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JAIPURIA INSTITUTE OF MANAGEMENT
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INTRODUCTION OF REAL ESTATE INDUSTRY
INDUSTRY OVERVIEW
A Brief Insight - The REAL ESTATE Industry in India
The real estate sector in India has come a long way by becoming one of the fastest growing markets in the world. It is not only successfully attracting domestic real estate developers, but foreign investors as well. The growth of the industry is attributed mainly to a large population base, rising income level, and rapid urbanization.
The sector comprises of four sub-sectors- housing, retail, hospitality, and commercial. While housing contributes to five-six percent of the country’s gross domestic product (GDP), the remaining three sub-sectors are also growing at a rapid pace, meeting the increasing infrastructural needs.
The real estate sector has transformed from being unorganized to a dynamic and organized sector over the past decade. Government policies have been instrumental in providing support after recognizing the need for infrastructure development in order to ensure better standard of living for its citizens. In addition to this, adequate infrastructure forms a prerequisite for sustaining the long-term growth momentum of the economy.
The total revenue of the real estate sector was US$ 66.8 billion during 2010-11. By 2020, the sector is expected to earn revenue of US$ 180 billion. In fact, the demand is expected to grow at a compound annual growth rate (CAGR) of 19 per cent between 2010 and 2014, with tier I metropolitan cities projected to account for about 40 per cent of this.
Growing infrastructure requirements from sectors such as education, healthcare and tourism are providing numerous opportunities in the sector. Further, India is going to produce an estimated two million new graduates from various Indian universities during this year, creating demand for 100 million square feet of office and industrial space. In addition, presence of a large number of Fortune 500 and other reputed companies will attract more companies to initiate their operational bases in India thus, creating more demand for corporate space.
India is ranked 20th in the list of world’s top real estate investment markets with investment volume of US$ 3.4 billion in 2012, according to the latest report titled 'International Investment Atlas' by Cushman & Wakefield. The sector is set for robust inflows of US$ 4-5 billion from overseas investors in the next couple of years, with Bangalore, Delhi and Mumbai emerging as the favorites, according to Jones Lang LaSalle, a global real estate consultancy giant
REAL ESTATE IN JAIPUR
Jaipur is sincerely viewed as an alternative to Gurgaon and it is anticipated as one of the ten mega cities of future, in India. Considering that corporate and institutional focus is the actual indicator of future growth, Jaipur real estate is surely on a spin.
Commercial developments
With several big IT projects coming up in the city, Jaipur has surfaced up as a major IT destination. Major Indian and international MNCs are setting up their feet in the city. Prestigious projects including, Mahindra’s 3,000 Acre SEZ, Anil Ambanis Mega City Development Plans and Hero Hondas Rs 700 crores plant are there to be launched soon.
Beside, Infosys, Cisco, Wipro, HCL, IBM, Daksh, Hinduja TMT etc are also exploring business opportunities in Jaipur. Subsequently, there is Knowledge Corridor, Sports City at Achrol and several hospitality projects including five star hotels by the likes of Taj, Hyatt, Radisson, and Hilton in the offing.
Residential property sector
As corporate demand would require quality residential properties and infrastructure to support future expansion, Jaipur is witnessing a horde of such projects both by local as well as metropolitan city-based real estate developers like Narayan group, NarvikNirman, Omaxe, Suncity, Unique group, DLF, MGF, Vatika, Ansals, Parsvnath, etc.
Recently, Fishman Holdings Indian real estate development subsidiary, Mondon Investments Ltd., bought a 600-acre plot in Jaipur for $108 million for building a four million square meter integrated township which will include residential units, commercial space, offices, and high-tech space at a whopping investment of $2 billion.
GROWTH DRIVERS
The IT wave in Jaipur is termed by the industry experts as the breakthrough for Jaipur real estate. Being strategically located at 3-4 hrs drive from Delhi on Delhi-Mumbai Highway, Jaipur has a well laid out transport network which offers connectivity via all means of transportation, and the upcoming metro link would be an added benefit.
RING ROAD JAIPUR: -
The Jaipur ring road will be around 147 km in length in the new designs being prepared by the National Highway Authority of India.
The initial detailed project report (DPR) submitted by Reliance Infrastructure in 2007 suggested a 145-km-long ring road to be developed on public-private partnership model. Acquisition exercise for 47-km stretch was carried out between Agra Road and Ajmer Road for the southern zone. However, the urban development ministry later proposed a reduction in the length of Northern Zone by almost 40 km and assigned National Highway Authority of India to prepare a fresh DPR. Urban development ministry decided to hand over the project to JDA due to slow pace of work by NHAI. The highway authority has been unable to prepare the DPR in time and the designs being proposed have suggested an even longer ring road. The JDA officials are expected to incorporate the suggestions from NHAI.
A ring road had been proposed for Jaipur nearly a decade ago. However, the project had been transferred from one department to another. The JDA had previously tried to develop the project on PPP model and Reliance Infrastructure bagged the contract in 2005. A 145-km long road costing nearly Rs 6,000 crore was proposed. The company, however, withdrew from the project in 2008 following a demand of Rs 2,700 crore reverse payments demanded by the government, the project the project came to a standstill. The urban development ministry later handed over the project to National Highway Authority of India in January. It was expected to begin work by June. However, the Jaipur Development Authority once again has been given the responsibility. An understanding is yet to be achieved on developing the ring road path connecting Ajmer Road-Tonk Road-Agra Road. The work on the southern part is expected to begin by 2011. Oct8th, after a long wait, the ring road finally came to the construction stage. On Thursday, the construction of the service road began. In the first phase the road, spanning in 45 km area, will connect Ajmer road, Tonk road and Agra Rod. For this 360 meter wide, 1620 hectare land has been acquired.
The detailed project report will be ready by November and consultant has been recruited. The people who have given their land will get developed land near the ring road. The JDA was planning to give the land by lottery but the farmers were protesting against that.
Problems: the ring road will also occupies some land of the JDA residential schemes where people have already built houses and their compensation hasn't been decided yet. The minister said this will be done in the DPR. The aim of the ring road is to get the traffic going towards Delhi, Agra, Kota and Ajmer to go through this road
MAHINDRA WORLD CITY SEZ:-
Mahindra World City is on par with the best business destinations in the world. The Capital of Rajasthan, Jaipur, is a city with a legacy of over 280 years. One of India’s best planned cities, Jaipur offers excellent infrastructure and facilities, essential for making of a metropolis and an ideal Business City. Located close to the National Capital Region, Jaipur serves as a conduit between entire North east India and the ports of the Western coast. The Mahindra Group focuses on enabling people to rise. Mahindra operates in the key industries that drive economic growth, enjoying a leadership position in tractors, utility vehicles, and information technology and vacation ownership. Mahindra has a presence in the automotive industry, agribusiness, aerospace, components, consulting services, defense, energy, financial services, industrial equipment, logistics, real estate, retail, steel and two wheelers.
Ranked No.3 among 12 major Cities in India, Jaipur has attracted companies such as Genpact, Coca Cola, Ericsson, MICO, Infosys and NEI with its investment friendly climate and pro-business attitude. Mahindra World City is the vision of a pioneer. And as this vision unfolds, India would have created several modern cities of excellence and prosperity, across the country. Mahindra World City is the perfect blend of business and lifestyle. Welcome to the future. A renowned tourism destination, Jaipur offers the cosmopolitan lifestyle coupled with the quality social infrastructure. The City offers all the facilities, luxuries and services for a modern and comfortable lifestyle.
Location: - Mahindra World City, Jaipur
Mahindra World City, Jaipur is a 3,000-acre business city with a 2,500-acre multi-product SEZ.
Highlights:
Promoted by the Mahindra Group and the Rajasthan State Industrial and Investment Corporation (RIICO)
Spread over 3000 acres
Located on the Golden Quadrilateral, situated off NH8, 18 kms from the airport and 21 kms from the railway station
Multi-product SEZ with dedicated zones for IT / ITS, Light Engineering and Auto Components, Handicrafts, Apparel, Gems and Jewelry, Warehousing and Logistics and a Domestic Tariff Area (DTA)
JAIPUR METRO
The Jaipur Metro is a rapid transit system under construction in the city of Jaipur, Rajasthan, India. Construction of the first part of the first line, comprising 9.2 km from Mansarovar to Chandpole Bazaar, started on November 13, 2010. The Jaipur Metro Rail system is expected to be India's fourth Metro Rail system after those in Kolkata, Delhi and Bangalore, with the Mansarovar-Chandpole segment expected to open to the public as early as August 2013. On 4 July 2013 Rajasthan Chief Minister Ashok Gehlot after review meeting directed officials not to settle for any compromises on the quality of work and safety of people. With this, the metro project in the pink city will not start running until December 2013.
The Jaipur Metro will be built in 2 phases. Phase consists of the Green Line and Phase II consists of the Orange Line. Currently, the Green Line is under construction. The implementation of Stage 1 of the project (Mansarover to Chandpole having the length of about 9.25 km) including the civil works, permanent way, depot and traction and power supply, etc. is being managed by DMRC. The AFC, telecom and Chaupar to Chandpole)
COMPANY PROFILE
ABOUT IIFL
It owns and manages the website, www.indiainfoline.com, which is one of India’s leading online destinations for personal finance, economy, corporate updates and equity and commodity-related updates.The company services 2.1 million customers with a team of 14,000 employees in 3,820 business locations present in eight countries.
Credit and finance: The facility is offered by subsidiaries India Infoline Finance Ltd and India Infoline Housing Finance Ltd. The diversified lending portfolio includes home loans, healthcare
finance for medical equipment, SME and trader loans, secured loans against gold jewellery, commercial vehicle financing, property loans, and capital market finance secured against securities. In FY13, this segment posted an 82.10% year-on-year growth in revenues at Rs. 17.37bn. The high quality loan book of Rs. 93.75bn as on March 31, 2013 is backed by strong
Capital adequacy of over 20% well above the stipulated 15%.
Private wealth management: In an increasingly unpredictable world, there is greater investor need for a comprehensive wealth management solution as opposed to disparate services. Under this segment, IIFL Private Wealth offers advisory services to high net worth individuals and corporate clients. It manages over Rs. 400bn of assets under advice on a client base exceeding 7,000 families.
Financial products division: The Group distributes a range of financial products like insurance, mutual funds, National Pension Scheme, bonds and debentures through its extensive distribution network. The company is a leader among non-bank promoted entities in the distribution of life insurance and mutual funds. For FY13, annual premium mobilization stood at Rs. 3.2bn.
Asset management: The business was launched in 2011 with a unique proposition. The maiden scheme was, and still is, the lowest cost Nifty ETF in India. A total of six schemes have been launched, including four close-ended debt schemes and two open-ended equity schemes. Total Assets Under Management stands at Rs. 3.27bn as on March 31, 2013.Equity, commodities and currency: Though the contribution to revenues is less than 15%,
IIFL Group continues to remain a leading online and offline broking as well as advisory services provider for cash and derivative segments directed at retail and institutional clients. Over a decade, the company has created a brand marked by informed research, systemic uptime, transaction speed, cutting-edge technology, extensive footprint, high service standards and competitive brokerage. It pioneered the concept of internet broking in India and rationalised brokerage rates from 1-1.5% in the late 90s to as low as 0.05%. The extension into commodities and currency trading reconciles with its vision to emerge as a one-stop-shop financial Intermediary.
Awards and recognition: IIFL has been awarded the ‘Best Broker, India’ by Finance Asia and the ‘Most Improved Brokerage, India’ in the Asia Money polls. India Infoline was also adjudged as ‘Fastest Growing Equity Broking House - Large firms’ by Dun & Bradstreet. A forerunner in the field of equity research, IIFL’s research is acknowledged by none other than Forbes as ‘Best of the Web’ and ‘…a must read for investors in Asia’
2012: Nirmal Jain - Entrepreneur of the Year award at the 10th Franchise India Awards
2012: BSE Top Performer-Equity-FI Category
Carpet Area:
It is wall to wall area of a property it does not include even walls. Open balcony should be taken as 505 of carpet area.
Build-up Area:
Carpet area + wall area (in case of common wall it is ½ of wall area)
Super build-up Area:
It is normally used in flats, builders add some percentage (20%-25%) in build-up area for extra amenities like galleries, stairs, lifts etc. (Price is always charged on super build-up area) also called Salable Area.
FSI/FAR:
Floor space Index (FSI) also called Floor area Ratio(FAR) is the ratio between the total build-up area and total land area of the project
APF:
Advance Processing Facility(APF) is used in case of multi unit projects. Here the legal and technical of the entire projects is done in advance and in case of loan application only credit appraisal of the applicants is done not property.
ADF:Advance disbursement facility(ADF) is used in case of top category APF only. Here the loan is disbursed in one shot instead of disbursing it in parts(Based on the stage of construction).
Building Structures:
There are two types of building structures:-
A. Load bearing structure.
B. RCC frame structure.
In case of Load Bearing Structure, the entire load is on walls instead of columns and beams. The advantage is low cost of construction but not suitable for high rise buildings.
In RCC (Reinforced Concrete Cement) framed structure entire load is on columns and beams. This is required for high rise building but have high cost of construction.
Title (ownership) Documents:
Documents which are required to prove the ownership of the immovable property. Examples: Sales Deed, Conveyance Deed, Partition Deed, Exchange Deed etc
Title Search Report:
This is prepared by the advocate by searching the records available at the sub registrar’s office. Usually it is prepared for last 13 years.
Apartment/ Row house/ Villa/ Bungalow/ Plot:
Apartment is terminology used in place of flats, villa is a constructed plot normally it is medium size; a big size villa is called Bungalow.
Segmentation
Market segmentation in housing and affordable housing for all is the need of the hour to overcome the economic slowdown, said Mr. Ajay Shankar, Secretary, Department of Industrial Policy & Promotion, Ministry of Commerce & Industry at an Interactive session on Steps Needed to Combat Economic Slowdown-How do We See a Turnaround organized by the PHD Chamber in the capital.
The present economic slowdown can be combated by boosting internal demand through investment on infrastructure and housing. Though Infrastructure spending is mainly done by Government, housing sector is mainly private sector driven. Indians unlike their
Western counterparts are still cash rich, and with housing credit rates down to single digit, housing needs tailored specific to different segments definitely will boost the demand for housing and allied industries.
There is certainly a demand for affordable housing. The private sector should cater not only to the luxury segment but move beyond to venture into affordable housing Segment Added Ajay Shankar.
GDP growth rate of 7% is possible in the coming years if internal demand picks up. There are quite a few positives on the Indian side felt Ajay Shankar, the scope for productive investment in infrastructure, unlike developed countries and even China , rise in steel production, huge cash rich central government employees with arrears on account of sixth pay commission would drive the economy out of the slowdown added Ajay Shankar. India was still the most attractive market as Toyota has invested only in India and Volkswagen was starting its Indian operation much before time. In USA the main driver of growth for 40 years was the housing sector.
On suggestion by the industry representative that though lot of land was locked with the PSU’s and if the real estate players got this land at reasonable prices to build up houses, than affordable housing could become a reality. Mr. Shankar said that the Government was eager to look at new fresh and doable ideas to kick start the housing sector.
India thankfully still needs infrastructure unlike China who has spent more on it than required. Investment build up on Infrastructure in India is at an early stage of development so every rupee spend on infrastructure is well spent.
Though the export sector was suffering and will suffer and continue to due to fall in international demand, the way to overcome this downturn was to explore newer markets?, added Shankar.
The PHD Chamber meanwhile requested Ajay Shankar to look at more tax cuts to increase disposable income in the hands of the buyer, Get more FDI, and unlock land held with the PSUs.
TARGETING
Real estate broking is an essential service which gets critical as the economy grows, cities grow and real estate prices escalate.The real estate broking industry is right now fragmented and the market share is spread amongst a lot of small businesses. In developed economies, real estate broking is not a small business. There are agents who earn a million dollars plus commission even in slow economies. There are real estate offices housing 500+ agents in a single location.As the Indian economy grows it is a right time for small business owners tostart real estate
POSITIONING
Positioning is the marketing art of knowing what available space or position you and your offering fill in the market and then getting that message to exactly the people who want what you’re offering.By first figuring out the position your offering fills you can easily figure who you want to talk, what you want to say, and what marketing vehicles – from advertising to direct mail to online to personal calls – you should use to reach the people you’re targeting.For example, say that you’re offering a lower-priced home in a neighborhood that primarily attracts first-time buyers. Your product position is lower end. With that knowledge, you’d hardly want to craft a message geared to the interests and motivations of high-income buyers. Nor would you want to deliver your message using media channels that lower-income prospects don’t read, tune into, or sign onto.Understanding your product position can make the difference between reaching your prospect or not, between motivating interest and action or not, and between making a sale or not
CONCLUSION:-
On the basis of the study of this project it was found that IIFL is the better service provide to their customers. Almost every customer is satisfied with the property they purchased from IIFL.This study conclude that IIFL should give more emphasize on providing more choice of products available in the market to their customers, it will help in getting more customers and existing customers will refer IIFL to their friends/relatives.