERS IDENTIFIED BEHIND THIS GROWTH

ARE-IN CASE OF RESIDENTIAL PROPERTY:
Higher affordability (higher salaries, easy credit); tax benefits to borrowers; existing
shortages; social structural changes in urbanized areas (splitting of joint families).
In case of Commercial: IT/ITES sector expansion, the local consumption story
leading to higher growth in corporate earnings; order books full; corporates
expanding, multinationals entering India to service huge “middle class”.
In Retail sector: Getting organized (3% of retail is organized as against 17% in
China); foreign brands and local brands seeking visibility, new formats being
developed; disposable incomes rising; younger population earning and spending well.

In terms of infrastructure Indian real estate sector is relatively poor to global

standards: If we compare Indian real estate sector with the global real estate industry,
we fare very poorly in terms of our infrastructure. While in the US, no matter where
you go, you have access to high quality infrastructure (drinking water, well-planned
roads, greenery, power, communications, healthcare, education, etc.), here in India,
even our signature cities are crumbling. We have not been able to create alternate

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cities in the manner that is required so as to release the pressure on the few that we
have. Until new towns/cities come up, the few existing ones will continue to provide
sub-standard quality of living and at very high prices. Another sharp contrast is in the
sphere of public housing. While more than 50% of Mumbai lives in slums, most of
Singapore lives in (subsidized) mass housing provided by the government.

Whether this boom will sustain or not, the answer could be both a yes and a no. Yes,
because of the above mentioned positive drivers. No, because a lot of factors/events
can spoil the party; such as, an increase in interest rates globally and locally, a
political directive (overseas) to reduce outsourcing to India, the emergence of China
as an alternate outsourcing hub, a major terrorist attack, the policies of the
government with respect to land and real estate supply, property prices becoming
unaffordable, etc.Already in some locations it appears that the cost of land is way too
high in comparison to the finished product, and there is a price limit beyond which
resistance can set in. Therefore, there is a risk of having unsold inventory at a high
cost. In some sectors, there is a re-emergence of the “investor” in large proportions.
Hence, when the stock comes in the market for absorption in large volumes, will there
be actual users to absorb it? That is still to be seen. On the retail front as a whole,
though we (as a country) have barely scratched the surface of organized retail, I feel
that in some locations there is an excess supply of mall space coming up. With
terribly poor efficiencies and very high running costs, not to mention a complete lack
of differentiation, it’s a matter of time before these malls will come back in the market
to be repositioned. Today, there is a feeling of success seeing “footfalls” by the
thousands, which reminds me of the internet days “eyeballs”—plenty of visitors, poor
conversion into shoppers.

BUYERS PERSPECTIVE:
1. Quality of Construction – Obviously when one buys a property he makes sure
that the quality of construction is good. Everyone while buying a new product
wants to buy quality stuff. Same applies to the property. Every buyer wants to buy
a well built house.

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2. Pollution Free Environment – The immediate surroundings of the property is

always evaluated by the buyer. These days developers give due importance in
making the surroundings beautiful with innovative and creative landscaping. They
involve landscape architects from different corners of the world to give their
customers the best. The NCR is becoming more and more popular among home
buyers because of its greenery and pollution-free environment.

3. Water Availability – Water Availability, power backup and safety and security
are some very important factors which people do consider while purchasing the
property. All these factors are hugely responsible for the transition of people from
Delhi to housing complexes in NCR as many colonies of Delhi faces problem of
shortage of water and power failure while availability of these essential facilities
are ensured in housing complexes by the respective developers.

4. Occupancy - Due to increasing crime this factor is becoming more and more
important for the buyers. They don’t want to settle down in such a place where
hardly anyone else lives. People prefer to stay in a reasonably well-occupied
housing complex. But its also true that people don’t prefer to stay in highly
populated areas as it was observed in the case of Shipra Sun City, Ghaziabad
where 5000 families living in one single housing complex fight for space and car
parking place.
5. Suitability of Home Type – Nowadays due to the wide range of options available
people can afford to be choosy. Now they don’t need to compromise on anything.
They don’t buy a property till the time all of the essential things match their
requirements. Developers do pay attention to the different requirements of
different customers. Some want a flat on the second floor while some want a flat
with two bedrooms. All these requirements are tried to be met by the developers.

6. Sport Complex / Recreational Facilities – “All work and no play makes Jack a
dull boy”. People have started believing in this concept. Now each parent wants
that within the complex his/her kids get all kind of sports to play. Even adults
want different recreational facilities to be available in the housing complex, which
may help them in eliminating work stress.

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DEVELOPERS PERSPECTIVE:
1. The major external factors which people consider while purchasing the property
are Price, Availability of loan and Proximity to workplace.

2. The major In-Locality factors which people consider while purchasing the
property are Quality of construction, Availability of water and Pollution-free
environment

GLOBAL SCENARIO IN REAL ESTATE INDUSTRY

Real estate industry in developed countries has been mature while it has been a
growing market with huge potential in developing countries like India. Anuj Puri ,
Managing Director of Trammell Crow Meghraj Private Limited opines: "Globally,
these funds are very popular, especially in developed economies such as the US,
Australia, and Japan. They have given excellent risk-adjusted returns. As per
NAREIT, the five-year compounded annual growth rate (CAGR) on such funds is
12.1%. In Japan, this is 15.5%. This compares well with equity mutual funds. For real
estate, the risk is lower than equity." Real Estate Investments Trusts (REITs) in the
US are the trusts established by wealthy promoters who usually invest in shopping
malls, office spaces, commercial complexes, hotels, and warehouses. The origin of
REITs dates back to 1960 and has gained popularity over a period of time. These
trusts make profits either by rental income or by capital gains resulting from sale of
property. To be qualified as an REIT, the company is liable to distribute 90% of its
income to the shareholders. This will in turn help the company to get exemption from
taxation. Based on the source of income, REITs are categorized as equity REITS,
which earn by owning and renting the properties; Mortgage REITS, which earn by
way of loans; and Hybrid REITS, which earn by both the means. REITs offer ample
liquidity to the investors as REITs shares are usually listed on the major stock
exchanges.

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REAL ESTATE FINANCE:

Property prices in India are rising fast, and not just in the biggest cities. As the tech
boom spreads across the country, as more Indians buy homes, and as the economy
grows at faster than 8% a year, real estate is attracting more investors, many of them
from abroad.

"India is one of the last few countries where there is primary demand for real estate
rather than individuals trading up," says Rajiv Sahney, who runs the India operations
of New Vernon Advisory, a $1.4 billion New Jersey hedge fund.

Merrill Lynch forecasts that the Indian realty sector will grow from $12 billion in
2005 to $90 billion by 2015. "India is the most exciting real estate market in Asia,"
says Michael Smith, head of Asian real estate investment banking at Goldman Sachs.
"It's one of the last major countries in Asia with an improving market."

That improvement worries some. Concerns about an asset-price bubble have led the
Reserve Bank of India to raise the risk weightage on real estate loans extended by
banks, and mortgage rates have gone from 7.5% to about 9.5% as a result. That's still
well below the 15% rates that most Indians were used to, but it's enough to raise
questions about whether the speculation of the past year and a half, which has driven
land prices up by 30% to 100% and real estate stocks up as much as 2,000%, may be
coming to an end.

The run-up in prices has attracted the likes of Morgan Stanley, which has invested
$68 million in Mantri Developers, a midsized construction firm in Bangalore, and
Merrill Lynch, which invested $50 million in Panchsheel Developers, a regional
builder. Foreign companies have also poured money into funds that invest in Indian
developers. GE Commercial Finance Real Estate, for example, has invested $63
million in an $800 million fund that is building IT parks, and Calpers and the Oregon
Public Retirement Fund have invested $100 million each in the IL&FS India Realty
fund.

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Real estate funds set up to invest only in India have already raised more than $2.7
billion. And new funds worth as much as $4 billion are being planned by J.P. Morgan,
Britain's Knight Frank, and other foreign investors. Warburg Pincus, the largest
private-equity investor in India, says it is spending nearly a third of its time studying
opportunities in this area. And Deutsche Asset Management recently hired someone
to head its real estate activities in India. "As the largest active managers of real estate
funds in the world," says Edouard Peter, head of Deutsche Asset Management Asia
Pacific and Middle East, "we expect to be actively raising and investing funds in real
estate in India."

It isn't going to be a cakewalk. "It's not easy to do business in India," says Seek Ngee
Huat, president of GIC Real Estate, an arm of the Singapore government that is
planning to invest several hundred million dollars in Indian real estate over the next
two years. "It's difficult finding suitable partners who have the same long-term
objectives, as most firms are small and family run."

Already margins have shrunk. "The vast majority of the planned real estate funds are
targeting annual rates of return of between 25% and 30%, but I'm skeptical that the
vast majority will cross 20%," says Mumbai real estate advisor Rajiv Bhatia.

To achieve the target returns, several funds are focusing on second-tier towns and
second-tier developers. "Many investors are going to lose their shirt here, as it's an
opaque market, and a wrong partner can easily do you in," says S. Sriniwasan,
executive director at Kotak Mahindra Realty fund in Mumbai. There's also
bureaucracy and corruption to deal with. Says Ashwin Ramesh, who runs a boutique
fund called Primary Real Estate Advisors: "There are a couple of hundred malls
currently being developed across India, and predictions are that only 10% will be
successful. Yet every developer feels his mall will be among the survivors."

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REAL ESTATE INVESTMENT

A recent report by the Chamber of Indian Industries pointed out that globally real
estate is and should always be considered as an income-generating asset. Indeed, real
estate is an attractive investment option, as it gives regular returns and also provides
capital appreciation. This scenario is presently unfolding in India.

Before the start of the 1990s, real estate was always looked upon as a place to invest
money, since prices were always escalating because of limited supply and heavy
demand. Developers were building residential and commercial projects, which were
sold out even before the construction began. Besides, during the course of
construction, the property changed hands several times before the completion of the
project, with further price increases.

But, those days are gone with the crash of the housing market in the mid 1990s. The
higher the rise in real estate prices, the steeper the fall. This was true, especially, in
the metros, e.g. Mumbai and New Delhi. The supply increased enormously and the
demand remained steady, as prices had gone beyond the realistic levels. This decline
in prices stabilised towards the end of the decade as rates became more reasonable
and affordable. In the meantime, the housing finance industry started to expand
rapidly, making home loans easily available to everyone. Besides the housing loans
boosting the market demand, the tax benefits provided by the last four consecutive
budgets have also encouraged the end-users and investors alike. Growing incomes of
urban buyers coupled with fiscal incentives and falling interest rates, has seen
disbursements by Housing Finance Companies grow at over 35% per annum in the
past few years, as shown in Figure I.

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Figure I

To evaluate real estate as an investment option, use the following guidelines.

 Check out the various loan options to raise the finances.

 Ensure that there is scope for infrastructure development around the property
under consideration.

 Another factor is the location and the proximity to schools, hospitals, markets,
public transportation, etc.

 Check out the rental returns and capital appreciation potential in the area where
the property is located.

 Actual property taxes to be paid.

 Finally, ensure that you are able to maximize the tax benefits to the limit.

The rental rates in India are among the highest in the world as returns on investment
on the capital value of the property. Figure II compares the rental returns for various
cities all over the world with the Indian cities. Investment in commercial property,
where the returns are 10 to 15 per cent, is a proven option, while residential property
is always in demand for leasing.

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Figure II

Since the 9/11 attack in the US, investments in Indian markets have gathered pace.
India has encouraged Non Resident Indians (NRIs) with tax incentives and relaxation
of foreign direct investments (FDI) rules. The sudden change in sentiments is clearly
visible in India’s bulging foreign exchange reserves, which are at a record high of
over 60 billion US dollars. And the RBI has relaxed the rules further for NRIs with
respect to repatriation of foreign exchange on real estate investments. Besides being a
safe destination, India offers 10 to 12 per cent returns, perhaps the highest in the
world. 30 per cent of all high major real estate transactions in Mumbai are accounted
by NRIs.

Moreover, with increasing volatility in stock markets and falling interest rates, many
investors have started considering investment in commercial and residential
properties. The bottom-line is that this is the time to go shopping for property; as the
market has started firming up already. As the organised market develops, real estate
as an investment is one of the better options available today. As Naresh Malkani,
CEO of Indiaproperties, says, “Considering the current property rates and housing
loan interest rates, it is worth investing in real estate in India.”

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EXTERNAL ENVIRONMENT
Commercial which ranks next only to food and clothing amongst basic human needs
has always had and continues to have important socio-economic implications.
Especially in countries like India which are in the throes of rapid development
housing has come to assume a crucial role as it contributes significantly to the
national economy and nation building. Arguably, housing has been the only industry
in recent times which has not only withstood the recessionary pressures, but has also
shown a consistent and healthy growth and if the future is to be interpreted in light of
the macro picture, the best is yet to come.

Housing and GDP are interlinked and contribute to each others’ growth. It is,
therefore, no wonder that ‘Housing for All’ is invariably proclaimed as a national
priority by all major political parties and adopted as a goal by the Government of
India in the National Housing and Habitat Policy document. Integrated housing
development not only satisfy the basic human needs but also facilitates holistic
development within the parameters of a planned welfare economy. Safe, secure and
affordable housing by any means increases employment and educational opportunities
for individuals and enriches communities leading to a better civil society and better
quality of life. Besides the direct contribution which housing makes to GDP it
increases social capital which is intelligible wealth that comes with good social
network at the heart of which lies clean environment, hygienic living and quality
housing.

India, with its billion plus population, still witnesses an acute shortage of dwelling
units. Despite sharp increase in the Usable Housing Stock from 70 million units in
1961 to170 million units in 2001, the shortfall in 2001 was estimated at 19 million
dwelling units, although unofficial estimates peg the figure at higher levels. This has
occurred due to the high population growth, especially in urban areas. Studies reveal
that the population in the five most populous cities of India, namely Mumbai,
Kolkata, New Delhi, Chennai & Hyderabad are set to increase at a scorching pace of
more than 50% between 1995 and 2010 and by 2025 the number will be more than
double. The 2001 Census reveals that the decadal population growth in the urban

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areas is one and a half times higher than the national average. All these statistics point
to a high level of migration of population from rural and semi urban areas to a more
urbanized form of settlement. The percentage of population staying in urban areas
have steadily climbed from 23.34% in 1981 to almost

28% in 2001. As on 2001, more than 5000 centres have been identified as “urban
centres” in India.

Coupled with the demand for dwelling units, another major factor which has
contributed to the buoyancy of Housing activity is the affordability of properties.
This, in turn, has been the result of a combined effect of stabilized property prices,
higher level of incomes and lower cost of borrowings. In fact the boom witnessed by
the Housing Finance sector can be heavily attributed to these factors.

Housing has often been called the “Engine Of Domestic Growth” of the Economy. An
investment in Housing and construction triggers of a series of investments in various
sectors. From Heavy Industries like Steel, Cement to industries like Paint, Furnitures
and even to Small Scale Industries, Housing affects as many as 269 industries directly
and indirectly. Housing ranks third amongst 14 major industries in terms of total
linkage effect in the Economy. The linkage effect, particularly with reference to the
Steel and Cement Industries was also underlined by the Government in the Economic
Survey of 2002-2003.

In terms of contribution to the GDP, for every rupee invested in Housing and
construction, 78 paisa gets added to the GDP. Housing ranks fourth in terms of the
multiplier effect on the Economy, ahead of sectors like transport and agriculture. The
Investments in the Housing sector has steadily increased from Rs. 1150 cr in the First
Plan period to more than Rs. 1,20,000 cr in the Ninth Plan period. Estimates of the
Tenth Plan peg the figure at about Rs. 7,00,000 cr.

Perhaps the greatest socio-economic impact of Housing is in employment generation.

Housing is the second largest employment generator in the country after Agriculture.
A host of vocations and professions derive their livelihoods from Housing, either

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directly or indirectly. Construction workers, builders, developers, suppliers, civil

engineers, valuers, property consultants, furnishers, interior decorators, plumbers –
the list is virtually unending. In a developing nation like ours, Housing can be the
solution to the most nagging problem that any Government faces – that of
employment. Apart from these various indirect benefits that the economy derives
from Housing, the Government itself is a direct beneficiary in terms of collection of
stamp duty rising out of acquisition of real estate assets.

It is therefore not surprising that the Government has left no stones unturned to
support Housing activities. The continued tax incentives on Housing Loans to trigger
a higher off-take in credit for retail Housing is a reaffirmation of the Government’s
committment to aid the sector. Other initiatives like extension of benefits u/s 80 I to
mass housing projects, scrapping of the Urban Land ceiling act, implementation of the
Securitization Act are all in line with the same objective of propelling growth through
Housing. However, it may also be added here that there is scope of further
improvement in various areas , mainly with reference to streamlining of laws related
to construction activities and rationalizing of stamp duties on transfer, securitisation,
etc.

When one looks at the future, the ‘big picture’ appears to be very bright. A
comparison of the Mortgage Finance to GDP ratio places India at the foot of the table
with a penetration rate of less than 2% , lower than the 9% of Thailand, 36% of
Singapore and 51% of USA. There is thus much room for the upside and a long way
to go.

With the population of India steadily increasing, it will not be long before India
overtakes China and emerges at the top position. Demographic experts have predicted
India’s working age population – the segment which has the highest demand for
Housing – to be the highest. This ensures that the demand for Housing is a long and
sustained one. Rapid strides in Infrastructure development like the Golden
Quadrilateral Project and the National Highways Development Programme, which
have progressed at an impressive speed is bound to trigger off a fresh round of

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Housing and habitation through further development of semi urban and rural areas as
well as setting up of new Satellite Townships.

To sum up, a reference to the Goldman Sachs Report on the Development of the
“BRIC Economies” can be made, wherein India is projected to have the fourth largest
Economy in less than 30 years time from now. In order to achieve that level of
growth, it is imperative for the Housing Industry to continue its contribution to the
economy at an increased pace in the future as well.

INTERNAL ENVIRONMENT
The last three budgets have provided enough incentives and the drastic reduction in
interest rates, making easier for the common man to achieve his distant dream of a
home come true. But on the supply side very little has been done to ensure that
developers who are the producers of homes get access to the required funds. It is
conferences like these that helping us carve out solutions for a better tomorrow.

The trade and industry was fairly to blame in the 80’s when there were not many
professionals in the building trade. It is still one of the largest unorganised sector in
the country, but slowly companies deeply committed to housing are becoming more
responsible, accountable and transparent.

Like other industries, real estate developers are also processors and producers of
goods (i.e. the home) which is a tangible product and has enormous cost from concept
to completion. It is impossible for any developer firm to bear the entire cost, hence the
need for real estate financing.

The customer preferences have moved away from under construction to nearing
completion or completed projects and hence the investments in the projects have
changed.

Strangely other industries get financed by the same financiers for process as well as
end product (i.e. the automobile industry). The banks and Financial Institutions have

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exposure to the producers and the purchaser but when it comes to developers the very
same Financial Institution shy away.

Now coming to the issue of funding developers – norms have been laid out and rating
should be made mandatory.

The one time pure vanilla product “construction finance” is no longer available and it
has out lived its purpose. Now the time has come for innovative products as the
market conditions have changed in the past 5 years.

Receivable discounting - is one option where projects in advanced stages can be

financed. The balance amount receivable against sold flats can be financed by
Housing Finance Institutions/banks (practice which is being followed) to infuse
liquidity and enable developers to complete the project within stipulated time period.

ESCROW ACCOUNT MECHANISM

During the boom period between 1991 and 1995 developers had invested heavily in
land by diverting funds from other project and taking on huge liabilities from banks
and financial institutions. With the crash in the markets the value of these investments
were eroded. Most banks and financial institutions today have frozen all their lending
to the developers community. The main reasons for this being the inability of the
developers to repay their debts. To instill confidence in the lenders the developer
community would need to organise themselves and bring about greater transparency
in their operations. In this respect developers must explore the ‘Escrow’ mechanism
to tap funds from Banks and Financial Institutions . Under the Escrow mechanism the
loan amount is decided after doing a thorough due diligence of the accounts of the
developer. All transaction (inflow and outflow) are routed through a designated
Escrow Account, the control in which remains entirely with the lender. The progress
of construction is monitored by the appointed auditors who submit periodic progress
reports. Disbursements are made strictly on the basis of the progress reports. This
system will not be successful without the co-operation, commitment and support of
the developer community.

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Position on project / Venture Capitals – The financiers takes a position like private
placement of area to be constructed at discounted rates and funds the project. On
completion of the project or during the construction, the developer sells on behalf of
the institution and gets their investment back with return. All loans originating from
these sales should go to the institution which funded the project. This the financiers
can do after due diligence as listed below:

RISK EVALUATION AND MITIGATION

 Essential to establish counter – party risks and mitigate them before offering
construction finance to borrowers.
 Finance available to builders with established track record.
 Minimum Net worth Criteria
 Track record of successful completion of projects
 Established source of cash flow and revenues
 Loans are usually project specific.

In addition to builder risk, saleability of project depends on

 Location
 Demand & Supply of flats
 Pricing
 Opinions from consultants are sought to mitigate these risks.

Due diligence of all transaction documents including

 Title documents
 MOU for land
 Power of Attorney
 Municipal clearance
Line of Credit - Like working capital advanced by banks, in this case, builders with
track record are able to work out their financial requirement and line of credit is
approved by Housing Finance Institution. This is for a minimum period of 4 –5 years

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renewable on a year on year basis. This covers all the projects of the developers. This
can be availed after the institution is satisfied about the following items-
CRITICAL LENDER REQUIREMENTS
 Builder to obtain statutory approvals prior to loan disbursal
 Loan to be secured by mortgage of the property of the proposed project.
 Property should have clean title
 Property should be easily marketable

STRATEGIC FACTOR ANALYSIS

Both serious academic research and informed business activity will be enhanced by
reliable collection of data relating to housing and commercial real estate. Housing
data, including prices, volumes of existing and new housing transacted, housing starts,
vacancy rates and household formation rates, as well as other demographic data,
segmented by metros, states and at the national level need to be collected frequently
and in a reliable manner by local and central authorities and disseminated widely.
Real estate commercial data would be more or less the exclusive domain of the
private sector.

USE OF IT IS VITAL
Here India has an opportunity of leapfrogging ahead of a number of other countries by
harnessing its comparative advantage in information technology. In some of the more
developed countries online databases of different kinds of real estate (office, retail and
industrial/warehouse) with data on city-wise vacancy rates, capitalization rates, the
local economic situation, job and household creation help firms, investors and
businessmen make informed choices.

THE DISCIPLINE
Links with urban planning and regional economics, on the one hand, and finance and
macroeconomics on the other would go a long way in a better understanding of the
economy, its monitoring, regulation, management and forecasting. It will also
promote appraisal and valuation techniques. In India, provision of housing credit may
be a supply side issue since banks cannot properly evaluate lending risks in the

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absence of development of credit and risk assessment systems, and databases on

credit benchmarks and credit scoring. It is vital to develop these risk management
systems on the basis of sound data and proper, widely available techniques. All these
steps will promote analyses and research that could inform domestic or foreign
investors to evaluate markets and carry out risk assessment for purposes of property
development and investment. The establishment of the discipline of real estate
economics would help in the dissemination of a common language of discourse and
promote standardised procedures, both necessary for national market development.

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REAL ESTATE –DELHI AS THE TARGET MARKET

Delhi is now more or less saturated and the high demand for residential properties has
increased rates beyond the reach of middle class. As a result, the suburban towns
within the NCR; Gurgaon, Noida, Faridabad and Ghaziabad have become destinations
for new residential projects that offer affordable quality housing to the middle class as
well as luxury housing for high end users. As these suburbs are now increasingly
generating employment, they will decide the future growth pattern of the NCR.

The business and trader class still largely dominate old residential areas in west and
northwest Delhi. Similarly the large multi-storey societies in East Delhi – in mayur
vihar and Patparganj – have found preference with the service class. The blue-collar
segment remains limited to apartments and society developments while big and small
traders occupy the whole of west Delhi, including Rohini. The elite class, in terms of
social status, i.e. politicians, bureaucrats and celebrities, restrict themselves to central
and south Delhi. Suburban areas like Noida and Gurgaon have developed as
alternative housing solutions and are inhabited mostly by professional and service
class people, as well as an increasing upper middle class segment.

Gurgaon offers a good quality of living with many high-end residential projects by
private developers. These new developments offer uninterrupted power supply,
community and health care centers along with facilities like a swimming pool,
clubhouse and other services. As per industry estimates, projects with approximately
5000 dwelling units have been announced in Gurgaon. Since it will be maturing as an
independent city, occupancies will improve but in the present context, it is an
oversupply situation.

Noida has experienced rising prices in its existing commercial, retail and residential
real estate. The new developing residential sectors are along the Greater Noida
expressway. Occupancies in Noida are good and prices are looking northward. It is a

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good destination for the middle class, as far as accessibility, social and physical
infrastructure and growth perspective are concerned.

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OBJECTIVE OF THE STUDY

 To find out the reasons for transition of people from Delhi to National Capital

Region (NCR).

 To find out the perception of people about the cities included in NCR namely

Gurgaon, Noida, Greater Noida, Faridabad and Ghaziabad

 To know the degree of importance of various factors which people consider while

purchasing a house.

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RESEARCH METHODOLOGY

SAMPLING METHOD –
Stratified method of sampling was used for face-to-face survey while snowball
sampling method was used while conducting telephonic survey.

SAMPLE SIZE
People living in Gurgaon Housing and Society Complexes, in Noida housing
complexes and in Ghaziabad (Indirapuram) Housing complexes were surveyed.

Total Number of people surveyed was:

Gurgaon Housing Complex ----- 200
Gurgaon Society Complex ----- 40
Noida Housing Complex ----- 56
Ghaziabad Housing Complex ----- 150
------
446
------

Sales Manager of 25 under-construction Housing Complexes were also surveyed to

know the degree of importance of various factors that people consider while
purchasing property, from developer’s viewpoint.

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DATA COLLECTION METHOD

Data was collected by using primary as well as secondary methods of data collection.

PRIMARY METHOD
1) Face to Face interview
2) Questionnaires
3) Telephonic Survey
4) Survey through E-Mail
5) Survey through Reference

SECONDARY METHOD
1) Magazines on Property
2) Internet sites on Property
3) Internet websites of popular property developers of India

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PROBLEMS ENCOUNTERED DURING THE SURVEY

Denial of permission to conduct survey in PVR shopping mall and few housing
complexes like DLF Belvedere Park, Ansals Sushant Lok, etc.

TRAVELLING TO FAR-OFF PLACES FROM DELHI

EVERYDAY.
Analyzing the perception of people about different cities of NCR was little difficult as
some respondents didn’t have much knowledge about Ghaziabad and Faridabad.

FACTORS AND PARAMETERS CHOSEN FOR SURVEY

The questionnaire was prepared in such a way so as to achieve all the three objectives
mentioned above. In order to attain the objectives five major questions were included
in the questionnaire along with few general questions.

In order to achieve the first objective of finding out the reasons responsible for
transition from Delhi to NCR two questions were included. One to find out the first
pull that attracts the people most while buying the property (See Q1 of Housing
Questionnaire given in Annexure 1). And the second question helps in finding out
other major reasons for purchasing the property (See Q6 of Housing Questionnaire
given in Annexure 1)

FACTORS WERE
1. Brand name – Brand name is something that immediately comes into your mind
when you think of any product. Even in case of purchase of property, brand name
plays a major role. Many people to prefer buy the property developed by well-
known and reliable developers. Moreover properties developed by established
developers help buyers in getting the best returns, as these properties can be sold
any time at a premium.

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2. Advertisements – Its an old belief that advertisement can sell literally anything.
In order to ascertain whether its true for property or not, it was also included as a
first pull factor in the questionnaire.

3. Location – This deals with property and connectivity to road links, airports,
railway stations and bus stops. The more approachable the property is to the
public transport terminal, the more value it holds. Proximity to the Central
Business District also plays an important role in this aspect.

4. Affordability – Budget plays an important role in short listing the options

available in the market. Its only when the budget is decided, one starts looking for
the available options in the price range decided.

SOME OTHER FACTORS WERE:

1. Need for More Space
2. Need for Better facilities
3. Need for Healthy environment
4. Want for Quality Construction
5. Lack of facilities in previous residence
6. Proximity to Workplace
7. Job transfer

In order to achieve the second objective of knowing the perception of people about
cities included in NCR a question related to it was included in the questionnaire (See
Q13 of Housing Questionnaire given in annexure 1).

PARAMETERS WERE
1. Location - This parameter includes all the locational factors such as proximity to
central business district, to schools, to hospitals, existence of huge shopping malls,
etc.

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2. Business Hub – This parameters helps in analyzing the perception that people
have about the job opportunities and business prospects available in different
cities included in NCR.

3. Quality of Living – This parameter helps in analyzing what people think about
the style of living prevalent in the 5 cities included in NCR.

4. Law and Order – This parameter helps in analyzing what people about the safety
and security situation prevalent in the 5 cities chosen for the survey.

5. Infrastructual Development – This parameter helps in analyzing how

respondents rate 5 different cities chosen for the survey, on the basis of conditions
of road and highways, availability of public transport, etc.

In order to achieve the third objective of knowing the degree of importance of various
factors, which people consider while purchasing the property, two questions were
included in the questionnaire. One to find the degree of importance of external factors
(See Q2 of Housing Questionnaire given in annexure 1) and another to find the degree
of importance of in-locality factors (See Q3 of Housing questionnaire given in
annexure 1).

FACTORS WERE EXTERNAL FACTORS

1.Price Range
2.Connectivity to Public transport
3. Proximity to workplace
4. Availability of loan
5. Easy Payment Plans
6. Rate of Interest
7. Resale Value
8. Clear title of property
9. Proximity to School
10. Proximity to Hospitals
11. Proximity to Entertainment Centers

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IN LOCALITY FACTORS
1.Peaceful Locality
2.Pollution Free environment
3.Population/occupancy
4.Quality of Construction
5.Maintenance
6.Suitability of Home Type
7.Utilization of space
8.Water Availability
9.Power Backup
10.Safety-Security
11.Recreational facilities/Sports Complex
12.Car Parking facility
13.Club Membership

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DISCUSIONS
REAL ESTATE MARKET
Construction sector has been the focus sector for some time as its impact on the
economy is big by virtue of its being a huge employment generator. The real estate
market is booming. Its growing at around 12% per annum.

Today its boom time in the real estate market and homebuyers couldn’t have asked for
a better opportunity to buy a home. Indian developers are now not talking of anything
less than world class. Infrastructure and economic development of some cities as well
as the housing shortages are driving the boom. There is a fundamental change in the
approach of the buyer, developer and the government. They all are seeking quality
development. The middle class demands the best that money can buy. With the
competition in the market, developers have to deliver the best within specified time
frames and the government, discharged from the duty of construction has to keep
everyone’s interest at heart.
The Major reasons for boom in the real estate market are:
EASY AVAILABILITY OF LOAN AND LOWER INTEREST
RATE
There is easy access to loans. The housing finance has posted a growth of 29 percent
in the last fiscal, touching 53,685 crores. Further, interest rates on housing loans have
come down and are much lower, between seven to eight percent as compared to 13-14
percent five years ago.

AFFORDABILITY
Another major reason for boom is that housing in India has become more affordable
in recent times. A decade ago, a house cost nearly 15-20 times an individual’s annual
salary. Today the cost of a house has come down to just about three to four times an
individual’s annual pay package.

INCREASE IN NUMBER OF NUCLEAR FAMILIES

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In the past, owing a home was a dream realized only after retirement. Largely because
people looked at it as a means of providing for their children, having themselves lived
in a joint family setup. Joint families are progressively getting included in the pages
of history book even in a country like ours. Not surprisingly the rise in the number of
nuclear families is pushing demand for housing further to cater to a generation that is
not averse to taking risks. Nor are they hesitant when it comes to paying a price to
realize their dreams

INVESTMENT OPTION
Competitive offers by home loan companies combined with good quality projects
developed by reputed builders having a number of amenities have made investing in
properties very attractive Wherever there is growth and opportunity, investors are
bound to be around and traditionally real estate has been a safe investment option.
Property is looked upon by many as an investment option that appreciates
substantially when compared to other traditional tools of investment.

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MIGRATION OF INDUSTRIES
Another major reason for boom in the real market is the migration of industries to
smaller towns leading to rural progress. With villages turning into towns and towns
becoming metros, the property market is growing steadily. This revolution has
directly resulted in greater demand for not just housing but also for the overall real
estate market with heightened demand for better infrastructure, transportation
facilities, entertainment zones, shopping malls, multiplexes and more.

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DATA ANALYSIS
Three tables and charts have been prepared for each of the three cities namely
Gurgaon, Noida and Ghaziabad to analyze what respondents from each of these cities
think about five cities included in NCR namely Gurgaon, Noida, Greater Noida,
Faridabad and Ghaziabad on the basis of five parameters namely Location, Business
Opportunity, Law and Order, Style of Living and Infrastructural Development and
also to know the reasons for which they bought the property.

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GURGAON

PERCEPTION OF PEOPLE ABOUT THE CITIES OF NCR

Business Quality of Law and Infrastructural

Location Opportunity living Order Development
Gurgaon 202 180 210 184 106
Noida 34 36 19 25 63
Greater Noida 1 12 8 17 65
Faridabad 2 10 1 1 2
Ghaziabad 1 2 1 4 5

FINDINGS:
1. Gurgaon buildings stand tall in each and every parameter. Gurgaon tops in all
the parameters among Gurgaon respondents.
2. Though in case of Infrastructural Development Greater Noida and Noida are
also ranked well by the Gurgaon residents. Probably the credit goes to DND
flyover.
3. Location wise, people of Gurgaon feel only Gurgaon and Noida are good in
the entire NCR as Greater Noida, Faridabad and Ghaziabad could fetch only 1,
2 and 1 favourable response out of total 240 responses.

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FIRST PULL TO CHOOSE THE HOUSING COMPLEX

Brand name Advertisements Location Affordability

46 10 140 72

FINDINGS:
1. The basic reason for people buying property in Gurgaon in mass scale is its
locational advantage. It shares border with the Capital of India. Moreover huge
employment generating BPO companies are located in Gurgaon. Many Reputed
schools and colleges have also come up in Gurgaon. Some of India’s biggest
shopping malls having shops of international brands as well as famous national
brands are also situated here.

2. Second major factor which attracted people to buy property in Gurgaon was
affordability. Developers realizing that most of the people shifting to Gurgaon will
be from middle class society they constructed big towers with numerous

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reasonable flats. Since the price of the property kept by the developers suited the
pockets of buyers they were able to buy it without any financial problem.

3. Third major factor was brand name. According to 17 % of the total respondents
brand name was the prime reason for which they bought the property. In Gurgaon
Housing Complexes have been constructed by popular and leading property
developers of India like Unitech, DLF, Ansals, Omaxe, Etc.

4. Only 4 % of the total respondents feel that it was advertisements which made
them buy the property. Advertisements can actually put the name of the property
in the mind of the buyer but no one actually buys the property only on the basis of
advertisements. Thus it will be wrong to say that advertisements are useless since
they do help in selling though not directly.

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MAJOR REASONS FOR SHIFTING

Better Better Healthy Increase in Quality of

Reasons More space Location Facilities environment living status construction
No. Of
people 46 84 54 43 38 11
Lack of Proximity to
Reasons facilities Workplace Job transfer Own house Investment Others
No. Of
people 18 58 10 42 11 26

FINDINGS:
1. Among various reasons better location is the most important reason for the people
to shift to Gurgaon Housing and Society Complexes. Why location is most
important has become apparent till now.

2. Proximity to Workplace and Better Facilities are close second and third most
important reasons. Proximity to Workplace may become the most important

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reason in few years time as industry migration to Gurgaon is happening quickly.

All the international brands are preferring Gurgaon over Delhi for their regional
office. Moreover people in need of better facilities like water availability, Power
Backup, Safety and security, etc also prefer to shift to Gurgaon as Housing
complexes of Gurgaon provide all these facilities.
3. Need for more space, Need for Healthy Environment, Need for Own House and
Increase in Living Status can be considered as other major factors for people
shifting to Gurgaon Housing Complexes.

4. People also purchased property in Gurgaon for investment purpose. This reason
may not be seen in such a large number in any other city of NCR. Its so because
people consider investment in property in Gurgaon as a very safe bet and expect
high return on Investment.

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NOIDA

PERCEPTION OF PEOPLE ABOUT THE CITIES

Business Quality of Law and Infrastuctural

Location Opportunity living Order Development
Gurgaon 2 13 22 22 6
Noida 54 32 32 27 9
Greater Noida 0 2 2 7 41
Faridabad 0 9 0 0 0
Ghaziabad 0 0 0 0 0

FINDINGS:
1. In Location, Noida is a clear winner with 54 out of 56 respondents choosing it as
the best location in the entire NCR. That is a huge percentage around 96%. This
shows that Noida people are happy with its Location. Noida is located close to the
Capital of India and is also very closely located to Indirapuram, another upcoming
city.

2. In all parameters other than location, Gurgaon has also been ranked as no.1 by
many people.

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3. One significant thing in this chart is that Faridabad was selected by many Noida
respondents as no.1 in case of business opportunities available.

4. The most significant thing indicated by the chart is that people of Noida have
chosen Greater Noida as no.1 in Infrastructural Development.41 out of 56
respondents have favourably marked for greater Noida while only 9 have marked
for Noida.
27

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FIRST PULL TO CHOOSE THE HOUSING COMPLEX

Brand name Advertisements Location Affordability

1 0 40 31

FINDINGS:
1. In Noida just like in Gurgaon, location is the most important factor that pulls
the people to buy a new home.
2. Advertisements have no role in the sale of homes but as said before in the
report advertisements do add the advertised property as an option in the mind
of the prospective buyer.

3. According to respondents from Noida Brand name of the developer didn’t

play a big role in making them buy the property. Its probably because Noida
doesn’t have highly popular brands like Ansals, Unitech, Eros, DLF, etc.

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4. Affordability is another major reason for the buying the property in Noida. As
there is hardly any popular developer in Noida and the homes provided in
Noida are not as luxurious as that in Gurgaon, the prices are very low as
compared to the prices prevailing in Gurgaon. In Gurgaon Higher class and
Upper middle class people also buy homes in large numbers whereas in Noida
the number of high class and upper middle class people looking for new home
is very less.

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MAJOR REASONS FOR SHIFTING

Better Better Healthy Increase in Quality

Reasons More Space Location facilities environment living status construction
No. Of
people 31 28 35 11 13 9
Lack of Proximity to Job
Reasons facilities workplace transfer Own house Investment Others
No. Of
people 5 2 0 31 1 3

FINDINGS:
1. One of the most important thing found out in the survey was that the one of the
major reasons to buy the house was the desire of people to have their own house.
This reason was not at all important in case of Gurgaon. This goes on to show that
houses in Noida are very reasonable. Mostly people earlier living in rent have
bought properties in Noida either to avoid high rents prevailing in Delhi or due to
the desire of having an own asset.

2. Need for better facilities was tick marked by maximum number of people as a
reason for buying the property. This again proves the fact that people buying

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property in Noida are generally from middle class who earlier used to live in less
popular colonies of Delhi which are deprived of essential facilities like water,
power and safety.

3. Another major reason for buying the property in Noida is Need for more space.
Generally people earlier living in joint families or newly married couples prefer
buying property in Noida as they are affordable.

4. Only 1 out of 56 respondents have said that investment was the main reason to
buy the property, which is around 2 % of the total respondents. This goes on to
show that people don’t generally buy property in Noida for investment purpose.

5. Another important point to notice is that in Noida proximity to workplace reason

is insignificant. Its probably because virtually non-existence of BPO companies in
Noida.

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GHAZIABAD

PERCEPTION OF PEOPLE ABOUT THE CITIES OF NCR

Quality of Law &

Location Business Opportunity Living order Infrastructure
Gurgaon 20 28 59 60 40
Noida 93 75 74 64 49
Greater Noida 2 6 9 12 48
Faridabad 1 17 2 5 0
Ghaziabad 34 24 6 9 13

FINDINGS:
1. 1.Respondents from Ghaziabad have chosen Noida as the best location in the
entire NCR. As many as 93 out of 150 respondents have marked favourably for
Noida which is around 60 % of the total respondents. This clearly goes to show
that Ghaziabad respondents have good image of Noida as far as location is
concerned.

2. In all other parameters there is a clash between Noida and Gurgaon but Noida
seems to lead in every parameter.

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3. In business opportunity Noida have again been favoured while rest four have
almost same image in the mind of Ghaziabad respondents.

4. In case of quality of living both Noida and Gurgaon have been marked by many as
number 1. Style of living in other three places do not have enjoy good reputation
in the mind of the Ghaziabad respondents.

5. In case of law and order Ghaziabad and Faridabad are clear losers. This fact has
been observed in all the three cities.
6. In Infrastructure Greater Noida enjoys good reputation.
1. 31

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FIRST PULL TO CHOOSE THE HOUSING COMPLEX

Brand Name Advertisements Location Affordability
14 11 85 92

FINDINGS:
1. In Ghaziabad affordability is the main reason for the people buying property out
there. The occupied Housing complexes of Ghaziabad are pretty old and very
reasonable. Developments in Ghaziabad started much before it started in Gurgaon
and Noida. So at that time prices were low. Now with the massive development of
Noida, Gurgaon as well as of Indirapuram price of property have increased like
anything.

2. Location is the second most important factor which makes people buy property in
Ghaziabad. Ghaziabad is located close to Noida as well as Delhi. Moreover
Indirapuram, the real upcoming area is its neighbour. Moreover Ghaziabad’s
development took place years ago so it already has lots of facilities available.

3. Advertisements and brand name did compel few to buy the property in Ghaziabad
but still they were not so important factors.
MAJOR REASONS FOR SHIFTING

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More Better Better Healthy Increase in Quality

Reasons Space Location facilities environment living status construction
No. of
People 49 71 37 9 11 2
Lack of Proximity to
Reasons facilities workplace Job transfer Own house Investment Others
No. of
People 9 12 5 54 1 20

FINDINGS:

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1. Though Ghaziabad respondents have rated Affordability as the major reason for
buying the property in Ghaziabad but if we exclude affordability as a factor we
find that location too was a very important factor as we can see in this chart. 71
out of 150 Respondents have marked location as a reason for buying the property
i.e. around 50 % of the total respondents.

2. Just like in Noida, the desire to have an own house is a major reason to buy a
property, in Ghaziabad too. This proves the reliability of the previous chart which
shows that the major reason to buy a property in Ghaziabad is affordability.

3. Third most important reason for buying property in Ghaziabad is requirement of

more space.

4. Same as Noida reasons like proximity to workplace and investment are almost
insignificant.

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OTHER BUILDINGS SURVEYED

Unitech Nirvana Country (Gurgaon)

 Unitech ‘The Close” (Gurgaon)
 Omaxe Nile (Gurgaon)
 Omaxe NRI City (Greater Noida)
 Omaxe Forest (Noida)
 Omaxe Royal Residency (Noida)
 Jaipuria Sunrise (Indirapuram)
 Ashiana Greens (Indirapuram)
 Ashiana Orchids (Greater Noida)
 Supertech Estate (Indirapuram)
 Supertech Avant Grade (Indirapuram)
 Eldeco Golf View Apartments (Greater Noida)
 ATS Green Village (Noida)
 Assotech Windsor Greens (Noida)
 Assotech Windsor Park (Noida)
 Vatika City (Gurgaon)

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ANALYSIS OF DATA COLLECTED FROM DEVELOPERS

Sales managers were asked to rank the above mentioned factors on the scale of 1-10
(where 1 stands for the most important factor and 10 stands for the least important
factor). After collecting the data, it was put in the excel sheet and then average for
each of the factors was calculated. In the above Bar chart averages have been shown.
Factor with the least average is the most important factor according to the developers,
that people consider while purchasing the property.

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FINDINGS:
1. It is clear from the above bar chart that Location is the most important factor
which people consider while purchasing the property.

2. After location, quality of construction and safety are second and third most
important factors respectively.

3. Healthy environment, Water availability, Maintenance, Power Backup and club

membership fall in the middle category with average ranking ranging between
3.5-7.

4. Car Parking and Sports complex are least important factors and according to
developers, people don’t consider them much while choosing a property.

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RECOMMENDATIONS

As Unitech enjoys good brand name and have a battalion of brand loyal customers it
shall make sure that the maintenance of its occupied housing complexes is taking
place in the best possible manner.

 Due to stiff competition in the market Unitech shall focus on the Quality of homes
provided and shall also try its best to meet different kind of requirement of
different buyers. Due to the current oversupply situation in the market Unitech
shall resist from increasing price of its property.

 Unitech shall help and lure the prospective buyers by helping them in getting
housing loans. It shall collaborate with some popular banks for this purpose.
These days even banks are more than willing to provide home loans.

 Unitech shall provide the right amount of greenery in its housing complexes, as
pollution free environment is a very important factor that people consider while
purchasing the property.

 Gurgaon, Noida and Greater Noida are the places where Unitech shall come up
with new projects as they have been marked favourably by the all respondents.
Respondents do not have good image of Faridabad and Ghaziabad while
Indirapuram is yet to prove its worth.

 Advertisement for selling property in Gurgaon can be “Why drive for 45 minutes
to your workplace everyday, take a flat in Gurgaon today.” As proximity to
workplace is the major reason for people buying flats in Gurgaon. Whereas for
Noida and Greater Noida advertisement can be like “Fed up of paying rent. Now
realize your dream of having a house of your own-COME TO NOIDA” as desire
of having an own house is the most important reason for the people buying
property in Noida.

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CONCLUSION

The major external factors which people consider while purchasing the property are
Price, Availability of loan and Proximity to workplace.

1. The major In-Locality factors which people consider while purchasing the
property are Quality of construction, Availability of water and Pollution-free
environment

2. Perception of people about different cities of NCR

 Location wise Gurgaon and Noida are adjudged the best by the respondents
 Business opportunity wise Gurgaon due to the mass presence of BPO
company and offices of MNC’s and Noida due to its proximity to Delhi are
consider good by the majority of respondents.
 In Quality of living again Gurgaon and Noida leads the pack but out of the two
Gurgaon is better due to the existence of Higher and upper-middle class
people in large number.
 In Law and Order all the places are bad as per the respondents but out of the
five Gurgaon is the best.
 As far as infrastructural development is concerned Greater Noida enjoys good
reputation among the respondents of all the three cities.

3. In totality, both Location as well as Affordability together account for more than
95 % of the total responses.

4. In Gurgaon major reasons other than affordability and location, to purchase the
property were proximity to workplace and healthy environment.

5. In Noida and Ghaziabad other major reasons were almost the same -desire to own
an own house as well as need for better facilities.

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BIBLIOGRAPHY

BOOKS & JOURNALS

 Real Estate in India , JM PUJARI, Manav Publication, 2006

INTERNET LINKS
 www.unitechgroup.com
 www.dlf-group.com
 www.ansalspropertiesltd.com
 www.eros-group.com
 www.eldecogroup.com
 www.omaxe.com
 www.parsvnath.com
 www.ashianahousing.com
 www.gurgaonproperties.net
 www.realestatencr.com
 www.gurgaonrealestate.com
 www.estatedeveloper.com

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APPENDICES
ANNEXURE- 1

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ANNEXURE- 2

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ANNEXURE -3

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