Real estate : Insights

Presenters:
 Manik Madan (2626)
 Deepak Yadav (2664)
 Vaibhav Gupta (2649)
 Nishant Aggarwal (2646)
 Abhishek Dalal (2641)
DFS, MFC

 Overview of Real Estate and basic terminologies
 Explanation of Shares comparison approach
 Real Estate Investment Management
 Regulatory structures used in Real Estate Industry
 Real Estate Methods of valuation
 Case Study covering methods of valuation
 Real Estate Private Equity Funds
 Future of Real Estate
 Summary

 Commercial real estate sector is in boom in
India.
 In the last fifteen years, post liberalization
of the economy, Indian real estate business
has taken an upturn and is expected to grow
from the current USD 14 billion to a USD 102
billion in the next 10 years.
DFS, MFC

Growing Market
Demand
Greater
Availability of
Information
• Realization of large
commercial projects
• IPOs by developers
• Gradual organization of the
markets in the Tier I cities
• Emergence of transparency and
liquidity
• Entry of international real
estate consultancies
• Governing legal framework
relaxed
• Competitive pricing
DFS, MFC

 Booming economy; accelerated GDP to 8% p.a.
 India’s emergence as an attractive off-shoring destination
and availability of pool of highly skilled technicians and
engineers ; Development of large captive units of major
players include GE, Prudential, HSBC, Bank of
America, Standard Chartered and American Express
 Rise in disposable income and growing middle
class, increasing the demand for quality residential real
estate and real estate as an investment option
 Entry of professional players equipped with expertise in
real estate development
 Relaxation of legal rulings and processes by the governing
bodies encouraging investments in real estate
 Improvement in infrastructure facilities
DFS, MFC

 ABSTRACT OF TITLE
A summary of the history of the legal title to a piece of
property; all changes in ownership, liens, mortgages
or any other matter that might affect the title.
 AGREEMENT OF SALE; OR PURCHASE AND SALE
AGREEMENT
A written agreement by which a buyer agrees to
purchase and a seller agrees to sell according to terms
set forth in that agreement.
 APPRAISAL
A procedure in which a qualified individual estimates
the value of a piece of property.

 ATTORNEY IN FACT
One who holds a power of attorney from
another, allowing him to execute legal documents on
behalf of the grantor of power.
 CLOSING
The final meeting at which the transfer of title of
property passes from the seller to the buyer.
 DEED
A legal document whereby title to real estate is
transferred from one person to another.

 EARNEST MONEY
Advance payment of part of the purchase price to bind a
contract for property.
 ESCROW
A procedure where a third party handles legal
documents and funds on behalf of a seller, buyer, and
lender.
MORTGAGE
An instrument used to encumber land as security for a
debt.

 POINTS
The one-time fee charged by a lending institution for
making a loan expressed as a percentage of the final
amount of the loan.
 SECOND MORTGAGE
Financing real estate with a loan or loans that are
subordinate to the first mortgage. It usually calls for a
higher interest rate and a shorter repayment period.
 ZONING
Procedure that classifies real property for a number of
different users:
residential, commercial, industrial, etc., in accordance
with a land-use plan. Ordinances are enforced by a

 The sales comparison approach (SCA) is one of the
three major groupings of valuation methods used in
real estate.
 This approach compares a subject property's
characteristics with those of comparable properties
which have recently sold in similar transactions.
 The process uses one of several techniques to adjust
the prices of the comparable transactions according to
the presence, absence, or degree of characteristics
which influence value.

 It determines the value of something as the sum of the
value of the various components which contribute
utility.
 For example, in the case of a single family
residence, such attributes might be floor
area, views, distance to amenities, number of
bathrooms, lot size, age of the property and condition
of property.
 the most common SCA method used by estate agents
and real estate appraisers is the sales adjustment grid.
 It uses a small number of recently sold properties in
the immediate vicinity of the subject property to
estimate the value of its attributes.

 More advanced researchers and appraisers commonly
employ statistical techniques based on multiple
regression methods which generally compare a larger
number of more geographically dispersed property
transactions to determine the significance and
magnitude of the impact of different attributes on
property value.
 In more complex situations, such as litigation or
contaminated property appraisal, appraisers develop
SCA adjustments using widely accepted advanced
techniques, such as repeat sales models (to measure
house price appreciation over time), survey
research, case studies or other statistically based
techniques.

 Summarize any actions required of your audience
 Summarize any follow-up action items required of you

 It involves the
purchase, ownership, management, rental and/or sale
of real estate for profit
 Improvement of realty property as part of a real estate
investment strategy is generally considered to be a
sub-specialty of real estate investing called real estate
development.

Real Estate is a asset with
 Limited Liquidity relative to other investments.
 Capital Intensive
 Highly Cash Flow dependent
If these factors are not well understood and managed by
the investor, real estate becomes a risky investment

Typical Sources of investment include following -
 Market listings (through a Multiple Listing Service or
Commercial Information Exchange)
 Real estate agents and Real estate brokers
 Banks (such as bank real estate owned departments for
REO's and short sales)

 Government entities (such as Fannie Mae, Freddie
Mac and other government agencies)
 Public auction (foreclosure sales, estate sales, etc.)
 Private sales (off-market transactions for sale by owner
For sale by owner)
 Real estate wholesalers and investors (flipping)

 Equity
 Debt
Things to notice about leverage :
 By decreasing equity requirements and increasing
leverage, our return on investment (ROI) is increases.
 By leveraging there would be negative cash flow from
the beginning.

 A typical investment property generates cash flows to
an investor in four general ways:
1. Net Operating Income
2. Tax Shelter Offset
3. Equity build-up
4. Capital Appreciation

 Adverse possession
Mitigate - Obtain a boundary survey from a licensed surveyor
 Overpayment at purchase
Mitigate - Obtain third-party appraisals and perform
discounted cash flow analysis as part of the investment pro
forma, do not rely on capital appreciation as the primary
source of gain for the investment
 Cash shortfall
Mitigate - Maintain sufficient liquid or cash reserves to cover
costs and debt service for a period of time

 Market Decline
Mitigation Strategy - Purchase properties based on a
conservative approach that the market might decline and
rental income may also decrease
 Fraudulent sale - Verify ownership, purchase title insurance
 Fire, flood, personal injury – Insurance
 Tenant destruction of property - Screen potential tenants
carefully, hire experienced property managers

 The regulatory structure in real estate industry is
facilitated primarily by the Real Estate (Regulation &
Development) Bill, 2011.
 Land Acquisition and Rehabilitation and Resettlement
Bill, which is currently under review, will also
contribute to existing regulatory structure.

 Primary objectives of the bill –
 To establish the Real Estate Regulatory Authority
for regulation and planned development in the real
estate sector.
 To ensure sale of immovable properties in an
efficient and transparent manner.
 To protect the interest of consumers in the real
estate sector and establish an Appellate Tribunal to
adjudicate disputes and hear appeals from the
decisions.

 Consists of a Chairperson and at least two whole time
Members to be appointed by the Government on the
recommendations of the Selection Committee.
 The Chairperson and Members hold office for a term
not exceeding three years.
 Government may, in consultation with the
Authority, appoint officers and employees for efficient
discharge of their functions under the general
superintendence of the Chairperson.

 Primary objectives of The Real Estate Regulatory
Authority –
 Protection of interest of the allottees.
 Encourage construction of environmentally
sustainable and affordable housing and promote
standardization.
 To act as the nodal agency to co-ordinate all efforts
of the Government regarding the development of
the real estate sector.

 Primary objectives of The Real Estate Regulatory
Authority –
 To ensure compliance of the obligations cast upon
the promoters and the allottees under this Act and
the rules and regulations made there under.
 To make recommendations to the Government on
matters connected with the objects of this Act.
 To fix for each area under its jurisdiction the
standard charges through policy or guidelines, or
regulations to be levied on the allottees by the
promoter.

 Real Estate Appellate Tribunal, established by the
Central Government to adjudicate any dispute
between –
 Between a promoter and a allottee.
 Between a promoter and Authority.
 Between Government and the Authority.
 The Government or the Competent Authority or any
person aggrieved by any decision of the Authority may
prefer an appeal to the Appellate Tribunal.

 The Appellate Tribunal consists of -
 A full time Chairperson.
 Four full time Judicial Members as the Central
Government may notify.
 At-least four full time Technical or Administrative
Members.
 The Chairperson has powers of superintendence and
direction in the conduct of the affairs of Appellate
Tribunal and presides over the meetings of the
Appellate Tribunal and exercises and discharges
administrative powers and functions of the Appellate
Tribunal.

 The Appellate Tribunal shall not be bound by the
procedure laid down by the Code of Civil
Procedure, 1908 but shall be guided by the principles
of natural justice.
 Subject to the provisions of this Act, the Appellate
Tribunal shall have power to regulate its own
procedure.
 The Appellate Tribunal shall also not be bound by the
rules of evidence contained in the Indian Evidence
Act, 1872.

 Central Advisory Council is established by the Central
Government with the ex-officio Chairperson of the
Central Advisory Council being Minister to the
Government of India in charge of the Ministry of the
Central Government dealing with Real Estate.
 The Central Advisory Council consists of not more
than ten members to represent the interests of real
estate industry, consumers, construction
labourers, non-governmental organizations and
academic and research bodies in the real estate sector.

 The functions of the Central Advisory Council
shall be to advise the Central Government on –
 All matters concerning the implementation of this
Act.
 Major questions of policy as applicable to the real
estate sector.
 Protection of consumer interest.
 To foster the growth and development of the real
estate sector.
 Any other duty or function as may be assigned to it
by the Central Government.

 Valuation Methods
 Case Studies

 Real estate appraisal, property valuation or land
valuation is the process of valuing real property.
 The value usually sought is the property's Market
Value.
 Appraisals are needed because compared
to, say, corporate stock, real estate transactions occur
very infrequently.
 Not only that, but every property is different from the
next, a factor that doesn't affect assets like corporate
stock.
 Furthermore, all properties differ from each other in
their location - which is an important factor in their
value.

 This product differentiation and lack of frequent
trading, unlike stocks, means that specialist qualified
appraisers are needed to advise on the value of a
property.
 The appraiser usually provides a written report on this
value to his or her client.
 These reports are used as the basis for mortgage loans,
for settling estates and divorces, for tax matters, and so
on.
Real Estate Valuation (contd.)

There are several types and definitions of value sought by a real
estate appraisal. Some of the most common are:
 Market value – The price at which an asset would trade in a
competitive Walrasian auction setting. Market value is usually
interchangeable with open market value or fair value. International
Valuation Standards (IVS) define:
 Value-in-use, or use value – The net present value (NPV) of a
cash flow that an asset generates for a specific owner under a
specific use. Value-in-use is the value to one particular user, and
may be above or below the market value of a property.
Market value - the estimated amount for which an asset or liability
should exchange on the valuation date between a willing buyer and
a willing seller in an arm's length transaction, after proper
marketing and where the parties had each acted
knowledgeably, prudently and without compulsion.

 Investment value - is the value to one particular investor, and
may or may not be higher than the market value of a property.
Differences between the investment value of an asset and its
market value provide the motivation for buyers or sellers to enter
the marketplace. International Valuation Standards (IVS) define:
 Insurable value - is the value of real property covered by an
insurance policy. Generally it does not include the site value.
 Liquidation value - may be analyzed as either a forced
liquidation or an orderly liquidation and is a commonly sought
standard of value in bankruptcy proceedings. It assumes a seller
who is compelled to sell after an exposure period which is less than
the market-normal time-frame.
Investment value - the value of an asset to the owner or a
prospective owner for individual investment or operational
objectives.

 There can be differences between what the property is
really worth (Market Value) and what it cost to buy it
(Price).
 A price paid might not represent that property's market
value.
 Sometimes, special considerations may have been
present, such as a special relationship between the buyer
and the seller where one party had control or significant
influence over the other party.
 In other cases, the transaction may have been just one of
several properties sold or traded between two parties.

 In such cases, the price paid for any particular piece isn't its
market 'value' but rather it's market 'price'.
 At other times, a buyer may willingly pay a premium
price, above the generally-accepted market value, if his
subjective valuation of the property (its investment value
for him) was higher than the Market Value.
 The most common reason why the value can be different
that the price paid, is that one of the two parties (buyer or
the seller) is uninformed as to what a property's market
value is, but nevertheless agrees to buy or sell it at a certain
price which is too expensive, or too cheap.
 It is the obligation of a Real Property Appraiser to estimate
the true 'market value' of specific real property and not its
'market price'.

 There are three main methods for valuing a real estate
property.
 Cost Method
 Comparable Sales Method
 Income Method

 The Cost Approach estimates the replacement value of a
property by analyzing the cost of its components, i.e. land and
building.
 Value is calculated by adding the market value of the land as if
vacant to the reconstruction cost of the building, minus
depreciation suffered over the years in comparison to a new
building.
 This approach has the most validity/reliability when
improvements are new or near-new. For older/aged structures,
the cost approach may not be relevant due to the greater
subjectivity involved in estimating accrued depreciation.
 The cost method is often used for valuation of industrial
properties that may have specialized equipment and do not
have any easily observed rental market.

Procedure:
 Estimate the value of the land as if vacant, by
comparing it to similar properties.
 Estimate the replacement cost of the building at
present. Factors to be considered include site
preparation, utilities, types of building improvements,
and tenant improvements etc.
 Assess the depreciation that has occurred to the
building and deduct the figure from the replacement
cost of the building.
 Add the estimated worth of the land, and the resulting
figure will be an indication of the value of the
property.

Market value of land: Rs10,00,000
Replacement cost of the building: Rs 20,00,000
Depreciation: Rs 7,50,000
Value of property = 10,00,000 + 20,00,000 -7,50,000 = Rs
22,50,000

 The "Comparable Sales Method" is sometimes called the
"Inferred Analysis" method of property valuation.
 This method estimates the value of a house by comparing it
to the prices of similar properties sold in similar
locations within a recent period of time..
 The basic assumption is therefore that a property is worth
what it will sell for, in the absence of undue stress and if
reasonable time is given.
 It is the most prevalent method in the residential property
market.

Procedure:
 The central task is to systematically assemble data on
comparable properties.
 Once the data has been obtained and collated the task
is to draw informed conclusions on the value of your
property.
 This method typically examines three or more like
properties and adjusts their value based on similarities
and differences among them.

 Advantages:
 It is the most easy and straightforward method and has
become general practice in the residential housing market.
 It leads to an objective valuation being placed on the
property. The answer is connected to the actual market
value as opposed to an individual's preferences.
 Disadvantages:
 Sometimes it might be difficult to locate enough similar
property transactions to draw meaningful conclusions with
regards to what the value should be.
 Market value and price might differ due to "unreasonable"
actions by other actors.
 This technique makes no reference to intrinsic value.

 The "Income Method" is also termed
the fundamental, or intrinsic method of property
valuation.
 In this method, the present worth of a property is
estimated on the grounds of projected future net income
(in rent, for example) and re-sale value.
 The method uses the discounted cash flow (DCF) model to
determine the present value of an investment.

 Assume we are valuing three-bed room flat.
 The expected Resale value is Rs 1,80,00,000 in 10 years.
 The three-bedroom flat generating Rs 4,00,000 per year in
rent costs Rs1,60,000 in expenses. So annual net income is Rs
2,40,000.
 Let the discount rate be 8%.
 PV of resale value = Rs180,00,000 / (1 + 0.08)¹º = Rs 83,37,500.
 PV of net income = (Rs 2,40,000 / 1.08¹) + (Rs 2,40,000 /
1.08²) + (Rs 2,40,000 / 1.08³) + … etc. … + (Rs 2,40,000 / 1.08¹º)
= Rs 16,10,200.
 PV of flat = Rs 83,37,500 + Rs 16,10,200 = Rs 99,47,700.

 Advantages:
 It focuses directly on the value of the property to the
individual concerned.
 Income analyses are very detailed and derive specific
conclusions .
 Disadvantages:
 This method is more complex and less intuitive than the
Comparable Sales Method.
 This method ignores the actual market prices of property.
 The ultimate house price recommendation is highly sensitive
to the assumptions made.

We shall now consider THREE CASE STUDIES, each
based on a specific REAL ESTATE VALUATION
METHOD..

I bought a house few months
back.. But I doubt whether I
paid an appropriate price for
it.. Can you tell me whether I
struck the right deal ?

 1. “The property in this first case study is an actual
investment opportunity that Bob purchased several
months ago. The house is located directly across the street
from a beautiful all sports Lake Orion. The property is not
considered to be lakefront, but rather lake view. While
houses on the lakefront typically sell for $200 per square
foot and up, lake-view houses sell for between $120 and
$140 per square foot. The subject property falls into the
second category, with a couple of exceptions, which is the
reason Bob is interested in it to begin with. The house sits
directly across the street from the lake on a little more than
three-fourths of an acre and happens to be the only parcel
of land uniquely situated with buildable lot space and
zoned residential multiple (RM). That means it is not a
single-family parcel, but rather a multifamily parcel that
will accommodate more than one house or condominium
unit.

 2. An additional bonus included in this deal is that
along with the land and the house are two boat slips.
The seller of the property happened to own 28 feet of
lake frontage right across the street from the house
and this parcel is currently home to two boat slips and
a motorized hoist, or boat lift.

 3. Take a few minutes to examine Table 10.1, carefully
studying the property’s income as it flows through the
model. In this table, the property is analyzed using the
seller’s original asking price of $370,000. The
worksheet you see is a proprietary model Bob
developed to quickly and easily analyze potential
rental house investment opportunities.
 4. The first section of the model allows the user to
enter information for comparable home sales(also
known as Comps). This information is needed to help
make accurate projections of the estimated resale
value of an investment property and can be easily
obtained by almost any local real estate sale agent.

 5. Next in this section is a provision that allows users to make
adjustments to the sales price of the comps. This section
provides users with the ability to compare properties on an
apples-to-apples basis, just as an appraiser would do. For
example, if the subject property has a central air-conditioning
system and the comparable sale property does not, the price of
the comparable sale will need to be revised upward in the
adjustments to price section.
 6. This is exactly how real estate agents and appraisers derive the
market value of a house. They start with an average price per
square foot of several similar houses that have recently been sold
and make adjustments to compensate for differences in value.
The comp averages section simply takes an average of the three
comps’ sales prices to come up with an average sales price. This
number is then divided by the average price per square foot. The
result is a weighted average price per square foot.”

 We will use COMPARABLE
SALES TECHNIQUE to find
actual worth of Bob’s new
home..

 Bob has managed to
strike a perfect deal.
 He has made a gain of
Rs 6956 even in the
Worst Case Scenario.
 Bob is very smart!!

INCOME APPROACH of Real
Estate Valuation

 Income Approach is a valuation method appraisers and real
estate investors use to estimate the value of income
producing real estate. It is based upon the premise of
anticipation i.e., the expectation of future benefits.
Overall Capitalization
The market value of a property, V, is frequently estimated as:
where NOI = net operating income for the subject property;
R = capitalization rate--the rate used to convert the property’s
flow of benefits (income, capital gain, tax benefits) to a
value today.
V =
NOI
R

 1. Estimate the potential annual gross income, that
is, the income that would accrue if all units were
rented at their market value.
2. Determine the effective gross income by
deducting an allowance for vacancy and collection
loss.
3. Determine the annual net operating income by
deducting the annual expenses of operation.
4. Apply the appropriate capitalization rate to the
annual net income.

 A rental property of ABC company is divided into 14 units of
rental @900 $ per month of similar property type.
 It experiences with vacancy and collection losses of 5 %.
 Operating expenses which include normal expense items
typically paid by the landlord such as real property
taxes, insurance, major maintenance, property management
10% of EGI, and remodeling(3 Units annually @ $2400).
 Estimate the value of a income rental property.

 Using Capitalization Rate and Estimated value can be
estimated.
Capitalization Rate = NOI /Sales price
NOI = Net Operating Income
Estimated Market Value = NOI/Capitalization Rate

Cost Approach of Real
Estate Valuation
case Study 3

 The cost approach begins with the
determination of site value. Sales of
vacant land with similar zoning, utility, and
acquired for the same or similar use as the
subject property being appraised, are
analyzed.

 Once site value has been
determined, reproduction or replacement
costs of the improvements are estimated
as if the improvements were new. The
estimate is then further adjusted for all
elements of accrued depreciation
including physical depreciation, functional
and/or external obsolescence

 The Building is 20 years old. But the effective age is 15
years.
 Estimated Life expectancy of a similar building is 45
years.
 The Estimated value of the site of building has been
calculated to be $ 814,000.

Current Price Costs of building improvements are as
follows:-
1. Building Improvement @ $86/Sq. Ft (6937)
2. Canopy @ $25/Sq. Ft (567)
3. Other Improvements @ $32,000 Lump sum
Physically Curable Depreciation- $2,500
Physically Uncured:-
Item New Cost % Depreciated Amount Dep.
Roof $ 25000 33% 8250
Mechanical $ 20000 33% 6600
Floor Cover $ 8000 50% 4000
HVAC $ 48000 30% 14400

 The Indian real estate sector has grown rapidly over the
last few years, with its stakeholder profile evolving
from locally-focused, privately-owned enterprises to
increasingly corporatized, professional organizations
funded with public capital and having multiple market
and product strategies.
 As a result, Indian real estate has seen a considerable
flow of capital in recent years, both from foreign and
domestic sources.

 The developer community is adapting to the
requirements of joint venture arrangements with
institutional capital sources by providing improved
transparency and higher professional standards.
 This fragmented nature of the developer community
provides scope for Real Estate Private Equity (REPE)
Funds to source off-market investment opportunities
and strategic relationships .

 An asset class consisting of equity and debt
investments in property.
 Investments are made via private equity real estate
fund which pools capital from private equity investors.
 These funds typically have a life span of five to seven
years and not suitable for small retails investors as
minimum ticket size in most of the PE funds is Rs 25
lakhs.

 The period includes a two-year investment period
where properties are acquired, followed by a 3-5 year
holding period where active asset management is
carried out.
 At the end of the whole period, the investors make an
exit when the acquired properties are sold.
 Typical expenses include annual management
fees, one-time setup fees, and a performance-based fee
(also known as carried interest).

Private Equity
Investor
Real Estate Private
Equity Fund
Real Estate
Projects/Properties
Investments
Partnership Interests
Investments
Equity/
Debt Position

 Considerations for investing in private equity real
estate funds relative to other forms of investment
include:
 High returns associated with High Risk
 Substantial entry costs, and
 Illiquid Investments.

 REPE fund investment is for those who can afford to
have their capital locked in for long periods of time
and who are able to risk losing significant amounts of
money.
 This is balanced by the potential benefits of annual
returns, which are often excess of 20% for successful
opportunistic funds.

 If a private equity real estate firm can't find suitable
investment opportunities, it will not draw on an
investor's commitment.
 Given the risks associated with private equity real
estate investments, an investor can lose all of its
investment if the fund performs badly.

 REPE funds has substantial entry costs with most
funds requiring significant initial investment (usually
upwards of $1,000,000) plus further investment for the
first few years of the fund.
 Investors in private equity real estate funds
tend, therefore, to be institutional investors or high
net worth individuals.

 Mostly REPE funds are in the limited partnerships
structure and therefore referred to as "illiquid"
investments which should earn a premium over
traditional securities, such as stocks and bonds.
 Once invested, it is very difficult to gain access to your
money as it is locked-up in long-term investments
which can last for as long as twelve years.
 Distributions are made only as investments are
converted to cash; limited partners typically have no
right to demand that sales be made.

 The most common investment strategies employed by
the real estate private equity funds in India are :
 Core plus investing,
 Value added investing , and
 Opportunistic investing

 This is a moderate risk/moderate return strategy.
 The fund will generally invest in core properties
however some of these properties will require some
form of enhancement or value-added element.

 This is a medium-to-high risk/medium-to-high return
strategy.
 It will involve buying a property, improving it in some
way, and selling it at an opportune time for a gain.
 Properties are considered value added when they
exhibit management or operational problems, require
physical improvement, and/or suffer from capital
constraints.

 This is a high risk/high return strategy.
 The properties will require a high degree of
enhancement.
 This strategy may also involve investments in
development, raw land, and niche property sectors.
 Investments are tactical.

 There were 89 active realty private equity funds in
India between 2008 and 2011, according to Venture
Intelligence, a research service focused on PE and
mergers and acquisitions.
 Tata Realty and Infrastructure, Indiareit Fund
Advisors, HDFC Real Estate Fund, ICICI Venture, ASK
Property Investment Advisors and Kotak Realty Fund
are some of the funds through which you can invest in
domestic and overseas properties.

 It is expected that Indian realty market can improve in
2013 due to the positive impacts of policy and
regulatory environment.
 Real estate regulation bill, land acquisition bill and
approval of FDI in India are some of the factors that
will increase demand of commercial and residential
property in the country..

 Though the last year was not that good in terms of real
estate market, there are positive expectations from the
current year.
 Rising construction cost and declining sales have left
negative impacts on real estate market.
 Total revenue of top real estate companies came down
by 4% in second quarter..

 In FY12 commercial space absorption in top six cities
was nearly 36 million square feet, in FY13 there will be a
drop of around 10-15% in office space absorption. This
will be the result of slowdown in the global and
domestic economy.
 Some of the hot destinations for commercial real estate
include Gurgaon and Noida with an anticipated share
of more than 85% of office space transactions.

 In Mumbai, localities that will see top multinationals
will include Bandra Kurla, while Nariman Point will see
minimal demand and lower rentals.
 Hyderabad and Bangalore will get office space demand
mostly from IT industry, while in Chennai 70% share
will be of secondary business districts and peripheral
business districts

 Predicting that the sagging momentum will pick up for
real estate from the second half of 2013, Anuj
Puri, Chairman & Country Head, Jones Lang
LaSalle India, said,
“The country’s economic environment will certainly
improve in 2013, with a corresponding gain in
momentum for real estate. The most tangible benefits
of economic improvements on the Indian real estate
space will be seen in second half of 2013.”

 According to Sanjay Dutt, Executive Managing
Director – South Asia, Cushman & Wakefield,
“For the Indian real estate sector, 2012 was a year of
cautious approach as stakeholders -
developers, investors and occupiers began the year with
an air of skepticism, a trait that continued through the
year. Rising inflation, rupee depreciation and
increasing cost of capital added to the woes that
affected demand as well as future supply dynamics of
real estate in the country.

 According to Ballbirsingh Khalsa, National
Director, office Industrial Agency, Knight Frank
India,
“With business sentiments getting improved, the
downward trend will change in FY14 and each quarter
will see a 9-10 million of absorption, with overall
absorption likely to surpass 40 million in FY14.”

We have tried to comprehensively cover the Real Estate
Market as an alternative investment in our
presentation.
The group had divided the topics among themselves and
have tried hard enough to explain the complexities
involved in this sector.
Hope it was insightful !!!!

 www.google.com
 www.investopedia.com
 http://joneslanglasalle.co.in/
 http://cushwake.com/
 www.eurekahedge.com/Database
 Real Estate Valuation by ICAI
 www.makaan.com/Real-Estate

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