Real Estate Industry

Real Estate Industry
Chapter 1 INTRODUCTION
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INTRODUCTION
Real estate is a business, not a profession. Real estate is sometimes inaccurately spoken of as a profession, but it is essentially a business. A profession applies science, art or learning to the use of others, the profit to the professor or person applying it being incidental; whereas a business is engaged in primarily for profit, and the profit is to the one engaging in the business. A profession A implies person professed may attainment in special with or
knowledge.
engage in business
without special knowledge and no one else is concerned with the question whether he has any knowledge of the business, because no one else is affected by the result. If he is successful the rewards are his; if he fails he bears the loss. But let him attempt to practice a profession and, if he be unskillful, others are directly affected, and the fact that his reward is diminished thereby is merely
incidental to the fact that others suffer.
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Ethics
of
the
business.
But
whether
real
estate
be
business or a profession has no connection at all with the body of ethics governing it. Every business can be conducted upon a plane ethically as high as the ideals of any profession, and the men who have been conspicuously successful in the real estate
business have attained success because they have applied to their business the highest ideals of commercial fair dealing. This does not mean that there is any ethical requirement for the seller or the purchaser to give away anything disclose which to the belongs other to him, or for for either selling one or to his
his
necessity
requirements
for buying; but the bargain having been
made, it is absolutely necessary that it be lived up to by both parties, according to its intent; and, if there be any doubt of the intent of the bargain as it is expressed in writing, that the spirit of the transaction be carried out rather than that the catch words of a written instrument should govern. Cases are frequent of men who to their own detriment perform the thing which they have promised to do although not legally obligated, and the bigger and more successful the man who makes the promise the more
surely will it be carried out. Important obligations are

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often incurred upon the mere promise of a well-known man to sell an important piece of property at a definite price, although no legal and enforcible obligation exist ; and the promise is always redeemed if it is made by a man who knows the business, and it is redeemed not merely from altruistic motives, but also for purely business reasons. Divisions of the business.The principal divisions of the real estate business are investment, operation and agency. These differ from one another according to the aims of the persons engaging in them and the methods by which those persons expect to make their gains. To conduct either of the first two divisions money of the business, is investment The or
operation,
actual
capital
required.
most
important capital in the agency business is the good will of its customers, and that can be husbanded, increased and made very valuable. Investment is the employment of capital in the acquisition of real estate or interests therein for permanent ownership or actual use of the person acquiring it. Operation is the
employment of capital in the acquisition or improvement of real estate or interests therein for commercial operations.
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Agency is dealing in or with real estate on behalf of others. Investment in real estate is generally made for either of two purposes : (a) to derive an income, (b) to hold for resale in expectancy of an increase in value. Investment for income may be for one of two purposes, (1) the derivation of rentalthat is, the direct return for the use of real property for definite periods, or (2) the obtaining of income through others upon money lent on the security of real property.
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Real Estate - Interest In Land ( Originally Published 1911 ) Rights of ownership divided.Land has existed from the beginning of property, and is indestructible in its nature. Each piece of land has a history, having various and conflicting and many persons, may have been in its
rights, or
interested,
either
successively
concurrently,
ownership. These various rights to ownership are divided into estates and chattel interests. Estates are rights in real estate which amount to real property. They may be perpetual or be measured by a life or lives. All interests in land which, in the eyes of the law, are of less importance or less duration than estates, all rights which are not measured by a life or lives or longer, are chattel interests. Limitations upon ownership.The highest form of
ownership of anything, personal property or land, would be unlimited in duration and unfettered by any limitations upon use; but there is no such thing in any civilized
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community.
All
property
is
liable,
in
every
civilized
community, to those limitations upon its use or ownership which the necessities of civilized life, as ex-pressed in the law, impose; but our civilization is founded upon the very greatest respect for private rights and ownership, and any interference with these can be justified only upon the highest grounds of public policy. The absolute dominion of the owner of real property over that which he owns is affected by four important
limitations arising out of the necessities of civilized life: (1) The police power, (2) The ultimate and original
ownership of the state, (3) The right of eminent do-main, (4) The right of taxation. The right to enforce these
limitations lies with the state. Police power.Ownership of land is confined within the right of the community to keep property from being used in such manner that it will hurt the life, health or morals of others. The owner of land on which stands an unsanitary tenement house, which is a menace to health, may think his right to keep the building there cannot be questioned, but the police power of the state will either order that the
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building be taken down, or that such changes be made in it as the enlightened sense of the community finds necessary for the preservation of life and health. If the erection of a new tenement be begun, certain standards of light and ventilation must be observed, only a percentage of the land can be used, certain appurtenances for cleanliness and opportunities for escape in case of danger must be provided; and unless the requirements of the law are observed, the police power of the state will circumscribe the owner's dominion over his land and prevent the
erection of a tenement house upon it. The Tenement House Law of the State of New York is one of the most drastic, enlightened and necessary exercises of the police power of a civilized community, and it has had to fight its way just because it is an in-fraction of what persons have thought was their natural right to the
absolute ownership of that for which they paid, or which they inherited from their ancestors. Ultimate and original ownership of the state. Another
limitation upon ownership of land is the principle that the state is assumed to be the original proprietor of all land
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and
to
have
the
ultimate
title.
Modern
ownership
is
traceable to some form of grant from the sovereign, who may be the people or their sovereign predecessors, the colonies, or the king. In the western states title can
frequently be traced to a grant from the United States in very recent times. Although land is assumed to belong to the person to whom the grant is made and to his heirs and assigns forever, yet, if he leave no heirs capable of
inheriting, it escheats to the state. It cannot be permitted that land which no one is entitled to inherit become a subject for dispute or strife, so the principle that the state is the ultimate owner is necessary for the preservation of law and order. The right of eminent domain.If at any time the state finds a specific necessity for the use of land, it has a right to redeem it under the principle of eminent domain ; but the state's right of eminent domain is limited by express constitutional requirement that it shall be exercised only upon condition that fair compensation be made for the property taken.
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The
right
of
taxation.The that those
necessities enjoying
of its
civilized benefits,
government
require
contribute to its support. This is done, frequently by laying a tax upon property, and as real property is permanent and cannot be moved from the domain of the tax gatherer, it is often the basis of state and local taxation. Estate in fee simple : The largest estate in land known to our law is a fee simple or a fee simple absolute, the terms being synonymous. A fee simple is the right to own land, to one, his heirs and assigns, without limit as to time, but subject to the limitations above mentioned, which are understood as affecting all land. Commercially this is the estate which is usually dealt in, and a contract to sell a piece of property, unless otherwise limited, implies a contract to sell the property in fee simple. All interests in land less than a fee simple imply that somewhere else in some other person or persons there is or will be the residue, which when added to the particular estate, will make up the fee simple absolute.
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Estate in fee upon condition subsequent.This is an estate which may last forever, unless an event occur upon the happening of which the creator of the estate or the heirs of such creator become entitled to reclaim the property. If A give a piece of land to B, his heirs and assigns forever, but upon the condition that if at any time liquor be sold upon the property, then B's right shall end, and A shall have the right to recover the property, the estate of the person in possession is an estate in fee upon condition; and left in A is the residue of the fee simple, the possibility that the land will come back to him, which is known technically as a possibility of reverted. The possibility of reverter can be released to the person who has the conditional estate, but in itself it is inalienable, and is not a present property right. Estate in fee determinable.If instead of making a
condition which might or might not happen, A gave the land to B to have forever, but provided, if B should die leaving no children, that the property go to someone else, B's interest would be a fee determinable because it would terminate in case a contingency happened for which A provided, and it would be determined within a definite time
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measured by a life or lives, whether the contingency did or did not occur. The difference between a fee determinable and a fee upon condition is that in the fee upon condition there may never come a time when it will be determined whether or not the condition has been broken; whereas, in the fee
determinable, it can be found out within a time which may be determined, whether or not the condition upon which the estate shall end has happened. Life estates and remainders.Estates may be so granted that the present interest is not a fee, but is measured absolutely by the duration of a life or lives, and there belongs to another person or persons the right to take the property after the present interest ends. A right to own land during a life or lives is denominated a life estate; the future interest which will vest in possession after the end of a life estate is known as a remainder. Life estates may be measured by the life of the possessor, or of another person or persons. Remainders may be contingent or
vested. A vested remainder is the indefeasible right to take real property after the termination of a particular
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estate, or the right to take the property if the particular estate were to terminate immediately. A contingent
remainder is one which may vest in possession if events happen which defeat the vested remainder. Examples of these two interests are as follows : If A grant a piece of land to B to have during his life, but provides that after his death it go to C, C's right to possess the property after the life estate is known as a vested remainder, there being nothing contingent about it. B has the land during his life, and he may sell this life interest, but when he dies, the right of C, the
remainderman, accrues, and it is always definitely known who will take the remainder. If A grant a piece of land to B, his heirs and assigns, forever, but provide that if B die without children, then it go to C, that which is given to C is known as a remainder; and as it cannot be known until the time comes whether C will ever get that remainder, it is called a contingent remainder.
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Dower.There are two other important interests in real property, which should be considered here. Upon the death of the husband, the wife becomes entitled to the use for her life of one-third of his real property or to one-third of the rents of his real property. In many states, including the State of New York, no act of the husband can defeat that right, and in those states in order that upon a sale or conveyance of property that interest be barred, it is
necessary that the wife shall join her husband in conveying or that she release her interest to the owner. The act must be voluntary, and in some states it is necessary that the wife shall privately acknowledge that it is her free act, without compulsion on the part of her husband. In many other states the wife is endowed only of such property as the husband may own at the time of his death. Estates by curtesy.There is a similar right which
husbands have in the real property owned by their wives, known as an estate by the curtesy. If there be real
property owned by a wife at the time of her death not disposed of by will, or not having been alienated during her life, and there has been a child or children (whether the child survive or not) the husband is en-titled to the
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use for life of the real property thus left, or to take the rents of the property during his life. That interest of the husband can be defeated at any time by the wife. Chattel interests.The principal chattel interest relating to real property is a leasehold or lease. A lease-hold is a right to occupy the land of another in consideration of paying rent. A lease for 999 years is a chattel just as much as a letting from month to month. Each is a leasehold; in each there are the same incidents; the difference is only in the length of the term. Another chattel interest in real property is a lien. A lien is a claim upon the property of another which if not satisfied, entitles the holder of the lien to sell or require the sale of the property. Liens may exist in favor of a money creditor or in favor of the holder of an obligation which cannot be easily expressed in money. Method of proving ownership.Historically the earliest
method of transfer of ownership of land was by some open. act upon or connected with the land. It was customary for the buyer and seller to resort to the place and publicly acknowledge that the buyer had be-come the owner of the
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property. But transactions of that sort rested only in the memory of living persons, and might be forgotten; and there might be disputes of fact as to the persons between whom such transactions had taken place, so that in more modern times it became customary to evidence the
transfer of land by a permanent written instrument, or by an open acknowledgment in court and a record of such acknowledgment upon the court records. For years the English method of conveyance by written instrument
continued until it became necessary (by reason of the fact that written instruments may be lost and the evidence of them lost) that there be some place in which they could be recorded and their contents made matter of public
notoriety. From this necessity was evolved the present method of public record, by which all instruments which bear testimony to claims for or against land are made matter of public record, and all who deal with land are presumed to have notice of the contents of the record.
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Real Estate - Brokerage ( Originally Published 1911 ) Brokerage defined.-Brokerage is a branch of the agency division of the real estate business. The persons most interested, whose property and money are involved in the transactions are the principals : and the broker is the agent of one or both of them. Principals employ brokers to bring about particular transactions, with the A and pay them
compensation which is
commensurate as
subject-matter, person who is
known
commission.
continuously employed to sell real estate is not a broker but a salesman. There are sales brokers and loan brokers. The sales broker is a person who is employed to bring about the sale or exchange of real property. A loan broker is employed to procure loans upon the security of real property. A broker's requirements.To achieve success in the
brokerage business, it is necessary to cultivate a wide acquaintance, to increase one's circle of customers from time to time among the people with whom one comes in contact. The real estate broker must learn something
about values. He must know when and where and at what

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price a property similar to that which he is trying to sell has been sold. He must have the instinct of salesmanship. A man who is a good and salesman a man can who succeed is not a in the good
brokerage
business,
salesman cannot. Methods of making sales.Brokers may find employment in making sales in one or two typical methods. A broker may come to a person who has property for sale, or of whom he believes that he may be induced to sell property, and seek employment on the plea that he has or expects to find a purchaser for that property; or he may first establish his relations with a prospective purchaser of property of a specific kind, and then seek the property, and having found it, approach the owner in the hope of inducing him to enter into the desired bargain. It sometimes happens that the broker is the person who conceives the transaction and presents it to both
principals. This is the highest class of brokerage, and usually cannot be achieved without going through a long course of apprenticeship.
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Agreement as to commission necessary.In or-der that a broker be entitled to commission for his services, it is necessary that he have an agreement that those services will be paid for. There is no presumption that a volunteer will be paid for his services. It is not necessary that the agreement be in writing, as a contract of employment may be implied from the relations of the parties. If a man who is known as a professional broker, enters into a business relation with one who has property for sale, and
accomplishes the bringing about of a sale, a contract may very well be implied. Obligation of brokers to principals.The con-tract having been made, a commercial and legal relation has arisen between the two persons which brings with it obligations on the part of both. The obligation of a broker to his employer is that which every agent or employee owes to his employerfair, honest service. If a principal has
confided to a broker his necessity for selling, or the lowest price he will take, the broker owes it to his employer not to betray that confidence. He also owes to his principal the disclosure of anything he knows or may learn during the
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course of his employment that has a bearing upon the subject-matter of the transaction. Statements a broker may make.A broker may make such statements as he believes to be true, and express such opinions as he can defend with relation to the subjectmatter of negotiationin the interests always of his
principal. A broker is not required to test the truth of any representations reason to his principal to be makes, A which broker he has no
believe
untrue.
may
make
comparisons between the transaction in hand and other transactions, but good business ethics require that he shall not violate previous confidences. Necessity for thorough knowledge of the property.A
broker should never start upon a transaction until he knows as much as can be learned about the property. He should examine it, see what it looks like, the surroundings, what kind of tenants are in the property. He should know its income-bearing possibilities, its speculative aspects, the possibility of increase or decrease in value, the
lettings, in what manner the tenants pay rent and what rent they pay.
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A broker must know the terms upon which the seller can deliver. He should find out whether or not the thing he is trying to sell is such that it can be used for the purpose for which it is desired. It is not necessary for a broker to search the title before he attempts to sell a property, but it is utterly wasteful to bring about a transaction which will break up just before it is consummated. Much trouble and controversy would be saved by procuring from the seller a memorandum showing just what he has for sale. Who pays the commission.It is usual that the contract for compensation be made with the seller; al-though, as the seller figures that out of the price which he receives, he must pay brokerage, economically, in its last analysis, it is the purchaser who pays the commission. In exceptional instances where a broker is employed to purchase a
specific property or property of a special character, he may be paid by the purchaser upon an express
understanding, and in that case he should approach the seller with the statement that he is employed by the purchaser and intends to look to him for commission. A broker cannot serve two masters. He cannot without the knowledge of his employer take compensation from the
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other party' to the transaction, and if it be known that a broker does this, he loses his commission. When commission is earned.Unless otherwise stipulated as a term of the employment, a broker has earned his commission when willing to enter he brings into the to his employer upon a person the terms
transaction
prescribed by or acceptable to the principal, provided that such person be able to carry out the transaction or is accepted by the principal as a person capable of carrying it out. "Near" does not count in the brokerage business. There is no pay until the bargain has been made, and there is no pay for "making impressions," as it is called. A broker may have made an impression on the mind of a prospective purchaser and al-most brought about a deal; but later, another broker who is a better salesman or who meets a better financial condition may complete the
transaction and earn the commission. It often happens that a seller is willing to sell a property upon large terms "of credit, and for a very small cash payment, especially in transactions where the property is vacant and intended to be improved. In such cases it is
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appropriate and often insisted upon, that the purchaser shall be personally acceptable to the seller. If there be no such condition, the broker is entitled to commission when he has brought to the seller a person willing and able to contract to purchase the property upon such terms as the seller will accept. A broker does not have to guarantee the solvency of his purchaser; all that is required is that he be a person of whom it is not notorious that he is insolvent or unable to complete, and one who is able and willing to make the contract. As a matter of commercial practice, it frequently happens that the broker waits for his
commission until the title closes, but commission is earned and is due and pay-able at the moment he brings about a meeting of the minds of the parties; and, unless expressly stipulated it is not a condition of the earning of brokerage that a valid and binding contract be made between the principals. When broker is procuring cause.In order to save paying commission persons who have been brought into relations by a broker will sometimes get together behind his back and complete the transaction. If the broker can show that this was done in bad faith, he is entitled to commission.
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False
representations.If
broker
so
far
for-gets
his
obligations as to make false representations in order to procure a purchaser, and the seller accept the result of a broker's work and sign the contract knowing of the false representations, then, if the purchaser be relieved of his contract by reason of the false representations, the broker is still entitled to commission. If, on the contrary, the purchaser be relieved of his contract by reason of false representations of which the seller did not know, then no commission is due from the seller. Good business to see that contract is made.The broker should try to see to it that the parties not only come to an agreement, but enter into a contract which is binding and enforceable. It is not satisfactory nor conducive to future business to base a claim for commission upon the fact that the broker has brought about a meeting of the minds of the parties, without good evidence to support the
contention; and the contract is the highest evidence that can be offered. Waiting for commission until title closes.Very often, after the broker has earned his commission and a contract has
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been made, it will be required of him that he wait for the commission until title closes, and that he stipulate that if the transaction be not completed, he will get no
commission. If that agreement be required of the broker, without consideration, it cannot be enforced against him. If a person wants to have it arranged that the broker's commission be not paid until the title closes, he must make that a term of the employment before the broker enters on the work. There may however, be consideration for such an agreement. If a person is willing to sell his property provided he get $1,000 down, and the purchaser has only $500, the broker, in order to bring about the transaction, may agree to wait for his commission until title closes, in consideration of the seller accepting the $500. In that case there is consideration; the seller has changed his position upon the broker's promise, and such an agreement may be enforceable. Broker not responsible for failure to complete. If the seller should be unable to complete his contract, having a bad title, or being unable to dispose of his encumbrances; or if, without fault of the broker, the purchaser be unable or unwilling to pay the balance of the purchase price, the
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broker
does
not
lose
any
part
of
his
commission.
To
require it of him is without consideration, and the broker can disaffirm such an agreement and sue for his
commission whether the title closes or not. Splitting commissions.If, after a broker has earned his commission, the seller should require him to remit any part of it, that has also been is a condition and imposed it is after
commission
earned
without
consideration. To divide commissions with principals is reprehensible on the part of the principals to ask, and on the part of the broker to grant. One of the most important things which has brought the real estate business out of disrepute has been the attitude of brokers with regard to giving away part of the commission to principals. There is no objection to brokers dividing commissions among
themselves. There may be three or four brokers in a transaction, and it is good business and perfectly proper that they should divide the commission upon any basis upon which they can agree. Usually the two at the ends of the chain get the larger part of the commission, and the other brokers all get a little compensation for bringing the parties together. The payer of commission is liable only to
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the
man
with
whom
he
makes the
the
agreement brokers
to will
pay get
commission,
but
frequently
other
orders on the owner from the broker to whom the owner is liable, and thus protect themselves. Points of difference between sales and exchange business and loan brokerage.One difference between the business of making sales and exchanges and the loan brokerage business is that in the latter the employment is not to obtain an agreement to make a loan, but to actually get the loan. There is seldom an enforceable contract to make a loan. A lender usually makes no agreement in writing, except that he will accept the application provided that all the things in relation to the loan are acceptable to him or his legal adviser. That does not necessarily mean that the broker never gets commission until the money be actually loaned. If a broker be employed to obtain a loan, and get an acceptance from a responsible lender, but, for some fault or default on the part of the borrower, the loan be not made, the broker is still entitled to his commission. A man who intends to buy a house regards that as quite an individual transaction. It makes very little difference to a
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lender which one of any number of parcels of property of the kind upon which he is willing to loan, he finally
accepts. A man who has $15,000 to lend on a $25,000 flat house, does not care in what block it is, whether the tenants are of one nationality or the other. All he wants to know is that there is a sufficient margin of equity between the loan and the actual value of the property. The lender who agrees to make a loan seldom receives any money for the agreement. The only way to make an
enforceable consideration for his promise is if by reason of that promise the other party has been led into
expenditures or has incurred other obligations which it was known to the lender would be incurred upon the faith of the promise. Unless that state of affairs exists, one
difficulty with enforcing a promise to make a loan is that it is a promise without consideration. One of the first and most essential elements of any enforceable contract is that there shall be consideration. When broker is procuring cause in obtaining loan.Cases may arise where a broker will get an agreement from a person to make a loan, and the attorney of the lender
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when he examines the title will make some objection to it. The intending borrower will then go to the person or company who examined his title and is responsible for it, and it may be that they will make or procure the loan for him. There, although the person whom the broker first obtained to make the loan, did not make it, someone else did, and the broker has been the procuring cause and is entitled to commission. Another peculiarity of the loan brokerage business is that never by any chain of circumstances does it happen that the lender pays commission. The lender quotes a rate of interest, which means a net rate free of all expense to him; and he expects that all expenses of procuring the loan, examining the title and the preparation of all
necessary legal instruments and putting them of record will be borne by the borrower. Agreement subject to prior closing of transaction.The agreement with regard to brokerage in the loan market, as in the sales market, is usually subject to prior closing of the transaction with somebody else in good faith. Very often a good loan will be in the hands of half a dozen
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brokers. Lenders as a matter of fairness consider that if they entertain an application for a loan, they entertain it from the man who offers it first, but there is no obligation of any sort on the part of the lender. There is no way that brokers can call lenders to account for any act of
favoritism. Get agreement as to commission.In the loan business as in the sales business it is important that the broker get a proper agreement as to his compensation, and that it be expressly understood that he will be paid for his efforts. In the sales business it is sometimes difficult for the broker to ask a man who employs him to sell a piece of property for written authorization, but with a loan application there are so many details a broker must tell the intending
lender, that it is easy for him to ask the person who is about to employ him to get a loan, to put these details on a blank form. Rate of commission.Rates of commission are governed by custom and agreement. There is no legal fixed rate of commissions, but the customary rate in the community will be understood to be the rate, unless there be express
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agreement for a different one. It is poor business for brokers to accept less than the. customary rate. Real Estate - Contracts Contracts a legal and commercial necessity.The law has provided that in order that such frauds as the failure to perform a deliberate engagement shall not be perpetrated, certain statute transactions is scattered shall be reduced to writing. This
through the law books of various
states in appropriate places. In relation to real property the provision usually is substantially to the effect that a contract for the leasing for a longer period than one year or for the sale of any real property or interest therein is void unless the contract or some note or memorandum thereof expressing the consideration is in writing
subscribed by the lessor or grantor or by his authorized agent. Contracts wise and safe.There are men who in spite of the statute will carry out their oral agreements, but the requirements of the law are so well known and so easily accepted that no man having made a bargain to purchase or sell real property, should hesitate to have that bargain
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expressed in a writing which will comply with the law and make an enforceable contract. The requirement that a contract shall be reduced to writing means that the entire understanding shall be reduced to writing. It is a principle of law that all the negotiations are presumed to have been embodied in the writing, and that whatever preceded the written agreement and is not expressed there, was not a part of the final bargain. Contracts a commercial necessity.There is also a
commercial necessity that a bargain to buy and sell real estate shall be reduced first to a contract relating to future acts. Bargains for the purchase and sale of real estate are always important transactions to the persons concerned in them, and no matter how professional the parties may be, are not carried out with-out deliberation. The purchaser is not prepared to pay his money without waiting to ascertain whether the seller can convey that which is the subject of the bar-gain. It is necessary too before closing a purchase to make financial arrangements to gather the money from the places where it is deposited or the investments into which it has been put; and it is often necessary that the seller remove from his title such encumbrances or rights of
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others as will enable him to deliver the property. For these reasons it is the almost invariable rule that the matter be reduced to an executory contract. The broker should endeavor to bring his parties to the place where the contract is to be drawn in such accord and with the elements of the bargain so well understood that he can hand to the person who is to draw the contract complete instructions for putting the bargain in writing; but it is not always possible to bring the bar-gain to that state of perfection, and frequently when the parties get together there will be some detail to be discussed or some term to be finally settled. Definition of a contract.A contract is a deliberate upon legal
engagement
between
competent
parties,
consideration, to do or abstain from doing some act. In the real estate business when we speak of a contract, we arrogate that word, which is a generic legal word, to our business: we mean a contract for the sale of real property. When we speak of an exchange contract, we mean a contract for the exchange of real property.
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Essential elements of a contract.(a) It is essential to a contract that there be competent parties. A man cannot make a contract with himself. A con-tract implies
reciprocal relations between two or more parties. In order that there be competent parties to a contract it is essential that they be parties who are free to contract. A person who is incapable on account of lunacy of caring for his own affairs is not a competent person to make a contract. A person who is under the legal age is not a competent party to a con-tract. An executor or other fiduciary who by the terms of his trust or by reason of the limited nature of his powers will not be able to perform the obligation into which he enters is not a competent party to a contract. When entering into a contract with a person other than an individual prudence competent acting to in his own behalf, that it is the part is of a his
inquire
whether to
other and
party perform
party,
able
contract
obligations. When dealing with an executor, a trustee or a person who purports to act as attorney for an-other, it is necessary to inquire as to the limits of his authority. It may be that persons who are incompetent at the time they propose to enter into an agreement can be authorized by
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legal proceedings to carry through the transaction. An infant may be incompetent to contract to sell property, but, by proper proceedings of a court, his guardian may be authorized to make the contract and convey the property. Similarly a trustee who has no right to sell a property, may be authorized by a court to enter into an agreement and to sell. (b) It is essential to a contract that there be de-liberate engagement, that is, that there be a promise and an acceptance of that promise-and that implies futurity. If A give something to B, that is an accomplished fact. It is not a contract, but a transfer. A contract implies the element of doing or abstaining from doing something in the future. (c) Another essential which element that in there a contract be is
consideration,
means
shall
some
change in the condition or position between the parties. If A promise B a house, and B give no promise in return, that is a mere promise without consideration. Consideration is found in a promise when the party who tries to enforce the promise has changed his position in some manner or given
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something of value or some enforceable promise in order to induce the other to enter into the obligation. The simplest form of consideration is money payment for a promise. Consideration may also consist of an enforceable promise. If A agrees to sell B a house, and B agrees to buy it and pay for it, B's enforceable promise to buy and pay the price for the house is consideration. There may be a third kind of consideration where A makes B a promise, and relying on that promise B changes his position or incurs secondary obligation; but this kind of consideration is not often found in real estate contracts. (d) A contract can be on any kind of fabric, and does not require to be written in ink, so long as it is reasonably permanent. It is necessary that the writing be subscribed, that is, the person to be charged with the performance of a contract or obligation which is required to be in writing must subscribe his name or put at the end of the record or instrument some character intended to authenticate it. It may be in any characters that can be understood between the parties and in any language. Contracts are enforceable in the courts of the United States so long as they can be
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translated and made understandable to the courts. The per-son who subscribes may write his name or he may make a mere X or other authenticating mark. The
subscription is complete when the mark has been made. The words, " his mark" which will sometimes be seen written about the mark are not part of the subscription, but are a mere memorandum written by some-body else for the purpose of identifying the instrument afterwards. (e) In order that contracts be enforceable, it is not
necessary that they be witnessed or acknowledged. If they contain a complete agreement between competent parties, upon proper consideration, and are subscribed by the
person to be charged, they are complete. Forms of contracts.There are many forms of contracts in use. The one selected for consideration and reproduced below is that in use by It the is leading a form title insurance to
companies
of New
York.
which seeks
embody in the printed matter all of those stipulations which are usually found in real estate contracts and leaves blanks to be filled in with the matter which varies in each contract.
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Divisions divisions:
of
contract.This
contract
has
four
main
1. A statement of the parties; 2. A statement and description of the property which is the subject of the bargain; 3. The terms of the financial settlement; 4. Certain miscellaneous stipulations, including the fixing of the time and place for the conclusion of the bargain. Date.A date is not necessary to any legal instrument, and therefore it is not necessary to a contract. It is a mere memorandum for the convenience of the parties, and the date and time make no difference to the effect of an instrument. There is no common law Sunday in the United States. Those things are prohibited to be done on Sundays and legal holidays which statutes prohibit, and if there be no statutory prohibition against the transaction of the
business of making contracts or the sale of real property
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38
on Sunday or on a holiday, a contract made on such a day is good and enforceable. Statement of the parties.In this instrument the parties to a contract are designated as the seller and the purchaser. In some forms of contract they are referred to as the party of the first part and the party of the second part, and in others, as the vendor and the vendee. These are all mere designations to avoid repeating the names of the
purchaser and seller. These two parties are looking at the bargain from different points of view. One has agreed to buy a definite thing and is about to put down money to bind his bargain and to show his good faith. The other, having that definite thing for sale, is about to bind him-self at some future day to deliver that property and in the meantime not to sell it to anyone else, thus depriving himself during the time
between the signing of the contract and the delivery of the deed of the opportunity of making a better bargain for his property. Each party must necessarily look somewhat to the character, relation, good faith and ability of the other.
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39
Examination of title the first care of purchaser. The first thing the purchaser wants to know is what security he is going to have for the earnest money which is almost invariably paid when the contract is entered into, and his first precaution should be to ascertain whether the seller appears to be the owner of the property. That cannot be done absolutely, but it can be done to a sufficient extent to make it a fair commercial risk to pay the money. The purchaser can ask the seller to produce his deed, if he has one. If not, he can ask when and where the property was bought, and can then consult some reliable real estate index, or the records the of title insurance to company be the to
ascertain
whether
seller
appears
latest
person in whose name the property has been put. When the seller is a trustee or corporation. If a seller purports to be dealing as a trustee, the purchaser should ascertain the instrument under which he claims to be acting, get a copy of it, and see whether the trustee is or is not able to sell the property. It may be that an
executor, trustee or guardian has not authority to sell at the time the contract is made, but may by appropriate action of
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court
be
so authorized.
In that
case
the
40
contract
should
be
so
conditioned
that
if
the
proper
authority do not approve and authorize, the parties are not bound to each other. When a corporation purports to act as seller, the purchaser should ascertain whether the officer who intends to sign the name of the corporation and to receive the money is authorized by the corporation. He may be authorized by a general by-law or specifically authorized by resolution, and if he is dealing in good faith, he will not object to
disclosing the source of his authority. Earnest money may be placed with bank or trust company. If the purchaser does not know the man who takes his money and cannot ascertain that he is the owner or has a right to contract and deliver the property, he can try to arrange that the earnest money be placed in a trust
company or bank or title insurance company until it be ascertained that the seller has a right to contract and deliver. Concern of sellers less than that of purchasers.Sellers usually do not criticize their purchasers with the same particularity that purchasers criticize sellers. Very often
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the seller knows nothing about his purchaser except his ability to pay down the stipulated amount, and frequently that is sufficient and sellers are content with it. If a man stipulates that he shall have $1,000 down, and agrees to deliver his property within thirty days, knowing that if the purchaser does not comply with the rest of the terms of the contract, he will forfeit the $1,000, the seller often feels repaid for his trouble and expense and for the fact that his property has been off the market for that time. Very often the person who signs the contract is not the real principal, and and may be a person to without respond financial to the
responsibility
without
ability
contract except so far as to forfeit the earnest money. If this fact be known to the broker who is employed by the seller, he should let his employer know of it. He may not be able to disclose the name of the real principal, having learned that in a confidential manner, but it is his duty to let the seller know that he is dealing with a dummy, and thus give him an opportunity to take care of himself in the rest of the terms of the contract. If the seller has
sufficiently protected himself by getting such a deposit as earnest

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money
as
will
compensate
him
in
case
the
42
purchaser is not able to complete the bargain, he does not very much care whether the signer of the contract be a dummy or not. When seller must know the responsibility of purchaser.-If, however, the property be of peculiar value, or sold on a rising market, or with a small down payment, it may very well happen that the seller desires to know more of his purchaser than that he is able to pay the earnest money, and will try to ascertain his responsibility. "Witnesseth, that the seller agrees to sell and convey." " "Witnesseth" means very little. If it were not there the contract would proceed just as well. It is almost the last vestige of legal verbosity to be found in the instrument. "Sell and convey:" The agreement is not only to sell, but to make the necessary conveyance. What kind of
conveyance that may be and how it may be expressed will be reverted to again. Practically, as soon as the contract is signed, the purchaser becomes the owner of the property. That relation is not important unless something unforeseen happens; as, for instance, if the seller become insolvent or incompetent.
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"And
the
purchaser
agrees The
to
purchase."This money is
is
the a
reciprocal
consideration.
earnest
not
payment for the contract, but a payment of part of the purchase price. The consideration for the promise to sell and convey is the promise to purchase, which implies that the purchaser will pay for the property. "With the buildings and improvements thereon." These are not necessary words to a contract, as real property includes the land as far down as you can go, including all mines in it, and as high as structures can be built
connected to the land. It is well, however, to leave these or equivalent words in the contract that there may be no doubt between the parties. Description.The description is the most difficult and the most important part of a real estate con-tract. The seller has been talking about something as seller, and the buyer has been talking about something as buyer, and as many minds as there are to the contract, so many different points of view can there be as to the description of a piece of property. The most important thing in drawing contracts is to express the description of the subject-matter in such
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manner that the contract can be performed by the seller, and that the description shall be the true expression of the intention of the buyer. (a) The simplest case to be found is that illustrated in the diagram, which shows a vacant lot (X) with no
encroachments by or on it. Here there can hardly be any difference in the point of view. This lot may be described at length, as in a deed, but sufficient description would be: "Lot on the southerly side of 2nd Street, distant 125 feet westerly from the westerly side of B Avenue, being twentyfive feet wide in front and rear by one hundred feet in depth, the side lines being parallel with B Avenue." (b) If, however, the lot is one which the seller has
purchased from a map, and his deed calls for a lot known as "Lot Number ten on the map of the D estate," in that case the seller and purchaser will look at the transaction from different points of view. The purchaser has made his offer upon the understanding that he is buying a lot
twenty-five by one hundred, and his position is perfectly plain. The seller looks at the proposition from the point of view that while he thinks he is selling the thing that the
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purchaser is offering to buy, he has always in mental reservation the fact that he is offering to sell that thing as he owns it. If he has any doubt, or if he learns that there is a limitation upon his ownership, or uncertainty as to the quantity, it is his interest to see that the contract
expresses the facts. It requires considerable experience in order to know what is material and what is immaterial. In this case, if the map be inaccurate the quantity of land contained in "Lot ten" may vary so as to be more or less, and the parties may look at such a situation from two sides. Very often a stipulation will be made that the buyer will take less than the absolute amount he intended to buy, but not less than a certain quantity. The most frequent stipulation made is the words "more or less." These words are very elastic, and mean just what they say, that the thing which the seller is able to give and which the purchaser will receive must not be substantially different from the dimensions as they were represented. A variance of an inch or so in width may be substantial, whereas a variance in depth may make no difference in the commercial value of a lot. It is all a question of
reasonableness, and no general rule can be given. If the

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variance be of such a character that the usefulness of the lot is impaired so that it cannot be as conveniently used as if it were of full size, that variance would excuse the purchaser from taking, even if the contract read "more or less." Whereas, if the variance be of such character or the lot of such size that it is as useful for the purpose for which it is fitted with or without the variance, then the subject of the bargain has not been disturbed, and the purchaser would be compelled to take the property. The question of reasonable variance is more difficult with vacant land than with improved property. Vacant land is intended for improvement and is bought by measurement. Its usefulness is in the clouds, and in order that it may become income-bearing a structure must be put upon it. To the purchaser of improved property it makes very little difference whether the lot be twenty-five feet or 24'11"; it is all there, and brings the same rent. While the words "more or less" afford some leeway, they afford very little more than if they were not in the description, especially where the land is vacant and unimproved.
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47
(c) When a person makes an offer for a piece of improved property, there are three things he offers to buy: First, the land; second, the structure as a rent producer or as a thing capable of occupancy; third, the right of permanently maintaining that structure upon the property. The case of a rectangular lot with a house in the middle of it is as simple as that cited in (a). Such cases are found in
suburban places and outlying parts of cities, but when we come to the crowded parts of cities, where houses are built contiguous to one another, descriptions are more difficult. (d) If there be a house on the lot' known as number 105, which exactly fits the lot, the seller does not care whether he puts into his contract the description of the lot or the house : they are equal to each other. That is the seller's point of view. The buyer, on the other hand, wants to be assured of two thingsthat the property is of the size represented to him, and that it is the structure which he thought he was buying. The seller might then appropriately add to the description of the lot: "Said premises being known as 105 Second Street," which has added nothing to the description but identification.
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48
(e) If the lot on which stands house number 105 Second Street be diminished by a structure which is on. a
neighbor's land, but encroaches on the lot, it would be dangerous to attempt to sell that lot in the form already given. In cases of that sort there are two forms of
description. The contract may :be drawn: "All that lot of land with the building and improvements thereon, known as 105 Second Street." That would be complete from the seller's point of view, but the purchaser might ask for identification or for limitation of dimensions. The seller can accede to a statement that the lot is 25' wide, more or less; and he can accede to a statement that it is 125' west of B Avenue, more or less; or, if he wants to be safe both against the possibility of a rejection for misrepresentation as to size, or the possibility of being charged with trying to sell more than he has, he can describe the lot as 24' 10" in width and known as 105 Second Street. (f) The owner may be in possession of all of the lot, but
his house may encroach upon his neighbor's lot, he having an easement or right to keep his wall there. In that case if he were to describe the property as "105 Second Street" he would be describing something which was 25'2" in
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width, and the purchaser might very well say that he agreed to buy all of the house and all of the lot, and the seller would be held to deliver 25'2" when he only had title to 25' and an easement over the 2". A proper form of description would be: "All that lot of land with the building thereon erected, beginning 125' west of B Avenue," and then describe it as if it were a vacant lot, letting it follow as a matter of inference and of law that all that is
appurtenant to the lot will go with itin this case, the easement or right to maintain a wall upon a neighbor's land. Then, although the house and lot are not equivalent, the seller having described the lesser of the two, is able to comply with his contract. If, for any reason, the purchaser require identification of the lot with the building, then it is necessary for the seller's protection that while acceding to that requirement he provide or state in his contract
something to the effect that he does not convey all of the land upon which the building stands. He may say that the building encroaches 2" on his neighbor's land, but he conveys a good right to maintain it there. Selection of form of description.No general rule can be given for writing descriptions. The selection of the form of
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description and the use of words can be acquired only by practice, and must be governed by knowledge of human nature and the subject and course of the negotiations. In some cases in order to satisfy the parties, it is necessary to quote a full description from a deed. In modern practice there are no superfluous words in instruments which are drawn by skilled draughts-men.
Every word means something, and every word if omitted or changed would change the sense. Property sold subject to tenancy.A contract containing a description of house No. 105 Second Street would entitle the purchaser to receive the title to that house in fee simple absolute, but the seller does not always own his property as free and clear as that. The most common limitation improved is the occupancy of tenants. and If property lettings is to
and
income-bearing
under
tenants, in describing the property, it is necessary to give its limitations, and add after the description a statement as to the hiring or letting upon which the property is held by those from whom the income is derived.
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51
Seller and purchaser look at this matter also from different standpoints. The seller looks at it from the point of view of protecting himself against being required to deliver the property subject to any tenancy greater than the lettings subject to which he owns it. The purchaser desires to know two things 'with relation to the occupancy of tenants, the length of term and the rent they are paying; and upon these subjects he requires the most specific information. He would require the contract to add after the description; e. g., "Subject to a tenancy expiring November 1st, 1908, at a rental of $100 a month." That is specific. It may be that the property is occupied upon monthly tenancy only, and the purchaser requires a statement to that effect. It may be that the terms of hiring cannot be expressed succinctly. They may be contained in an elaborate
instrument of lease, and then it may be sufficient to say: "Subject to a lease to (here naming the party or par-ties to the lease) dated-,(here insert the date of the lease) ;" and then add something by way of identification which would be particular and would operate to protect both parties to the bargain.
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52
Restricted
property
Another
important
and
frequent
limitation upon ownership which it is necessary to provide for in a contract is restrictions upon use. It happens frequently that when property is in the course of
development from suburban to urban property or from country or acreage property into suburban, in order to further that development the future use of the property is restricted by appropriate instrument. Frequently a
covenant is inserted that it may not be appropriated to certain uses, which are generally known as nuisances. Sometimes property will be restricted more stringently that no tenement house be put upon it, that it be used for residences only, that nothing but private houses for the use of one family only or for the use of not more than two families be constructed upon the property. These are all frequent restrictions, and all have influence upon the
values of property. Restrictions property, enhance according or as detract they from are the values of or
appropriate
inappropriate to the present situation of the property or according as they do or do not seem to deprive the
property of the opportunity for future development.

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Property which is restricted in its use need not be taken by the purchaser unless the contract contains a stipulation that it shall be taken subject to such restriction, so it is to the seller's interest to see that the restriction be inserted in the contract. It is to the interest of the purchaser to see that the contract be specific. A form of contract which contains the stipulation, "Subject to any restriction there may be on it" is manifestly unfair, because in most cases the purchaser does not take in the fact than an important stipulation of that sort is run in with the ordinary printed matter. The purchaser should consider every word of a restriction, and should never buy property subject to a restriction amount to under the representation Every that it does not to
anything.
restriction
amounts
something: some of them amount to a great deal. The seller who tries to get a purchaser to take property subject to a restriction of which he claims that it is not now binding by reason of "change of neighborhood" is taking a very dangerous position, both for himself, if be contracts to deliver free of restriction, and for his purchaser if he leads him to purchase believing that the neighborhood has changed.
54
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In order that restrictions be useful to the purchaser and act as an enhancement of value, there must be an element of mutuality. If a man buy a piece of property restricted to the use of in dwelling his houses or only, in that he ought character to of have the is
assurance neighboring appropriate property is
contract
the the
improvements to the property,
restriction the
and that In
surrounding restrictions
similarly
restricted.
framing
connected with the development of a tract, it is wise not to make them perpetual, but to make them run out at a definite time. Neighborhoods are frequently retarded in their proper development because of the fact that there are restrictions which were put on to run without limit of time, as to which it cannot be said the neighborhood has so far changed that the restriction need not be enforced, but still the property does not sell at its full value. A restriction that property may be used for the purpose of dwelling houses means any kind of a dwelling, including private dwellings, flats, apartments, apartment hotels,
anything that is used for human habitation. A restriction that property may be used for private dwellings means a dwelling for the use of one family only. A restriction
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against the use of property for tenement houses is very difficult to construe. Easements: An easement is a right over or to the use of part of property in favor of another adjacent property. If A own a lot and B have a right to walk over it to reach the street, B's right is known as a "right of way," and if A were selling his lot, he should provide in the contract that it is sold subject to that easement. A party wall right arises either by agreement or where one man owns sufficient land for two or more structures,
constructing them with a common wall, so that the wall is upon the dividing line between the two lots, and partly on each, the buildings on both sides being supported by the wall. The owner of each building has an easement in the other's lot to the extent that he has a right to have the wall remain as long as it will stand, and to have support for any structure which he may put upon the property, provided he does not bur-den the wall so as to impair its usefulness. The owner of each lot may build on the wall to its full width as high as he pleases, but he cannot extend the wall further back or forward on the lot. Where property
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is sold subject to a party wall right, the contract should so stipulate. It may be that the wall is entirely upon the lot which is being sold but must support a neighbor's building. In such a case, the neighbor's right is known as a beam right. Cases frequently arise where one building has a right to drain over another. When a property is subject to either of these rights, the contract should so pro-vide. Appurtenances go with the property whether specifically mentioned in the contract or not ; but all things to which a property is subject which may detrimentally affect its price or impede its use should be put into the contract by the seller, so that they may not be objections to the title.
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57
OBJECTIVES
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58
OBJECTIVES
Following study: To
are
the
prime
objectives
of
this
present
an
overview
of
the
Real
Estate
Industry. To critically analyse the Future Trends in
Real Estate Industry. To critically of evaluate major the in position Real and
prospect Industry.
players
Estate
To enquire about the future prospect of Real Estate Industry.
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RESEARCH METHODOLOGY
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RESEARCH METHODOLOGY
Since the Indian real estate sector continuos it steady progress with overall sales activity going up significantly in the past six months. And hence, the principal methodology is the print media, especially the Journals, magazines, the government survey reports etc., published from time to time. It has been used deductive method based on the aforesaid documents : Information regarding the real estate and the impact of the WTO hats been taken from two sources.
Primary Sources : Marketing personnel public relation personnel, showroom managers of the Housing and Construction companies etc. were approached to gather various types of information.
Secondary Sources : Internet IIPM, CII Library etc. Articles from - The Times of India, The Hindustan Times, A & MS Business World etc.
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Newspaper Articles from - The Economic Times Based on the above information concepts are developed on which analysis has been made and even recommendation s are given.
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AN OVERVIEW OF THE REAL ESTATE INDUSTRY
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AN OVERVIEW OF THE REAL ESTATE INDUSTRY
MARKET OVERVIEW Market Summary The Delhi Residential real estate market has maintained its buoyancy in 2004. The growing housing demand of the burgeoning middle and upper middle class supported by the competitive low interest rates continues to fuel the growth of the suburban residential market. This growth is evident in the overall evolution of the residential developments in the suburbs highlighted by the new highland mid end developments in Gurgaon and Noida, such as World Spa,Pinnacle, Belmonte, Uniworld City, The Forest etc. All theses projects boost of high specifications in terms of quality of construction in comparison to the previous facilities. projects Also along of with these luxurious projects amenities have and
most
witnessed
recompilation bookings to the extent of 75 to 80% both by endusesrs and investors.
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The South Delhi residential market is mirroring a similar market sentiments the suburban region, the only
difference being in the profile of the buyer. The demand is mainly led by small time investor group looking to place their funds in relatively liquid assets (as compared to other Real-Estate options) with a steady return on
investment. This heightened demanding South Delhi from investors (which include Indian residents as well as NRIinvestor) and end users has lead to a shortage of good quality stock in the prime areas. It is interesting to note that in the last 68 months, the supply and demand dynamics in the market have reflected a complete turnaround with demand
outstripping the supply. This scenario has resulted into a 25-30%rise of capital values in colonies such as Vasant Vihar, Westend, PanscheelsPak, Defence Colony, Golf Links etc. Rising trend of foreign investment in integrated
townships. Foreign investment in the integrated township sector is displaying a rising trend after the Government of India, in
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the first quarter of 2002, allowed up to 100% foreign direct investment (FDI) for the development of integrated townships with a minimum area of 100 acres. Although the policies governing investment in the sector are still largely restrictive in terms of pre-conditions for interested parties, major developers, especially those from South East Asia, have been active in collaborating with local partners to execute large integrated township projects in major cities across the country. The first FDI project in the sector was a 100-acre
residential township proposed for development in Delhis suburban business and district of Gurgaon. firm Indian Feedback
infrastructure
property
consultancy
Ventures Ltd tied up with Malaysian developers Kontur Bintang and Westport for this project. The total capital outlay is estimated to be USD 160 million. Another Malaysian firm, IJM Berhad, is also involved in two major projects a 2,200-unit apartment project in the southern city of Hyderabad in a joint venture with the Andhra Pradesh Housing Board (APHB) and a 500-acre integrated township in SAS Nagar in Mohali, in North India,
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for which a memorandum of understanding (MoU) has been signed with the Punjab Urban Development
Authority(PUDA). Two more prominent projects are underway in Bangalore and Chennai, involving Singapore-based developers Keppel Land and Lee Kim Tah Holdings respectively. While Keppel Lands Bangalore project is in association with private developer Purvankara Projects, Lee Kim Tah Holdings has signed an MoU of with Tamil the Nadu State Industries for Promotion Chennai
Corporation project.
(SIPCOT)
the
These five major projects, committed within a span of two years since FDI was allowed in the sector, is testimony to the fact that regional developers are optimistic about the Indian real estate market, a particularly the residential in foreign
segment.
However,
marginal
relaxation
investment pre-requisites is needed to further align Indias real estate market with its regional counterparts.
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ECONOMIC OUTLOOK The Centre for Monitoring Indian Economy (CMIE)
estimates that India's gross domestic product (GDP) will grow significantly by 2003-2004. From July 1, for highvalue real estate transactions, Form 37(I) Income Tax clearances are not required. Budget 2002 had provided for the repeal of this provision allowing the government the pre-emptive right to purchase immovable property. This is a progressive step that significantly reduces the threemonth waiting period before large-value transactions could be registered. A Rs 50 billion (US$1.02 billion) Urban Reforms motivate Incentive agencies Fund at (URIF) every has been to proposed to
level
undertake
infrastructure reforms. Extra funds have been announced to those States pushing reforms, especially in the context of the Urban Land Ceiling Act. regime has lowered cost of The soft interest rates to housing finance
funds
institutions, translating into a drop in interest rates. This has triggered off a large take-up of finance by end users.
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CURRENT SCENARIO Office markets showed signs of revival towards the end of Q1 2002, post September 11. Outsourcing drove these to India of 'back office operations' of financial institutions and call centres. However, the market saw some
uncertainty as a result of tensions on the India-Pakistan border. The subsequent travel warnings issued by some Western governments delayed decision-making. The
market is now looking more buoyant, with most corporates perceiving the travel advisories as an over-reaction. In Delhi, rental and capital values continue to be soft and the principle business districts are seeing movement of small corporates on A from or B+ secondary grade markets to The the CBD,
focussed
buildings.
suburban
markets of Gurgaon and Noida are driven by larger space requirements of IT-enabled service (ITES) providers,
primarily call centres. Major corporate offices are also relocating from the CBD to Gurgaon, primarily driven by quality and size of space offered. Landlords are offering single flexible and divisible floorplates of upto 25,000 sq ft.
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69
There
is
clear
link
between
shifting
corporate
destinations and the boost this provides to housing. This is evident in Gurgaon in Delhi where residential take-up has been in tandem with corporate influx. The middle to upper middle class residential market is active across the
country. This market is driven by: Tax incentives offered by the government on housing loans. Lack of other attractive investment options such as the stock market or personal savings schemes. Improvement of transport linkages. Good quality products offered at reasonable cost by
developers to boost lack-lustre markets The last quarter saw fresh leasing activity in Gurgaon with space commitments of approx. 150,000 sq. ft. However, values are expected to continue to be under pressure as new supply of over 65,000 sq. ft. is added. In the next 8-12 months, demand for IT enabled
services will be in excess of 1.2-1.4 million sq. ft. Approximately 65% of this demand is likely to be split
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over
cities:
Mumbai,
Pune,
Delhi,
Bangalore,
Hyderabad and Chennai. In the News: Hero Corporate Services is planning to invest $ 20 million in the next 6 months which will be used to set up the companys third contact center as a part of its information technology enabled services (ITES) division, Hero Serveit, and also to ramp up existing facilities. American Express has tied up with DLF Golf Course to provide its platinum card members with free access to golf every Wednesday. Reliance Infocomm is planning to invest Rs 750 Cr. In building a retail chain offering a one stop for telecom solutions. Starbucks International , the coffee chain, is looking for an entry in to the Indian market early next year. The company will initially set shop in three metros: Mumbai, Delhi and Chennai.
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RESIDENTIAL Market Summary: In the last two years, Delhi has seen a perceptible shift in demand for farmhouses from stand-alone independent houses in the city. Most farmhouses have amenities like landscaped lawns, tennis courts, swimming pools,
gymnasiums etc. and provide exclusivity. For security reasons, embassies and high commissions show
preference for occupying independent houses (on long leases) rather than apartments. The bulk of the demand in farmhouses has been in the Brijwasan area and for high quality properties with Grade A specifications.
Preference for Brijwasan over other areas is also on account of proximity to the airport and to international schools. Demand for housing is still polarized between up market independent units and medium budget apartments.
However, despite this overall increase in demand, the available supply is still more than prevailing demand. Good quality independent houses have seen a noticeable and steady decline in supply. Development activity by
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private builders in South Delhi continues to be active. Either builder apartments or poorly constructed owner built floors primarily dominate available stock. NRI investment in retail residential sector has seen an increase of 15-20% since 9/11. NRI investments account for nearly 20% of the Rs. 12,000 crore real estate residential sector. CURRENT SCENARIO Small developers/builders are acquiring plots/entering into collaboration agreements with landlords in all major residential locations in Delhi. Multi-storey apartments are replacing older single storey bungalow properties and this has significantly increased the quantity of
stock. Comprehensive residential developments south of Delhi in Gurgaon in Haryana and east of Delhi in Noida and Greater Noida in Uttar Pradesh, also service the
Capital's growing needs. In the Gurgaon area, developers have branded their large multi-use developments viz DLFs DLF City, Unitech's South City I & II and Ansal's Sushant Lok. Following this
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lead, the Haryana Urban Development Authority (HUDA), is attempting to give identification to its holdings. RESIDENTIAL VALUES Capital Values Location Rs/ sq ft. CENTRAL DELHI Prime SOUTH DELHI Prime Secondary WEST DELHI Prime (New 2,300 14 4,500-5,500 3,500-4,000 40-50 35-45 6,200-8,500 60-75 Rs/sq. ft./ month Rental Values
Rajender Nagar) Secondary EAST DELHI Prime Secondary GREATER NOIDA Land Apartments 3,5000- 6,000 1,200- 1,500 2,000-2,500 1,200-1,500 20-25 10-12 1,200-1,900 7-10
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LATEST PRICES OFFICE MARKET CURRENT SCENARIO Corporate take-up is driving Delhi's office market as well as call centers and other IT-enabled users. Tenants are generally seeking fully fitted office space. In the CBD, such space is often vacated by corporates who have relocated to the suburbs. Sometimes landlords fit out space to attract good tenants. Takers of smaller office space such as Infar, Tellabs and Frederic R Harris in the CBD have opted for fully fitted facilities, vacated by
previous tenants. In Gurgaon and Noida too, there has been take-up of fully fitted accommodation. Most landlords offer air conditioning and power back up, supported by professional real estate property
management. In the CBD, landlords of properties such as Ashoka Estate and Hindustan Times House have improved these buildings, which have enabled them to upgrade
tenant profile.
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The industrial areas of Udyog Vihar, Okhla and Mohan Cooperative too are seeing take-up by IT-enabled services. In the suburbs, developers have land and schemes, which are being marketed to corporates with large build-to-suit requirements. Noida and Gurgaon offer buildings with such larger floor plates which cater to large space users. At present, Noida has a better six-lane road infrastructure project on than the
Gurgaon.
However,
flyover
National Highway 8 is scheduled to start soon in Gurgaon. This will improve the road connectivity to Gurgaon from Delhi. Both Noida and Gurgaon have emerged as prime
residential locations, which produce an English-speaking workforce capable of servicing call centres, and IT enabled services companies. There are approx 40 call centres
operational in Gurgaon and Noida. Call centres typically employ upwards of 100 people at a per-person-per-sq ft ratio of 70. Call center space take-up is therefore typically in excess of 7,000 sq ft upto approx 200,000 sq ft. Large players such as GE Capital, EXL Services, Spectramind and Daksh have head counts upwards of 2,500 operating out of multiple locations.
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OUTLOOK Three projects in the CBD area are awaiting occupancy approvals from the government. These are expected to bring approx 800,000 sq ft of space into the market, which will put pressure on prices. Gurgaon will hold its position as the preferred suburban location due to significant
quality supply in the pipeline. Call and data centres will continue to be the demand drivers of large accommodation in the suburban areas.
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OFFICE VALUES
Capital Values Location Rs/ sq ft.
Rental Values Rs/ sq ft./ month
PRIME Connaught Place Grade** Connaught Place Grade** SECONDARY Bhikaji Place# Nehru Place# Okhla Industrial Estate* Okhla Industrial
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80-100 A 7,000-9,000
50-70 B 5,000-6,500
Cama 3,000-4,000 3,000-4,000 5,000-7,000
30-40
20-30 50-70
2,000-3,500
20-35
Area* Mohan Cooperative*^ SUBURBAN Gurgaon Grade Gurgaon Grade* Noida A Grade Noida B Grade Greater Noida 4,000-6,000 1,500-2,000 1,400- 3,000 40-60 12-20 B 1,200-3,000 15-30 A 4,000-5,000 35-40 N.A. 25-60
Values for shell & core space. Security deposits and rental advances as applicable. *These areas were originally classified as light
industrial, but since information technology fits into the light industrial sector, these areas are being used by IT enabled services and software
development centers. ** DLF Center in CBD commands premium rental rates of Rs 135/ sq. ft/ month
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# Gesco centers in both these locations commands rental values of Rs 100/ sq. ft/ month ^ Sale of built-up property not permissible. Rental Values depend such as on location and offsite
infrastructure
power
supply,
sewerage
systems and approach roads. RETAIL CURRENT SCENARIO Rentals are improving due to paucity of space in traditional retail areas of Connaught Place, South Extension, Greater Kailash I & II, Basant Lok, PVR complex and New Friends Colony. Retailers Vikaspuri, are moving towards the affluent and areas Vaishali of in
Rajouri
Garden,
Pitampura
Ghaziabad. Approx 2.2 million sq ft of retail space will become available in the Delhi region over the next few years in approximately 15 malls, which are currently under construction.
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Restaurants are major drivers of Delhis retail sector, in areas such as Basant Lok, Vasant Vihar, South Extension and Defence Colony.
OUTLOOK Multiplexes and entertainment complexes in the vicinity of retail destinations, such as the PVR multiplexes in Vasant Vihar, Anupam, Naraina and Vikaspuri, will continue to do well. The 15 malls which are under construction are
expected to include a strong leisure content.
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RETAIL VALUES
Location
Capital Values Rs/ sq. ft.
Rental Val ue s Rs/ sq. ft./ mon th
Connaught Place Inner Circle Outer Circle South Extension Basant Lok PVR Saket GK-I GK-II New Colony Noida Gurgaon Greater Noida
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8,000-9,000 20,000-25,000 12,000-15,000 10,000-12,000 20,000-25,000 8,000-9,000
120-150 70-100 250-325 110-120 110-125 250-350 80-100 90-110
Friends 9,000-10,000
8,000-9,000 5,000-6,000 4,000- 6,000
90-100 50-60 82
Values for shell & core space. Security deposit of 6 months rent applicable. NEW PROJECTS COMMERCIAL The JMD Group is constructing over 765,000 sq. ft. of commercial and retail. These will be priced at Rs. 3,500 6,000/ sq. ft. Pacific Square is a commercial building near the 32 n d milestone and shall have an area of approx. 170,000 sq. ft. over 9 floors Morpen Laboratories has leased on a built-to-suit basis approx. 80,000 sq. ft. space by DLF at undisclosed price Phase III of Global Business Park is now under
construction Max India is proposing to construct a super specialty hospital in Gurgaon
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RETAIL DLF, MGF, Sahara and Ansals are each developing
shopping malls in Gurgaon. Regents Plaza is a shopping mall covering an area of 70,000 sq ft over four or five floors. It is going to be exclusively hosting fashion designers like Giorgio Armani, Versace & Gucci. RESIDENTIAL Feedback Ventures is developing 100acre residential
development in Gurgaon DLF has launched Trinity Towers , a 4 BR condominium development in Phase V Gurgaon ATS Infrastructure has launched Phase II of ATS Greens in Sector 50, NOIDA Kamalka Lakelands is a 9-hole golf course real estate project in Gurgaon GESCO has launched Central Park , a 2,3, 4 BR
condominium development in Gurgaon
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Ardee Infrastructure is constructing The Residency , 4-BR, serviced, and uni-bed, low-rise apartments near South City, Gurgaon
COMPARATIVE PROMOTER AREA PRICE (basic ) NRI CITY PUTTING GREENS NRI CITY PUTTING GREENS NRI CITY PUTTING GREENS 4244 Sq.ft 2362 Sq.ft 2104 Sq.ft 1900/Per sq.ft 3 room 1900/per sq.ft 4 room 2100/per sq.ft Penthous e
85
LOCATION
G.NOIDA
Bed
G.NOIDA
Bed
G.NOIDA
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PARSVNATH PLATINUM ATS GREENS VILLAGE
1500 Sq.ft
G.NOIDA
1300 Sq.ft 1500 Sq.ft 1750 Sq.ft 2800 Sq.ft
1700/Sq.ft
NOIDA EXPRESSWAY SEC-93A
STELLAR KINGS COURT
2003.5 Sq.ft 1702 Sq.ft 1507 Sq.ft
1650/Sq.ft
WESTEND HEIGHTS DLF
2700 Sq.ft 2500 Sq.ft
2000/Sq.ft 2500/Sq.ft
GURGAON
ELDECO GREEN MEADOWS
SAVANNA H 1330 Sq.ft GARDENIA 1510 Sq.ft 1589/1595/Sq.ft
G. NOIDA SEC Pi
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VERDANA 1610 Sq.ft
Sq.ft
1660/Sq.ft PARSVNATH GREEN VILLE 2000/Sq.ft Ground Floor 1950/Sq.ft 1st and GURGAON
2 n d Floor ELDECO RESIDENCY GREENS TULIP 1665 Sq.ft CARNATIO N 1455 Sq.ft DAFFODIL 1200Sq.ft
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G. NOIDA 1595/Sq.ft SEC Pi
1566/Sq.ft
1490/Sq.ft
PROMOT ER
AREA
PRICE (basic )
LOCATION
SOUTHEN D FLOORS
925Sq.ft 1412 Sq.ft 1490 Sq.ft 1570 Sq.ft
1486/Sq.ft 1338/Sq.ft 1342/Sq.ft 1433/Sq.ft
SEC 49,SOHNA ROAD GURGAON
48-
UNITEC THE CLOSE
UNIVERSAL 2000,2480,31 70 sq.ft INTERNATION AL
RS. 2350/Per sq.ft Rs.2500/ sq.ft Per
GURGAON
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NRI CITY SINGAPOR E
1657,1990,21 13 sq.ft
Rs.2000/ - sq.ft
GREATER NOIDA
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CHAPTER 2
5 MAJOR PLAYERS IN THE REAL ESTATE INDUSTRY
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5 MAJOR PLAYERS IN THE REAL ESTATE
JAIN ESTATE
They are well established commercial real estate agents in Delhi, India who provide their clients suitable properties in Delhi and NCR The region for residential has space and a office
premises.
organization
achieved
distinct
reputation among the commercial real estate agents and property dealers in India by following a policy of "Clients' First".
To empower our ability to provide full range of real estate services & to achieve the international technical know-how and trade practices, They have partnered with ONCOR International. ONCOR International is an organisation of
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top-ranked, companies
privately which offer
owned a
commercial
real
estate of
comprehensive
selection
corporate & investor related services.
Jain
Estates
Oncor
International with
is
real
estate and
consultancy
organization
extensive
resources
ability to offer personalized professional services in India. Our professionalism is hallmarked by quality, innovation and effectiveness, while delivered with enthusiasm and determination. Empowered with the cutting edge
knowledge of trade trends and practices, our deals have inculcated confidence and genuine satisfaction amongst the real estate buyers. For the past few years India has emerged as the most favourable destination for International Corporates and
Multi National Companies. Meeting the diversified need of the Industry, They have arranged Commercial / Industrial & IT Enabled Accommodations. These are available at
strategic locations in Delhi and NCR. The company holds an impressive track record of
completing successful transactions of over Two Million Sq. Ft (20,00,000 Sq. Ft) area. Varied Government
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Organizations,
leading
Indian
Corporates
&
Top
Multinational Companies have expressed their loyalty and trust in us. Jain Estate has partnered in real with Oncor International, offering a a
leading
name
estate
arena
comprehensive solution of corporate and investor related services world wide. The group has developed a unique positioning in the
market place, where its consultancy business is focused on working with the clients by taking a pro-active approach and adding value. LIST OF ONCOR'S PARTNERS: 1. Alles Group Mexico City, Mexico 2. Alliance Partner AsiaPac, China, Australia & Singapore 3. Anthony Allenton, United States of America 4. Atlantic, St. Petersburg, Russia 5. Beacon Property Solutions, Prague, Czech Republic 6. Boer Hartog Hooft, Amsterdam, Netherlands 7. Burnham America
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Real
Estate
Services,
United
States
of
8. Carter & Associates, United States of America 9. Codina Realty Services, United States of America 10. 11. CORE Realty Partners, United States of America Cornish & Carey Commercial, United States of
America 12. 13. 14. 15. 16. 17. 18. 19. 20. Dickson Realty, United States of America DnB Nringsmegling, Oslo, Norway Dr. Lbke GmbH, Frankfurt, Germany Fernandez Mera, Sao Paulo, Brazil Ferran, Barcelona, Spain Follman Properties, United States of America Frederick Ross, United States of America Gabetti per l'Impresa, Milan, Italy HUFF Commercial Group, United States of
America 21. 22. Hugo Ceusters, Brussels, Belgium Irwin Saviers Company, United States of America
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23. 24.
JHI Real Estate Ltd., Johannesburg, South Africa Keegan & Coppin Company, United States of
America 25. 26. 27. 28. 29. 30. Kuoni, Mueller & Partner, Zurich, Switzerland Lincoln Harris, United States of America Macadam Forbes, United States of America Meredith & Grew, United States of America Nelson Bakewell, London, United Kingdom Pacific Real Estate Partners, Inc. United States
of America 31. Paine/Wetzel Associates, United States of
America 32. 33. 34. 35. 36. 37.

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PI Performance, Switzerland Sadolin|Albk, Copenhagen, Denmark Siegel-Gallagher, United States of America Signature Associates, United States of America Sitar Company, United States of America SOPREC Enterprises, Paris, France
95
38. 39.
Southeast Venture, United States of America Stream Realty Partners, L.P. United States of
America 40. Toribio Achaval Propiedades, Buenos Aires ,
Argentina 41. 42. 43. 44. 45. 46. Torode Realty, Canada Travers Realty, United States of America TRI Commercial, United States of America United Properties, United States of America US Equities Realty, United States of America West, Lane & Schlager Realty Advisors, LLC,
United States of America 47. 48. Weston Companies, United States of America Zimmer Real Estate Services, United States of
America Infrastructure They possess adequate resources, to deal in sale and purchase of residential, commercial and industrial
properties. They owe our success in this highly competitive

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field to our good contacts and a huge network of highly dedicated professionals who enjoy dealing with people and consulting them. Our expert professionals have an
exhaustive knowledge of the real estate market. They also help our clients to get financial aids from financial
institutions, in case they need monetary aids.
:: Real Estate Services :: Jain Estates ONCOR and real International estate services provides for property space,
consultancy
office
residential premises and commercial premises. Call Centres/Software Development/BPO Companies Jain Estates Oncor International can help you get the best kind of office locations for call centers and other IT related industries, in the most preferred locations, in Delhi and surrounding areas.
Office Accommodation Jain Estates ONCOR International can provide buildings for office accommodation that are both furnished as well as
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unfurnished, in accordance with the requirements of the clients, in relation with location and space. Retail/Showroom/Warehouse/Godown Jain Estates ONCOR International has a large network of consultants spread all over India and especially in Delhi, who can assist you in finding the best options for setting up your retail showrooms, warehouses and godowns. Residential Accommodation Jain Estates Oncor International makes it possible for you to find apartments, options bungalows for rent and or other in kinds the of
accommodation
sale,
prime
locations, in and around Delhi.
:: Corporate Services :: Jain Estates ONCOR International provides the highest
level of corporate advisory services available in the India Market Jain Estates unique approach to client service starts with a detailed needs the assessment objectives analysis of the in order to as fully the
understand
assignment,
selection and detailed evaluation of viable options. Based upon our understandings, build-to-suit projects and
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synthetic leasing, as well as more traditional leasing and sale transactions.
Jain Estates ONCOR International plays an important role in documenting a detailed business case and negotiating on behalf of our clients n order to ensure that they arrive at the best possible Real Estate Solutions. :: Industrial Services :: Jain Estates ONCOR International provides comprehensive industrial leasing and sales services nation-wide with
offices in India. They assist our clientele in step-by-step process in the selection of the right location, incorporating all aspects of the operation, including infrastructure, labor and issues related to logistics and the supply chain. Jain Estates ONCOR International also provides disposition services for a wide range of industrial facilities. They evaluate the India potential of each property based in development opportunity and future income streams to optimize the sale income received, and apply creative
marketing techniques both locally and internationally in order to minimize time on the market.
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:: Investment Property :: Jain Estates ONCOR International provides tailored
financial services for the users of corporate and industrial real estate developers Our and private a and wide institutional range of
investors.
activities
include
investment and financial-related projects with emphasis on creatively and transparent completion to ensure the most competitive pricing available.
:: Real Estate Financial Analysis :: Jain Estates ONCOR Internationals real estate
professionals are seasoned in the Indian market and have provided services covering a diverse range of projects. Our in-house capabilities allow us to examine the financial viability of each investment or development project and isolate individual variables to assess impact on project development returns. budgets, have that are operating analyzed budgets complex and and investor
They
development encompass
opportunities
multi-phased
hundreds of thousands of square feet to investments as small as 1,500 square feet. At the same time, They are able to analyze quickly the net effective rental rates to
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landlords
after etc.
expenses, in order to
commissions, make decisions
tenant more
improvements,
readily with respect to prospective tenants.
:: Residential Services :: Jain Estates for ONCOR International area. provides offers real real estate estate
services
residential
Also
financial analysis services and financial services for the users of corporate and industrial real estate developers and private and institutional investors.
:: EHS Reports :: Jain Estates ONCOR International's professional provides services related to EHS Reports (Environment Health & Safety Reports).
Property in Delhi
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2,500 Sqft Safdarjung Enclave, Africa Avenue Main Road (South Delhi) High Signage, Centrally AC, 100% Power back up,
Furnished office suites alongwith Workstations/ Conference and meeting rooms/ Executive cabins etc.
Located in the heart of South Delhi facing Bhikaji Cama Place. 1,250 Sqft. Kasturba Gandhi Marg-
Cannaught place (Central Delhi) Centrally AC,100% power backup, Lifts, Parking, Fully Furnished. Located in the central Business District of Delhi. Easily accessible, Ideal Choice for a Liaison office. Nominal rent. .
50,000 Sqft. Mohan Co-operative-Main Mathura Road (South Delhi) Brand New Independent building , Centrally AC,100%
power back up, False ceiling, Flooring etc. High Signage, A+ grade building, Right choice for corporate
office/BPO/Call centers etc.

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8,000
Sqft
to
50,000
Sqft.
Commercial
Business
District (South Delhi) A+ Grade Building having central AC,100% power back up, Lifts,Fully vacated by Furnished.100% a fortune 100 legal commercial. Ideal Recently for
company.
choice
corporate office.
7,000Sqft. Inner Circle -Connaught Place 1st Floor (Central Delhi) Centrally AC, 100% Power Back up, fully furnished, Central business district of Delhi, Ample parking space. Easily accessible, Surrounded by corporates, Banks, Restaurant, Showrooms etc.
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7,000 Sqft. to 15,700 Sqft. Connaught Place, (Central Delhi) Centrally AC, 100% Power Back-up, 2 Lifts, Reserved
parking, Fully Furnished. Easily accessible for staff and visitors, Nominal rent @Rs. 70 per Sqft per month.
3,000 to 5,000 Sqft. Inner Circle (Connaught Place) Centrally AC,100% Power Back up, Fully Furnished, Central Business District of Delhi, Ample parking space, Easily accessible, surrounded by Corporates, Banks, Restaurant,
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showrooms, 4 Cabins etc @Rs. 60- Rs. 80 per Sqft per month. 75,000 Sqft. to 15,000 Sqft-Qutab Institutional Area (South Delhi) Centrally AC,100% power back up,Lifts,Fire Fighting
equipment,A+ grade building. Peaceful & serene location, Easily accessible. Amongst the best office building in South Delhi close to Airport/ Gurgaon & yet it South Delhi.
Taj Hitech is an innovative, reliable and trained applicator for entire range of construction chemical products used for chemicals resistant coating of buildings. ABOUT US At Taj Hitech, They have excelled in providing services in specialty construction chemicals, exterior coating, exterior painting, specialized flooring, interior painting epoxy and / coating of buildings, coatings /
coatings,
polyurethane treatment,
silicone
water
repellent
expansion
joints treatment, waterproofing and anticorrosive coatings. They are a team of qualified Civil Engineers, Chemical
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engineers & Applicators working in this field for more than ten years satisfactorily. Our team has extensive knowledge and understanding of the entire range of construction chemicals products. This coupled with our expertise in the key areas of a
procurement,
logistics
and applications have created
truly world-class team as the quality applicator of various construction chemical coatings. They give great stress on quality.
OUR SERVICES
Our application and coating services include entire range of construction chemicals products. Services Applications
Water proofing. Anticorrosive M. S pipes, treatment Metals, of
Epoxy
Flooring
steel
Epoxy Coating
water tanks etc. Industrial flooring & coating, hygienic Automotive coatings & for others
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Engineering,
Pharmaceutical
& food manufacturing units.
Anticorrosive coating for M.S & others metal surfaces
Polyurethane Flooring Polyurethane Coating /
Water coating
proofing/ to
exterior the
protect
buildings/bridges/industries
Industrial flooring,
coating
and
Water repellent coating for building, Expansion bridges joint exteriors, sealing,
Silicone Coating
window/door sealing.

Chemicals,
algae,
acids,
Chlorinated Rubber Paint
alkalis resistant coating for swimming fountains pools and
Synthetic Paint
Rubber
Coatings
for
Tennis/Badminton/Basketball court
Polymers
Waterproof coatings/injection groutings

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for concrete
Acrylic
Exterior
water
proof
coatings/painting
Polysulphide
Sealant sealing
expansion
joints
EPOXY FLOORING / EPOXY COATING Epoxy flooring and epoxy coating, polyurethane flooring / coating are used to on floor and wall surface. It gives higher abrasion resistant to surface. It is very easy to clean and wash.
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Application Areas: Automobile Industries Engineering Industries Automobile Show room & Workshops Pharmaceuticals Industries Food Processing Industries Health Care Center Chemicals Industries
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Fertilizer Industries I.T Industries Electronic Industries Benefits: Provides Cleaner, healthier, more pleasant place for your employees to work in. Protects your concrete from wear, making it last longer Controls concrete dusting Protects the substrate from chemical and physical degradation. Cuts down on amount of lighting needed in plant. Make your plant more appealing to your potential customers. Helps keep your finished parts clean before shipping Define certain areas, or designate the presence of hazards. Reduce the maintenance and cleaning costs. Uplift in Aesthetics. Easy wash ability
Jobs Done: ST Microelectronics Noida

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Daewoo Motors Noida GE Motors Faridabad McDonald's restaurants New Delhi HUDA Faridabad Honda Siel Power Products Rudrpur, Uttranchal Gary Pharma Ludhiana (Punjab) BELCO PHARMA Bahdurgarh (Haryana) Phoenix Hospital New Delhi Pristine Valley Noida Salwan School New Delhi Jagson Pal Faridabad Techno Spring Faridabad ABB Faridabad BENARA AUTO Agra HONGO INDIA Greater Noida ADIDAS Gurgaon ALLIANZE AUTOMOBILE New Delhi MGF Hyundai Mayapuri
Their EXPERTISE They have professional acumen & expertise for handling the work. They possess skilled manpower for timely
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completion of projects & sites. Client satisfaction is our utmost task. They provide best solutions considering the clients' needs. They suggest best possible and durable solutions.
LOGISTICS Their infrastructure comprises of a good working methods, skilled labor force and high tech gadgetry. There are
experts entrusted with the responsibility of keeping the equipment and machinery under strong vigilance to
constantly appraise the performance.
The list of Machinery:
Hydro Blasting Machine 1 No. Industrial Vacuum Cleaner 2 No. Elcometer 2 No. Electric Stirrer (Mixer) 3 No. Spray 3 No. Injection Grouting Machine 2 No. Electric Clader (Trolly) 1 No.
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Coating Brushes Rollers, etc 100 No. Moisture & Temperature Measuring tool 1 No. Grinders 4No.
ASSOCIATES Their associates include various builders, contractors,
hotels and industries. The list of our reputed clients are following
American Embassy, American
Center,
New
New Delhi Delhi French Embassy, India International Center, New Delhi New Delhi Sahara India, Noida Lucknow airport, Lucknow Hotel Vasant Continental, New Hotel Ashoka, New Delhi
Delhi Lotus Temple, New HCL, Gurgaon-Noida Delhi GAIL, Noida-Pata NIIT, New Delhi XANSA, New Delhi Power Grid, Gurgaon HYUNDAI ENGGDFIDC, New Delhi Korea, Allahabad
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Daewoo Motors, Noida Smith Kline Beacham, Sonepat NIRLAC HUDA, Faridabad
Ahluwalia Contracts Hamdard University
JOBS DONE Their comprehensive business capabilities have enabled us to successfully complete many large-scale projects. They have sought superior raw materials and new and more efficient ways to exploit natural resources to fuel the economic dynamo of our organization. They have optimized our productivity by the virtue of the implementation of new industrial technologies that have supercharged our growth. CONTACT US Contact us or send us on-line Query Taj Hi-Tech Mr. Hafeez Rehman A-67, 2nd floor, Dayanand Colony, Lajpat Nagar- IV, New Delhi -110024 (INDIA) Tel No : +91-11-26214016/55688699 Mobile : 9811080298 Email : tajhitech@indiatimes.com hafeez@email.com
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TCG DEVELOPMENT INDIA PVT. LTD. TCG Developments India Pvt. Ltd is a Real Estate
Development and Consultancy Company, promoted by New York based The Chatterjee Group. The company started its Indian Operation in 1996 and has presence in Delhi,
Mumbai, Kolkata, Bangalore, Chennai and Pune. They are Real Estate Consultants dealing in commercial real
estate development and other consultancy services .
The company has made its mark with Projects like First India Place in Gurgaon, Bengal Intelligent Park, Kolkata, First Technology Place, Bangalore.
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TCG PROFILE Expertise TCG Developments India Pvt. Ltd is a Real Estate
Development and Advisory Company, promoted by New York based The Chatterjee Group. The company started it's Indian Operation in 1996 and has presence in Delhi,
Mumbai, Kolkata , Bangalore , Chennai and Pune. The company has made it's mark with Projects like First India Place in Gurgaon, Bengal Intelligent Park, Kolkata, First Technology Place, Bangalore. They are a leading
commercial property developer in India.
They
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are
Commercial
Property
Agents
offering
Real
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Estate Development services. The members of our team have established their credentials on landmark projects across the world. Together They have created a company with unusual and contrasting strengths. They offer not only the long experience of seasoned professionals, but also the energy and dynamism of a young enterprise. Years of experience on major projects have taught us the
importance of 'first-to-last' approach , covering every stage - from site selection to property management in order to exploit the project's true potential and add the greatest possible value. They handle development projects as 'a whole', the better to create more than the sum of the parts. They are ambitious for our projects to deliver above average rewards, both aesthetic and financial. What makes us different What marks TCG out is the set of attitudes that order our priorities. adding of First, our overriding in commitment our the projects key is to the are of
value. to
Second,
They
determined
satisfy
equally
objectives
excellence in design and execution, financial return and benefit to the community . Third, our intention is to realise more than a development; They aim to create a
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place a destination . Fourth, this ' sense of place' is securely grounded in identifying a powerful rationale for each development. Fifth, They believe that the long-term view makes sound business sense. Finally, They favour the design principles that are timeless .
First-to-last development They encourage a development process that aligns every aspect of the project to the same end. Marketing is linked to design, is linked to construction, which itself is linked to financing, management. cash-flow This is management first-to-last and property where
development,
decisions affecting different stages of the project are not made in isolation. Although construction is the most
expensive part of a development, it is possible to make most impact on those costs at the outset, than when construction actually begins. First-to-last development
makes it possible to assemble all the pieces in the right order, in the right form, at the right price . Maximising Return The principal behind the most remunerative developments is that profits are maximised at the best level of cost , which is not necessarily or even usually the lowers level of
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cost. Often small increase in quality triggers a larger increase in the return. It is a matter of identifying what it is appropriate to develop. They believe our role is to determine where They can find the highest possible value and return. It requires both vision and acuity: the ability to make an imaginative and a leap strict and visualise of the the
attainable
dream ,
understanding
factors that make a project viable. The design concept may seem to drive the project, but the key to the design concept is feasibility.
How They add value
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They favour first-to-last development, because adding of value happens, every step of the way. It starts at the conceptual stage , in maximising the use of the site to secure the best return. Good design is fundamental in adding value , because it creates the delight and appeal that characterise a highly marketable development. More precisely, the manipulation of materials is an aspect of practical creativity . They can add value by using high quality materials where they matter, and by value
engineering the building to avoid excess. The design can also take account of value in use the durability,
maintainability and energy efficiency of what is built , it is possible, also, to achieve higher value by
procurement, risk management, and by the use of advance control systems. Real value addition also hinges on expert management of the execution of construction. Assembling a project team who can achieve the right quality may be less to do with the money spent and more to do with management and supervision. Undoubtedly the greatest contribution comes through the quality of the design.
Expertise with large projects

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The potential for adding value is greatest in largescale developments where overlapping populations give scope for complementary can become a uses. new A multi-building and bring
development
destination
focus to an urban area in the way that is not possible with a single building, or even two or three. Large
developments with mix uses, types of building and scales of building present enormous opportunities. But they also pose risks-in terms The of design, must logistics be and financial without
management.
project
staged,
compromising its viability. The design must handle repeat elements without repetitiveness or unnecessary cost, in a solution that is intellectually stimulating. Construction
planning must allow for later stages to be built when earlier stages are occupied. In addition, the bigger the project, the more sensitive it becomes. Being leading Real Estate Builders , They take care that all these steps are properly followed.
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Why details matters People gain a sense of their item environment helps from from the every overall
subliminal
detail.
Each
perception, but it is the things people touch and feel which have the most impact. They believe that a developer can exploit the environmental potential of the project within a prudent and responsible financial approach. They believe in taking an imaginative approach to the procurement of detail , by commissioning designers who have a
particular sympathy for each object. They need to ensure that each component is properly executed , functions well,
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is
aesthetically
pleasing,
and
fits
within
the
123
whole . Due weight must be given to elements that are taken for granted.
Why they take the long term view They are Property Builders and believes that the longterm view in development is good for business. Buildings have high visibility and last for decades, even centuries. They affect the lives of people who neither own them nor use them. They therefore take responsibility for what They are building and care for what They leave behind. They believe a development and should add something environment to the where
community
improve
the
possible . Buildings of quality constantly increase in value. They also add to the value of the land. Buildings built with care and quality are easier to maintain, less costly in the long run and less damaging to the environment ,
benefiting everyone. By being associated with high quality projects, owners and investors protect or enhance their established reputation. Corporations are aware of the
value of a name. It can be powerful asset. They think in terms of developments which offer something back to the community, as people take advantage of the extra facilities
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which the development has made possible. This is not wasteful building. It is economically and environmentally the right thing to do. If the project is based on sound logic, what makes financial sense for the owner can also make good sense for the community.
Making our expertise available to others Their expertise in first-to-last development is available to clients who for various reasons do not wish to handle their own developments. This service is appropriate for various types of organisation. They can act on behalf, or
represent, corporate clients who decide to invest in real estate . Rather than assemble a large professional team, they can hire us to be their development arm. They can also assist financial institutions and by identifying as their
development
opportunities,
acting
representatives. For owners of land or underdeveloped property, They offer an alternative to selling the asset for another developer to exploit. They can work with them as a fee based developer, to help them establish a higher value for the asset , and also manage the process. They can assist governments or quasi-governmental institutions
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which
have
major
resources
in
terms
of
land
or
infrastructure, and need to plan what to do with them - or how to maximise development opportunities as well as benefit the community. They can help such clients they need to to
formulate a strategy , especially where
work with the private sector . Finally, They can act for international companies entering a new territory which wish to build its own premises in order to establish their identity in the market.
Their SERVICES TCG offers various building contractor & real estate
development services in India including design, project management, other financial feasibility, They marketing are and
value-added
services .
building
construction contractor and offer the following packages.
Turnkey Built-to-Suit They offer a complete turnkey solution for any real estate project. Whether commercial office buildings, or retail
complexes,
technology
facilities
residential
accommodation , whether for a developer, investor or for

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corporates wanting their own facilities, They are able to Design and built-to-suit for lump sum cost and to a specification and schedule as agreed.
Their
design
team
comprising
of
architects,
civil
engineers, electrical and mechanical engineers aim to provide the best value within the project parameters of functionality, aesthetic and budget and our experienced construction team believes in planning ahead.
Design & Development Services This fee-based service has a been one designed stop to suit to
companies
looking
for
solution
developing their project . They undertake the design,

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attend to all engineering needs and manage the entire project till its completion, without taking away the
financial control process from the client. Our aim is to ensure that the project is planned to suit the clients needs and executed to the highest standards of quality, within budget and schedule parameters. If required by the client, They also conduct financial feasibility study and financial planning of the project and offer our marketing services.
Project Management Services A fee based service, especially intended to offer complete project includes design management managing team, the services entire for a project. This of of
process,
recruitment appointment
engineering
consultants,
contractors and procurement of machinery and materials and then managing They the entire the project through of its the
completion.
manage
various
steps
project and conduct value engineering at the project planning stage to ensure that the client gets the best value for the money .
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Interior Fit-outs This service suits those looking to finish the interiors of their facilities . Our fit-out team, armed with knowledge of facility planning, and technology infrastructure, is for capable any and of
practical
design high
value-engineering of interiors
delivering software hotel,
quality
office, facility, other
development
center,
co-location or any
residence,
retail
outlets
specialized facility .
Advisory Services They offer a range of advisory services suited for
companies planning their own facility, developers, planning a real estate development, investors planning to invest in real estate or financial institutions wanting to
conduct due diligence . Our services range from design and engineering to advise on facility planning , project management, investment advice, market research and
property search.
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SM Towers, Gurgaon
A housing 20-acre
proposed
large-scale
group
development on a plot in by Gurgaon, Classic Haryana
promoted
Infrastructure & Development Ltd. The development has been designed to set new standards for residential
accommodation in India. The facilities include duplex town houses, apartment blocks, sufficient basement parking,
club, swimming pool and landscaped parks. The complex consists of six types of buildings; two storey townhouses with open terrace, four storey duplex/stacked townhouses, eight-storey apartment blocks and, eighteen-storey tower blocks. The building forms have been carefully integrated with the circulation routes and open landscape areas to provide an homogenous development. The individual units have been planned with respect to user identity, individual requirements and social requirements.
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The Manor, New Delhi
luxury
hotel, located in the up sector of South Delhi
market
and set amongst beautiful gardens and lush green lawns spread over 1.5 acres. The Hotel is finished to the highest international standards has 18 well-appointed rooms with a bar and a restaurant. All rooms have a private lawn or a private terrace.
Angle World
Corporate Information They are an organisation engaged in diverse business
activities including hosting Miss India Worldwide Pageant, designing and exporting precious jewellery, real estate activities matters. Inception and Growth About three decades ago, to be precise, They established a real estate firm in New Delhi, India engaged in developing and corporate immigration & company law
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residential properties. Our actual growth started in the mid 80s when They shifted operations to London only leaving a small portfolio in India. Today, in the U. K., They own two well reputed hotels along with a variety of serviced
apartments spread out all over central London. Special fondness of Ms. Angeli Puri, our Director towards jewellery designing brought us in the business of designing and exporting of precious jewellery world over. Today, The Angel World is a force to reckon with in this industry. Our was a logical extension towards body decoration, which ultimately culminated in celebrating "the beauty with a cause". Today, They are hosting the annual Miss India Worldwide Pageant with great honor and high spirit.
Future Outlook The group has always been looking towards future with utmost positive attitude and sees itself as a vibrant unit that would achieve many milestones in time to come. They will continue to look for the opportunity for further
business growth and consolidation to give maximum value to all the people concerned.
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They would always be delighted to hear from you. Kindly send us online query or contact us. Contact Information Corporate Office: The Angel World S-98, Panchsheel Park New Delhi- 110017, India Ph: 91-11-51751750 & 51751751 & 51751752 Fax : +91-11-26013876 Email : info@theangelworld.com Website : http://www.theangelworld.com
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Eldeco Group
Founded in 1975 by Mr.S.K.Garg, the Eldeco group is today a leading name in quality housing & township
development. The Eldeco group was founded on ethical standards factors goodwill and rich values and it is because enjoys has of these
that in
the the
Eldeco
brand
name
immense a major
marketplace.
The
group
presence in Lucknow, Kanpur, Agra & Greater Noida where it enjoys leadership position.
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Eldeco group was founded in 1975 at Agra by Mr.S.K.Garg, a civil engineering lecturer turned consultant and presently CMD of the Eldeco Group, with firm ideologies and a dream of establishing a housing and construction company based on rich values. These values are visible and strictly
observed in all the Eldeco projects. Eldeco grew rapidly from strength to strength over the years earning respect and fame for quality work. Joined in 1993 by Mr.O.P.Bajaj, Eldeco strode a on prominent a Agra based path of
industrialist,
remarkable
progress achieving a position among the top ten Real Estate companies of India. Since its inception, Eldeco has grown over by 1000%
having constructed over 12 million sq.ft. and successfully developed self-sufficient townships on more than 470 acres of prime land. Today, the group is a leading name in township complexes development, and contract group work housing, and enjoys commercial leadership
position in Lucknow, Kanpur, Agra, Ghaziabad and Greater Noida.
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Today, Eldeco brand commands a healthy premium in the market place. Eldeco's vast experience and resource of professional talent is due to the same vision and
enthusiasm with which the group was founded. At Eldeco They believe They may not be the biggest but They try to be the best.
ELDECO GROUP COMPANIES Eldeco Constructions (P) Limited Founded : In the year 1975. The parent company of the group which owns the Eldeco brand.
Activity : Has done a number of residential and commercial projects in Agra and Lucknow. Now involved
in the licencing of all group companies. Regd. Office : Pragati Kendra, Kapoorthala Complex, Aliganj, Lucknow Phone No.: 321921, 326298, 328396, 331482 Fax. : 371029 Key Person : Mr.S.K.Garg, Chairman Eldeco Housing & Industries Limited Flagship company of the group Founded : In the year 1985
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Activity : Involved in civil construction and housing. Has completed over 50 prestigious projects covering Lucknow,
Kanpur, Agra and Ghaziabad. Regd. Office : Pragati Kendra, Kapoorthala Complex, Aliganj, Lucknow Phone No.: 321921, 326298, 328396, 331482 Fax. : 371029 Key Person : Mr.S.K.Garg, CMD Eldeco Infrastructure & Properties Limited Founded : In the year 2000 Activity: To undertake projects in the NCR of Delhi in the fields of real estate and infrastructure. Currently Noida.
focussing on Noida and Greater
Regd. Office : SU 12-13, Bhikaiji Cama Bhawan, Bhikaiji Cama Place, New Delhi-66
Phone No.: 6160081/2/3; Fax.: 6160084 Key Person : Mr.Panjak Bajaj, MD
Eldeco Build Tech (P) Limited Founded : In the year 1998 Activity : Involved in affordable housing projects. Has
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completed low-cost
housing projects namely Chamma
Enclave & Sarojini Nagar. Regd. Office : 28/2, First Floor, Sanjay Place, Agra Phone No.: 353699, 220798; Fax.: 350448 Key Person : Mr.V.K.Garg, MD Eldeco Projects (P) Limited Founded : In the year 1996 Activity : Involved in the execution of construction contracts for Eldeco Group of companies and other construction of
concerns around Delhi. Specialising in the multi-storied residential apartments.
Regd. Office : Office No. 2, First Floor, Local Shopping Center, Udai Park, New Delhi-110049
Phone No.: 6514315, 6966421 Key Person : Mr.Vinit Gupta, MD
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CHAPTER 3
BUSINESS STRATEGIES (OPERATION APPROACH)
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BUSINESS STRATEGIES OF THE REAL ESTATE INDUSTRY
THE MARKETING CONCEPT The marketing concept is a business philosophy that challenges the three business orientations we just discussed. mid-1950s.
Its
central
tenets
crystallized
in
the
The
marketing
concept
holds
that
the
key
to
achieving its organizational goals consists of the company being more effective than competitors in creating, delivering, and communicating customer value to its chosen target markets. The marketing concept has been expressed in many colorful ways: "Meeting needs profitably." "Find wants and fill them.' "Love the customer, not the product." "Have it your way.' (Burger King)
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"You're the boss." (United Airlines) "Putting people first." (British Airways) "Partners
for profit." (Milliken & Company) Theodore contrast concepts: Selling focuses on the on the of needs the of the seller; is his of Levitt between of Harvard the drew a perceptive marketing
selling
and
marketing
needs the
buyer. to
Selling convert
preoccupied product into
with
seller's
need
cash;
marketing
with
the
idea
satisfying the needs of the customer by means of the product and the whole cluster of and things finally
associated
with
creating,
delivering
consuming it. The marketing concept rests on four pillars: target market, customer needs, integrated marketing, and profitability. They are illustrated in Figure where The It
they are contrasted with a selling orientation. selling concept takes an inside-out perspective. starts with the factory, focuses on
existing
products, and calls for heavy selling and promoting

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to produce profitable sales. The marketing concept takes well an outside-in market, all and the perspective. focuses on It starts with a
defined
customer that by will
needs, affect
coordinates customers,
activities
produces
profits
satisfying
customers. see the Marketing Insight Scholars and Dollars: Marketing and Selling Comes to College. Target Market Companies do best when then choose their target market(s) carefully and prepare tailored marketing programs Customer Needs A company can define its target market but fail to correctly understand the customers' needs.
Consider the following example: A major chemical that company into invented a a new like
substance material.
hardened
marble
Looking for an application, the marketing
department decided to tar get the bathtub market. The company created at a a few model bathtubs They hoped and to
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exhibited
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them
trade
show.
convince
manufacturers
to
produce
bathtubs
with
the new material.
Although bathtub manufacturers
thought the tubs were attractive, none signed up. The reason soon became obvious. 7he bathtub
would have to be priced at $2,000, whereas most bathtubs sold in the $500 range. For the higher
price, consumers could buy tubs made out of real marble or onyx. heavy that In addition, the bathtubs were so would have to reinforce
homeowners
their floors. Understanding always simple. customer Some needs and wants have is not of
customers
needs
which they are not fully conscious. articulate require these needs. Or they
Or they cannot use words it that mean
some
interpretation.
What
does
when the customer asks for an 'inexpensive" car, a 'powerful' lawn mower, a 'fast' lathe, an
"attractive" bathing suit, or a 'restful" hotel? Consider the customer who says he wants an
inexpensive car.
The marketer must probe further.
We can distinguish among five types of needs:
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1.
Stated
needs
(the
customer
wants
an
inexpensive car) 2. Real needs (the customer wants a car whose
operating cost, not its initial price, is low) 3. Unstated needs (the customer expects good
service from the dealer) 4. Delight needs (the customer would like the
dealer to include a gift of a U.S. road atlas) 5. Secret needs (the customer wants to be seen by friends as a savvy consumer) Responding only to the stated need may
shortchange the customer.
Consider a woman who
enters a hardware store and asks for a sealant to seal glass window panes. a solution, not a need. This customer is stating The salesperson might
suggest that tape would provide a better solution. The customer may appreciate that the salesperson not her need, not her stated solution. A distinction needs to be drawn between responsive marketing,
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anticipative
marketing,
and
creative
144
marketing. need and
A responsive fills it.
marketer
finds
a stated looks
An anticipative
marketer
ahead into what needs customers may have in the near future. A creative marketer discovers and
produces solutions customers did not ask for but to which they enthusiastically that respond. must Hamel go and
Prahalad
believe
companies
beyond
just asking consumers what they want: Customers are notoriously lacking in foresight. Ten
or 15 years ago, how many of us were asking for cellular telephones, fax machines, and copies at
home, 24-hour discount brokerage accounts, multi valve cars automobile with engines, compact disc players,
on-board
navigation
systems,
hand-held automated Shopping
global teller
satellite machines,
positioning MTB, or
receivers, the Home
Network? Why is it supremely important to satisfy target
customers?
Because a company's sales each period
come from two groups: new customers and repeat customers. One estimate is that attracting a new
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an existing one. And it might cost sixteen times as much to bring the new customer to the same level of profitability is as the more lost customer. than Customer customer
retention attraction.
thus
important
Integrated Marketing When all the company's departments work together to serve the customer's interests, the result not work is all for
integrated employees the
marketing. are trained and
Unfortunately, motivated once to
customer.
An engineer
complained that
the salespeople are "always protecting the customer and went not on thinking to The blast of the company's for interest'! for He too the
customers
"asking
much."
following
example
highlights
coordination problem: The marketing vice president of a major European airline wants to increase the airline's traffic share. His strategy is to build up customer food, satisfaction cabins, Yet he
146
through
providing
better
cleaner
better trained cabin crews, and lower fares.

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has
no
authority
in
these food
matters. that keeps
The
catering food
department costs; the
chooses
down
maintenance
department
uses
cleaning
services that keep down cleaning costs; the human resources department hires people without regard
to whether they are naturally friendly; the finance department departments point of sets the fares. take a Because cost of or these
generally the vice
production is
view,
president
marketing
stymied in creating an integrated marketing mix. Integrated marketing takes place on two levels.
First, the various marketing functions-sales force, advertising, management, together. customer marketing service, research-must product work
Too often the sales force thinks product
managers set prices or sale quotas "too high"; or the advertising director and a brand manager all not agree on an advertising campaign. All these
marketing functions must be co-ordinated from the customer's point of view. Second, marketing must be embraced by the other departments;
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they
must
also
"think
customer."
147
According
to
David
Packard
of
Hewlett-Packard:
"Marketing is far too important to be left only to the marketing department!" Marketing is not a
department so much as a company wide orientation. Xerox goes so far as to include in every job
description an explanation of how that job affects the customer. visits to the if Xerox fac tory managers know that factory the can is help sell a potential efficient.
customer
factory
clean
and
Xerox accountants know that customer attitudes are affected by Xeroxs billing accuracy and promptness in returning calls. To foster teamwork among all departments, the
company carries out internal marketing as well as external marketing. External marketing is
marketing directed at people outside the company. Internal marketing is the task of hiring, training, and motivating able employees who want to serve customers well. In fact, internal mar keting must It makes no sense to before the company's
precede external marketing. promise excellent service
staff is ready to provide it.

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Managers company's traditional
who only
believe true
the
customer center' in
is
the the a
'profit chart
consider
organization
Figure
1.8(a)-
pyramid with the president at the top, management in the middle, and front-line people and customers at the bottom-obsolete. invert the are the chart, are the Master as shown marketing in Figure next in
companies 1.8(b). At
top the
customers; people
importance
front-line
who
meet,
serve, and satisfy the customers; under them are the middle managers, whose job is to support the front-line people so they can serve the customers well; and at the base is top management, whose job is to hire and support good middle managers. have added customers along the sides of We
Figure
1.8(b) to indicate that all the company's managers must be personally involved in knowing, meeting, and serving customers. Profitability The ultimate purpose of the marketing concept is to help organizations achieve their objectives. In the
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in the case of nonprofit and public organizations, it is surviving and attracting enough funds to perform useful profits work. as Private such of but firms to should not aim as for a
achieve superior by
profits
consequence A company
creating
customer
value.
makes
money
satisfying
customer
needs better than its competitors. Perdue's philosophy: Most companies do not embrace
Consider Frank
the
marketing
concept until driven to it by circumstances. Various developments prod them to take the marketing
concept to heart:
Sales decline: When sales fall, companies panic and look for answers. Today, newspapers are
experiencing declining circulation as more people rely news. know These on radio, TV, and the now people Internet realize read for that their they
Some little
publishers about why are
newspapers. consumer
publishers
commissioning
research and attempting to redesign newspapers to be contemporary, relevant, and interesting to readers. They are also starting Web pages.
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Slow
growth: to
Slow search
sales for
growth new
leads
some They
companies
markets.
realize they need marketing skill to identify and select new opportunities. Wanting new sources of revenue, Dow Chemical entered consumer
markets and invested heavily to acquire consumer marketing markets.
expertise
to
perform
well
in
these
Changing operate in
buying
patterns:
Many
companies by rapidly
markets
characterized
changing customer wants. These companies need more marketing know- how if they are to track buyers' changing values.
Increasing competition: Complacent companies may suddenly AT&T be was attacked a by powerful marketing-
competitors.
regulated,
naive telephone company until the 1970s, when the government began allowing other companies to sell telecommunications equipment. AT&T
plunged into the marketing waters and hired the best marketers it could find to help it compete.
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Companies
in
deregulated
industries
all
find
it
necessary to build up marketing expertise.
Increasing marketing expenditures: Companies may find their expenditures for advertising, sales promotion, service decides to it marketing be is poorly time research, done. to and customer then
Management a
undertake
serious
marketing audit to improve its marketing. In the course of converting to a marketing orientation, a company faces three hurdles: organized
resistance, slow learning, and fast forgetting. Some company and departments believe (often a manufacturing, marketing
finance,
R&D)
stronger
function threatens their power in the organization. The nature of the threat is illustrated in Figure
1.9(a) through (e). Initially, the marketing function is seen as one of several equally important
functions in a check-and-balance relationship. Lack of demand is leads more marketers important. to A argue that their go
function
few
enthusiasts
further and say marketing is the major function of the enterprise, for without customers there would
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be no company. Enlightened marketers clarify the issue by putting the customer rather than
marketing at the center of the company. They argue for a customer orientation in which all functions
work together to respond to, serve, and satisfy the customer. Some marketers say that marketing sting needs to command a central position if customers' needs are to be correctly interpreted and efficiently satisfied. See the Marketing Memo "Reasons to
Embrace the Marketing Concept." Resistance is especially strong in industries where marketing is being introduced for the first time-for instance, in law offices, colleges, deregulated
industries, and
government agencies. But in spite
of resistance, many companies manage to introduce some The marketing company thinking into their organization. a marketing key the
president marketing
establishes talent is
department; managers marketing marketing
hired;
attend budget planning
marketing is
seminars;
substantially control
increased; are
and
systems
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introduced.
Even
with
these
steps,
however,
learning comes slowly. Even after marketing has been installed,
management must fight a tendency to forget basic principles, example, markets achieve especially many in the U.S. in the wake of success. For
companies and
entered
European to
1950s
1960s
expecting with
outstanding
success
their
sophisticated products and marketing capabilities. A number of them failed because they forgot the basic marketing maxim: Know your target market and
how to satisfy it. U.S. companies introduced their current products and advertising programs instead of adapting them. cake General mixes Mills in introduced only its to
Betty
Crocker
Britain
withdraw them a short time later: Angel food cake and devil's food cake sounded too exotic for British consumers. And many Britons felt that the perfect-
looking cakes pictured on the packages must be too hard to make. Companies adapting
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face ad
particularly to
difficult
task
in
slogans
international
markets.
154
Perdue's slogan-"It takes a tough man to make a tender takes chicken"-was a sexually rendered man into to Spanish make a as 'It
excited
chick
affectionate." Even when the language is the same, words carry different meanings: Electrolux's British ad line for its vacuum cleaners-'Nothing sucks like an Electrolux" would certainly not lure customers in the United States! THE SOCIETAL MARKETING CONCEPT Some have questioned whether the marketing
concept is an appropriate philosophy in an age of environmental explosive poverty, companies deterioration, growth, resource world shortages, hunger and Are
population and that
neglected do an
social
services. job of
excellent
satisfying
consumer wants necessarily acting in the best long run interests of consumers and society? The
marketing concept sidesteps the potential conflicts among consumer wants, consumer interests, and
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The fast-food hamburger industry offers tasty but unhealthy food. content, pies, two and the The hamburgers have a high fat restaurants high in in promote and files fat. and The
products are
starch
products
wrapped
convenient
packaging,
which leads to much waste.
In satisfying consumer
wants, these restaurants may be hurt ing consumer health and causing environmental problems. Situations enlarges suggested "ecological like the this one call for a new term that those and it the
marketing are
concept.
Among
'humanistic We
marketing" calling
marketing."
propose
societal marketing concept.
The societal marketing concept holds that the organization's wants, and task is to of determine target the needs, and to
interests
markets
deliver the desired satisfactions more effectively and efficiently or than competitors the in a way and that the
preserves
enhances
consumer's
society's well-being.
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The
societal
marketing
concept
calls
upon
marketers to build social and ethical considerations into their marketing practices. They must balance
and juggle the often conflicting criteria of company profits, consumer want satisfaction, and public in terest. notable Yet a number of companies have achieved sales the and profit gains by adopting concept. and Two
practicing
societal
marketing
pioneers of the societal marketing concept are Ben & jerry's and The Body Shop. But, as recent events
show, even they encounter difficulties. HOW BUSINESS AND MARKETING ARE CHANGING We can say with some confidence that 'the
marketplace isn't what it used to be. It is changing radically as a result of major societal forces such as technological advances globalization, and
deregulation.
These major forces have created new
behaviors challenges: Customers increasingly expect higher quality and
service and some customization They perceive fewer real product differences and show less brand loyalty
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They cab obtain extensive product information from the Internet and other sources, peel ting them to shop more intelligently. They are showing greater
price sensitive their search for value. Brand manufacturers are facing intense competition from domestic in and foreign brands, costs and which is
resulting
rising
promotion
shrinking
profit margins. They are being further buffeted by powerful retailers who command limited shelf space and are putting out their own store brands in
competition with national brands. Store-based oversaturation retailers of are suffering Small from an are
retailing.
retail ers
succumbing to the growing power of giant retailers and "category growing killers.' Store-based from retailers are
facing
competition
catalog
houses; and TV
direct-mail
firms;
newspaper,
magazine,
direct-to-customer ads; home shopping TV; and the Internet. shrinking As a result, In they are experiencing
margins.
response,
entrepreneurial
retailers are building entertainment into stores with coffee

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bars,
lectures,
demonstrations,
and
158
performances. They are marketing an 'experience" rather than a product assortment. COMPANY RESPONSES AND ADJUSTMENTS Companies are doing a lot of soul-searching, and
many highly respected companies are changing in a number of ways.
Here are some current trends: : From focusing by on key functional processes,
Re-engineering departments to
reorganizing
each managed by multidiscipline teams.
Outsourcing : From making everything inside the company to buying more goods and services from outside better. if A they few can be obtained are cheaper and
companies
moving them
toward virtual
outsourcing
everything,
making
companies owning very few assets and, therefore, earning extraordinary rates of return.
E-commerce
From
attracting
customers
to
stores and having salespeople call on offices to making virtually all products can available on the of
Internet. products,
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Consumers read the
access shop
pictures
specs,
among
on-line
159
vendors for the best prices and terms, and click to order and pay. Business-to-business purchas -
ing is growing fast on the Internet: Purchasing agents can use bookmarked Web sites to shop for routine items. Personal selling can increasingly
be conducted electronically, with buyer and seller seeing each other on their computer screens in real time.
Benchmarking : From relying on self-improvement to studying "world-class performers' and adopting "best practices."
Alliances : From trying to win alone to forming networks of partner firms.
Partner-suppliers : From using many suppliers to using fewer but more reliable suppliers who work closely in a 'partnership" relationship with the
company.
Market-centered: From organizing by products to organizing by market segment.
Global and local : From being local to being both global and local.
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Decentralized : From being managed from the top to encouraging more initiative and
"intrepreneurship' at the local level. MARKETER RESPONSES AND ADJUSTMENTS Marketers also are rethinking their philosophies,
concepts, and tools.
Here are the ma jor marketing
themes as the millennium approaches:
Relationship transactions
marketing to building
From
focusing
on
long-term,
profitable
customer relationships. most profitable
Companies focus on their products, and
customers,
channels.
Customer lifetime value: From making a profit on each sale to making profits by managing
customer lifetime value. to deliver a constantly
Some companies offer needed product on a
regular basis at a lower price per unit because they will en- the customer's business for a longer period.
Customer market
Share to a
From focus
a on
focus
on
gaining customer
161
share
building
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share. offering
Companies a larger
build
customer of goods
share to
by
variety
their
existing customers. They train their employees in cross-selling and up-selling.
Target marketing : From selling to everyone to trying target to be the best firm serving well-defined is being
markets.
Target
marketing
facilitated by the proliferation of special-interest magazines, newsgroups.
TV
channels,
and
Internet
Individualization : From selling the same offer in the same way to everyone in the target market to individualizing and customizing messages and offerings. Customers will be able to design their own page. product features on the company's Web
Customer database: From collecting sales data to building a rich data warehouse information purchases, profitability. proprietary
162
about
individual
customers' and their
preferences, Companies
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demographics, can 'data-mine"
databases
to
detect
different
customer
need
clusters and make differentiated offerings to each cluster.
Integrated
marketing
communications:
From
heavy reliance on one communication tool such as advertising tools to or sales a force to blending brand several to
deliver
consistent
image
customers at every brand contact.
Channels
as
partners
From
thinking
of
intermediaries as customers to treating them as partners in delivering value to final customers.
Every
employee
marketer
From
thinking
that marketing is done only by marketing, sales, and customer support personnel to recognizing
that every employee
must be customer-focused. making or and slim : From to making basing the
Model-based decisions decisions on on
decision intuition models
data on
facts
how
marketplace works. These this

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major to
themes help
will
be
examined and
throughout sail
163
book
marketers
companies
safely ahead. keep
through
the
rough
but
promising
waters
Successful companies will be those who can marketing changing as fast as their
their
marked place-and market space. 1. Businesses and today face three major challenges in
opportunities:
globalization,
advances
technology, and deregulation. 2. Marketing creating, services Effective can be is typically seen as the task good of and
promoting, to
and
delivering and
consumers can
businesses. form : It or
marketing
take
many
entrepreneurial,
formulated,
entrepreneurial. marketing many
And marketers are involved in types of entities: goods,
services, experiences, events persons, places, properties, organizations, information, ideas. 3. Marketers They seek are to skilled influence at managing level, demand: and
the
timing
composition of demand. host what

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To do this, they face a major ones should such have as to

164
of
decisions, a
from
features
new
product
minor They
ones also
such
as
the
color in
of
packaging. different
operate
four
marketplaces: consumer business, global, and nonprofit. 4. For each chosen target market, a firm develops a market of offering buyers that as is positions'. some in the
minds
delivering
central
benefits.
Marketers must try to understand the
target market's needs, wants, and demands: A product or offer will be successful if it delivers value and satisfaction to the target buyer.
The term markets covers various groupings of customers. marketplaces Today and there digital are both physical as
market
spaces,
well as megamarkets. 5. Exchange involves obtaining a desired product from someone by offering something in return. A transaction is a trade of values between two or more parties: It involves at least two things of value, agreed-upon conditions, a time of
agreement, and a of agreement. generic

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In the most to elicit a

165
sense,
marketers
seek
behavioral
response
from
another
party:
purchase, a vote, active membership, adoption of a cause. 6. Relationship marketing has the aim of building long-term mutually satisfying relations with
key parties customers, suppliers, distributorsin order to earn and and retain their The long-term ultimate
preference
business.
outcome of relations marketing is the building of a unique company asset called a marketing network. 7. Marketers reach their markets through various channels-communication, selling. environment Marketers and a distribution, operate in a and task They
broad
environment.
face competition from actual and potential rival offerings marketers from and substitutes. The set of tools
use to elicit the desired responses target markets is called the
their
marketing mix.
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8.
There are five competing concepts under which organizations can choose to conduct their
business: the production concept, the product concept, concept, The the and selling the concept, the marketing concept. limited
societal
marketing are of
first
three
concepts
usefulness today.
The marketing concept holds
that the key to achieving organizational goals consists of determining the needs and wants of target markets and delivering the desired
satisfactions
more
effectively
and
effi ciently
than competitors. market, coordinates focuses all
It starts with a well-defined on customer that will needs, affect
the
activities
customers, and produces profits customers. 9.
by satisfying
In recent years, some have questioned whether the marketing in concept a and world is an appropriate with major
philosophy demographic
faced
environmental
challenges.
The societal marketing concept holds that the organization's task is to determine the needs,
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wants, and interests of target markets and to deliver the desired satisfactions more
effectively and efficiently than competitors in a way that preserves or enhances the consumer's and the society's well-being. upon marketers to The concept calls balance profits, three consumer
considerations:
company
want satisfaction, and public interest. Applications 1. Relationship trends in marketing marketing is one of the hottest have
today.
Experts
defined the term in many ways-but the bottom line is always getting to know your customers (clients, publics, etc.) better so you can meet their wants and needs better." Keep a record of the next four transactions in which you participate, and clas sify each one as very satisfying, satisfying, adequate, For those
dissatisfying, or very dissatisfying.
experiences that you found dissatisfying, what could

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the
company
or
salesperson
have
done
168
better?
For
those
that
you
find
satisfying,
what specific factors led to your satisfaction? 2. Describe the marketing mixes (product, price, place, and promotion) used (a) by each of the (b)
following
organizations:
Burger
King,
Canon Copiers, (c) Walt Disney World, (d) Jiffy Lube. 3. Russell priced discount Stover, a manufacturer sold is in of moderately and its
chocolates chains,
drugstores to improve
looking
market share.
How might Russell Stover team What What two
with Hallmark to accomplish its goals? benefits benefits would would Russell Stover receive? If the
Hallmark
receive?
companies were to enter into an alliance, how might they develop advertisements that
promote both their products? 1. The Air Canada ad in Figure 1 stresses the timesaving aspect of its flights between the United States and Canada as well as the frequent flier mileage
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benefits.
Ho
do
these
two
elements
169
affect the ratio of benefits to cost in the value equator prices, Other how to than else advertising can the Air lower ticket its by
Canada
use
advertising customers?
affect
value
perceived
Suggest at least two specific value
enhancing approaches Air Canada might take. 2. The marketing network of Dow Chemical Company consists of a wide range stakeholders, including customers, and employees, and suppliers, distributors, of nonprofit
volunteers
beneficiaries
organizations such as Habitat for humanity. Why would Dow advertise (see its support 2, ad W to of Habitat does on for the its How
Humanity company
Figure this
effect have
expect with build to
relationships can Dow
various on more
stakeholders? strong
stakeholder in the
relationships
con
effectively
construction industry? Focus on Technology Charles Schwab, based in San Francisco, is a giant discount
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brokerage
firm
offering
wide
range
of
170
investment someone
and
financial a
services office
options. or calls
When the
visits
Schwab
company, employees can immediately bring up that customer about on-line records and and se talk to knowledgeably customer's
investments
that
individual situation.
Schwab also invites customers
to op locate financial research, place trades, and track market trends on its Web the Schwab Web site looking at the offerings and the on demonstration of Schwab capabilities. How does this Web site
confirm Schwab's focus on the customer?
Why is
employee access to complete and current customer record especially What important other parts to in of the Schwab brokerage must be
business? properly
coordinated
ensure
integrated
marketing for customer satisfaction? E-commerce is growing exponentially because of its convenience, savings, selection, personalization,
and information.
Still, figuring out exactly how to
reach the night cyber customers can be challenging for even the largest marketers. Kraft, Kellogg,
.and other companies are learning to use targeted

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banner advertising to reach the customer segments most These likely to be interested .boosted banner in their products. sales a
companies by
on-line ads on
significantly
placing
Peapod,
Internet-based Untargeted ad
.grocery banners,
shopping by
service. are
comparison,
inexpensive but draw less customer response. Visit Peapod's directed. Web site and sign type in to in your take zip the code, as
Then
shopping
demonstration showing which products are offered and how the service operates. What types of
products could potentially benefit from advertising on this site? What kind of information would these
marketers want from Peapod in order to determine the site? value of targeted banner advertising on this
How might Kellogg use banner advertising on to support a new cereal product? To
Peapod
support an existing cereal product?
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CHAPTER 4
INTERNAL CONTROL BY BUILDERS
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INTERNAL CONTROL BY BUILDERS
Builders Control = Value Builders Control has set the standard for construction
project funding sense 1936. Experts in their field, they provide exceptional value to lenders, allowing them to concentrate their resources on lending rather than
managing funds distribution. Builders Control can handle all their construction jobs, monitor their investments,
save they money, insure smooth cash flow, and help they get a faster return on their investments. Lenders Lend Money - BC Manages Money Builders Control is like having their own funds
disbursement department without the cost and drain on their valuable internal resources. Builders Control's funds disbursement is paid for by the construction project, so there is no cost to the lender, only savings and increased profit. This frees the lender up to do what they do best, make loans. Larger lenders make more money, while
smaller lenders can be more competitive with Builders Control managing their funds disbursement. The estimated
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cost of an internal funds disbursement department with four employees with benefits, and office expenses comes to about half a million dollars a year. In most cases the cost to the lender who employs Builders Control for their funds disbursement is zero dollars and they have the provider of choice looking after their investments. No Limits With Builders Control there is no limit to the amount of construction jobs they can manage. They make it easy to monitor their investments with up to the minute
documentation and line item accounting. Their accelerated draw plan means smooth cash flow and on time
disbursements. Projects stay on schedule, avoiding costly delays and insuring a faster return on your investment. Builders enjoys prompt payments, while capturing cash discounts and insuring the lowest possible price of
materials, adding value and savings for the lender and owner. Lenders nationwide look to Builders Control for all their funds disbursement needs.
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Specializing in Funds Disbursement for over 60 years, Builders Control provides exceptional service and value for anyone in the lending and investing business. Governments Policy In the next few weeks the politician season will march toward its final moment, a time when good citizens should demand straight answers from those who wish to represent them. Real estate and government are closely intertwined.
Government policies influence housing demand, interest rates, taxes, where you build and how you build.
Alternatively, when the real estate market sours politicians lose jobs, a fair trade by any standard. If you're in office you have a record to defend and for the past few years the Republicans have controlled the House, the Senate and the White House -- a political trifecta that should make everyone nervous. The issue is not that the Republicans have found electoral success, it's the general view that no single party should control both houses of Congress and the presidency at the same time. A strong opposition tends to moderate legislative demands and slow
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government action, trends which the Founders encouraged by creating our system of governance. The objective record for housing during the past few years has been excellent. Home sales have reached new highs, prices have risen in most areas well beyond inflation, and interest rates have fallen to levels not seen since the Eisenhower administration. But as well as we've done in recent years, future trends are not so clear. The success enjoyed within real estate has not carried over into other fields. The apolitical
Conference Board reports that its "Consumer Confidence Index, which had been on the rise since April, declined in August. The Index now stands at 98.2 (1985=100), down from 105.7 in July." What are the questions politicians need to answer? In terms of real estate they look like this: Deficits During the past two years the federal government has run up a massive deficit, many times what is being spent on the war in Iraq. To finance this deficit the government must borrow, which means it will compete with the private
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sector for funds and inevitably drive up interest rates. Much of our borrowing now depends on the goodwill of overseas investors, a reliance which ought to make
everyone nervous. Tell us Mr. Candidate, how will you resolve the looming deficit crisis? Does the term "tax increase" apply? Estate Taxes Warren Buffett and Bill Gates both say that the effort to end estate taxes is wrong. Given the budget deficit, do you believe that estate taxes should be returned to past
levels? Do you believe that the creation of a super-wealthy patrician class is good for the county? Do you believe that inherited wealth spurs industry? Creativity? Jobs The latest figures show This that we have is a 5.5 percent It
unemployment
rate.
percentage
contrived.
magically does not count 1.6 million people who "wanted and were available to work and had looked for a job sometime in the prior 12 months." "There are," says Business Week , "1.1 million fewer jobs than there were at the beginning of 2001, when Bush took
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office."
This
is
an
amazing
statistic
given
that
our
population stood at 282 million during the last presidential election and now tops 294 million people. So, Mr. Candidate, how will you invigorate the job base, something which is necessary if the pool of homebuyers is to be maintained? Fannie Mae and Freddie Mac Fannie Mae and Freddie Mac are former parts of the federal government that have been spun off into the
private sector -- but not completely. These huge firms buy mortgages from local lenders with money acquired from Wall Street investors. Unlike private companies that do the exact same thing, Freddie Mac and Fannie Mae benefit from a variety of special rules. There is considerable debate regarding whether Fannie Mae and Freddie Mac should be required to purchase more loans from minority borrowers (thus raising portfolio risk, according to some observers), whether they should have a line of credit with the U.S. Treasury (thus implying a government guarantee in the event of problems, a
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lower cost), whether they should receive special tax and regulatory benefits (to even the playing field with private companies) and whether they should be privatized. Do tell, Mr. Candidate, what is your view?
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CHAPTER 5
ENVIRONMENTAL ISSUES
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CHAPTER 5 ENVIRONMENTAL ISSUES

Do you believe that major highways should be closed to protect an endangered species? Do you believe there
should be a relationship between costs and benefits when it comes to environmental issues? Did you grow up in a home with lead-based paint? Do you believe that condor is better served with rice or a glazed sauce? Just curious.... At the local level, voters ought to ask about tax policies, zoning, growth restrictions, road development, rent control (where it still exists), subsidized housing and so-called "smart growth" policies. And at the end of this process -- whether or not you can get a straight answer to any of these questions -- you ought to go out and vote in November. It's your way to exercise power.
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CHAPTER 6 GOVERNMENT POLICY
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CHAPTER 6
GOVERNMENT POLICY
Government Estate
The Issue
Electricity is one of the largest operating expenses for owners of commercial real estate. Legislation at both the federal and state levels would deregulate and promote competition in the electric utility industry, thus
National
Energy
Policy
in
Real
presumably providing cheaper, more efficient power to owners and operators of commercial real estate and
presenting commercial real estate developers with choices regarding utility providers. To date there has been much debate over which path our country should move with a national energy policy. Much of the debate has been focused on several issues:
Consumer access to adequate supplies of reasonably priced energy.
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Reduction in the demand for energy.

184
Incentives for all consumers to improve their energy efficiency.
Increased domestic energy supplies, less reliance on foreign energy sources
Modernization and expansion of the existing power grid capabilities.
Position
Members believe that a comprehensive approach is the best way to ensure all consumers realize the most wideranging benefits while ensuring the country conserves its natural resources. must Further, implement believes a that the Federal policy,
Government
national
energy
which guarantees all consumers have access to adequate supplies of reasonably priced energy. Believes that this goal may be achieved only if the Federal Government demonstrates a leadership role in:
Identifying
reliable
sources
of
domestic
and
renewable energy.
Eliminating
unreasonable
regulatory
burdens
and
restrictions which inhibit the development of these energy sources.

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Identifying
and
eliminating
regulatory
structures
which impose artificial pricing schemes.
Ensuring
an
uninterrupted
transmission
and
distribution energy network.
Protecting consumers in the absence of competitive market forces.
Legislation
No new legislation has been introduced in the 109th Congress
Talking Points
Identify reliable sources of domestic and renewable energy.
Eliminate
unreasonable
regulatory
burdens
and
restrictions which inhibit the development of these energy sources.
Identify
and
eliminate
regulatory
structures
which
impose artificial pricing schemes.
Ensure an uninterrupted transmission and distribution energy network.
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Protect
consumers
in
the
absence
of
competitive
market forces.
WHAT NON-GOVERNMENT RESTRICTIONS ARE THERE ON THE USE OF MY PROPERTY?
In addition to laws established by the government, there may also be private party agreements and other
restrictions controlling what you can do with your real property. For example, a real estate developer may sell homes in a subdivision or condominiums subject to
restrictive covenants in the purchase contract (typically referred to in Real Estate World, as CC&R--covenants, conditions, and restrictions). Lot size, architectural design, vehicle parking and even placement of satellite dishes are subject contract. to the conditions easements set and forth in the purchase may be
Private
rights-of-way
established by grant, implication and prescription enabling others to use a portion of the real property. Typical
remedies for violation of private party agreements include an award of damages against the violator and injunctive relief (requiring removal of the violation and prohibiting such a violation in the future).
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In
addition
to
the
rights
that
you
obtain
by
owning
property, it is important that you recognize that there are responsibilities and potential liabilities to others which also result through ownership of real property. For example,
you may own property subject to a mortgage (if you fail to pay the mortgage, the lender will take the property back);
a lien for payment of a debt can be placed against your property (such as a "mechanic's lien" or
"judgment lien"); and
if someone is injured on your property, you may be held liable to the injured person for all damages resulting from your negligence.
Government contacts - real estate

General government contacts for the real estate sector
Other useful government contacts for businesses in the real estate sector are listed below:
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Better Public Buildings - government initiative promoting excellence and quality in the design and construction of public sector buildings. Commission for Architecture and the Built Environment (CABE) an executive non-departmental public body
funded by both the Department for Culture, Media and Sport and the Office of the Deputy Prime Minister. CABE's mission is to promote design excellence in all aspects of the built environment. COSHH Essentials - part of the HSE, COSHH Essentials is an interactive tool to help businesses to comply with the requirements of the COSHH Regulations. Department for Education Skills (DfES) - the government department responsible for the education of children and young people and for promoting training to improve the skills of adults. Department of Enterprise, Trade and Investment (DETI) the government department responsible for economic
policy, tourism, health and safety and consumer protection in Northern Ireland.
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Department for Transport - government department with overall responsibility for transport policy in the UK. Disability.gov.uk - part of the Department for Work and Pensions providing online information about disability
legislation. Europa - an online resource for information about EC policy. National Assembly for Wales the devolved regional
governing body for Wales. Northern Ireland Office (NIO) the government
department responsible for regulatory matters in Northern Ireland where these are separate from the rest of the UK. Office of the Information Commissioner - the government department responsible for data protection in the UK. Planning Inspectorate - government body that processes planning and enforcement appeals in England and Wales. It handles a variety of other planning related work, including applications for listed building consent.
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Sector Skills Development Agency (SSDA) - the agency responsible for funding and supporting the UK network of Sector Skills Councils.
Go ver nm ent Po lic y in India
In October 1997, the chief Executive Mentioned nothing except a promise to achieve a supply of 85,000 units of housing flats and a target of home ownership increased to 70% in the long run.
This
promise
represents
substantial
increase
in
housing supply in India given the previous total supply of housing flats from 1992-97
Urban Construction In the early days of New China, the country had only 58 cities, and in 1952 there were only nine cities with
populations over one million each. Since 1978, Chinas urbanization has been speeded up. The number of cities increased from 193 in 1979 to 668 in 1999. Among these cities there are 37 extra-large ones with populations above one million; 48 large cities with populations between
500,000 and one million; 205 medium-sized cities with populations between 200,000 and 500,000; and 378 small
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cities with populations less than 200,000. The number of medium-sized cities has increased fairly rapidly, and that of small cities has grown the most rapidly. In the eastern coastal areas, city groups (belts) with extra-large cities as the centers have been formed, such as the Bohai Bay, Yangtze River Delta and Pearl River Delta urbanized areas. The policies of reform and opening to the outside world have greatly strengthened the cities comprehensive
strength. Between 1988 and 1996, the urban GDP grew by 18 percent on average annually, with the cities centering status and role becoming more and more prominent. Since 1979, the Chinese government has invested heavily in the construction of urban infrastructure facilities,
including public utilities, parks and other green areas, urban roads, public communications, waterand gas-
supply facilities, and treatment of urban garbage. In 1999, the water supplied totaled 46.75 billion cubic meters in the Chinese cities; the length of the urban roads, 151.000 km; and the total amount of gas and natural gas supplied came to 2.121 million cubic meters.
Real Estate
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In recent years, the real estate business has developed rapidly. All localities throughout the country have worked out policies and measures for the reform of the urban housing system to promote commercialization of housing, the use of land with compensation and the comprehensive development of the real estate business. The main policies are: (1) To actively promote the reform of the real estate investment system-replacing the single mode of
investment by the state with diversified investments by the state, localities, enterprises and individuals; (2) to promote the construction of economic and suitable housing and construct ordinary housing according to the housing construction standards specified by the state while the government offers policy-related support by selling
housing to the families with medium and low incomes at the cost price; and (3) to establish a housing accumulation fund system for urban residents, while raising the rents for publicly-owned housing, selling the existing publicly-owned housing at the cost price, developing housing finance, etc. To help individuals buy housing, most cities have
readjusted
the loan direction for housing accumulation
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funds to help residents to buy their own homes. Now China has more than 20,000 real estate development companies.
Residences The Indian government attaches great importance to
housing construction in both urban and rural areas, and has adopted a series of policy-related measures to speed up housing construction. Between 1979 and 1999, a total of 3,717.3 billion Rs. was invested in the construction of residences in cities and towns. The newly built residences covered a floor space of 16.4 billion sq m. The per capita residential area for urban residents increased from 3.6 sq m in 1978 to 9.8 sq m in 1999. Between 1979 and 1999, the newly built residences in rural areas reached about 13.8 billion sq m, with the per capita residential area increasing from 8.1 sq m in 1978 to 24.4 sq m in 1999. Meanwhile the government has also implemented the
comfortable housing project so as to improve the living conditions of households with housing difficulties. To
improve the living environment for urban residents, China started the construction of 67 residential quarters in 56 cities on a trial basis in 1986, with a total construction
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area of 10 million sq m. Since the 1990s, the Chinese government has promoted a model project to ensure
better-off housing by the year 2000, with an area of nearly 10 million sq m. In accordance with the Ninth FiveYear Plan for Urban Housing Construction and the
Development Objectives by 2010, by 2000, each urban household will have a residence; 70 percent of urban families will have a residential flat with fairly complete utilities and with the per capita living area reaching 9 sq m and the per capita usable area 14 sq m, and the quality and functions of rural residences will be much improved. By 2010, each urban household will have one residence with complete utilities, the per capita living area reaching 10 sq m, and the per capita usable area, 15-18 sq m. This means a room for each person, in general. At the same time, the quality of rural residences will be greatly
improved, with basically complete utilities.
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Tax Aspects
INCOME TAX REVIEW
Tax Issues 1. The object of this article is to deal with certain aspects of income tax pertaining to construction
business. It is not intended to cover all the aspects as there are other articles in this special issue, e.g. there are separate articles on presumptive taxation, development agreements, etc in respect of
construction or real estate-development activity. I have attempted to touch upon the following points: a. Treatment of land cost (introduction by partner, conversion into stock in trade etc. ) b. Capital Asset vs. stock in trade c. Valuation of Work in progress, Job completion method vs. Percentage Completion Method and Variations thereof. d. Statutory disallowances e. Various Tax incentives (including 80-IB)
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2. Accounting
and
taxation
of
construction
business
often pose serious problems due to the following factors a. There are various methods of accounting cash vs. mercantile; completed contract vs.
progressive completion; b. Projects usually range over a long period often more than one or two years and there is an element profits. c. Various events are to be reconciled with each other-viz. execution entering of into , of agreements, over of of uncertainty in determination of
agreement
handing
possession, progressive payments, concepts of FSI, TDR, roles of builder developers vis--vis contractors. d. Amounts involved are usually quite high and
even a small error in judgment may have serious repercussions. e. Accounting standards also elude simplicity.
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197
f. Motivations vicious.
of
Revenue
Authorities
are
also
Nevertheless, one has to face the reality. Hence, this exercise to find practical interpretations. 3. Treatment of land cost 1. The deals of purchase of land are seldom simple and straight forward. Payments are partly in money and partly in kind say giving constructed flats, shops, etc. There are litigations; to tenants be be to be settled,
encroachments restrictions to
removed, cleared,
Government interests on
borrowings for purchase of land, stamp duty and registration fees; and so on. Grants of additional FSI, purchase of TDR etc. create further
complications. 2. The cost of the land is added to the total cost of project proportionate to the construction
completed vis a vis the total construction.
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3. Introduction of land by the Partner In case the plot of land is introduced by the
partner as his capital contributions, as per section 45(3), the value of asset recorded in the books of accounts of the firm is to be taken as the full value of consideration received or accrued as a result of the transfer of land. As a corollary, the same will be treated as cost in the hands of the firm. 4. Many times, the land is purchased where there are already unauthorized dwelling units. Certain amount of compensation or similar other cost is required to be incurred for clearing such
encroachments. Such costs form part of the cost of the land.
2. Capital asset vs. stock in trade 1. Conversion of land held as capital asset into Stock-in trade [Section 45 (2)] In many cases, an individual who holds a large area of land converts it into stockintrade and
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carries on business of construction/development. In such an event, the market value of land on the date of conversion will be considered and capital gains will be computed. However, these capital
gains will be chargeable to tax when such land is developed/constructed and sold. In case, such sale spreads over more than one year, capital gains pro-rata will be chargeable to tax.
Correspondingly, for determining business income, such market value on the date of conversion would be regarded as cost. 2. In the construction industry, land is considered as stock-in-trade. Ordinarily, therefore, the
question of capital gain does not arise on sale of land. Hence, Question of Sec. 50 C does not arise.
3. Valuation of Work in progress, Job completion method vs. Percentage Completion Method and Variations
thereof
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1. In the completed contract method, the profit from the project as such is effectively accounted for only in the year in which the project is substantially completed. If some minor or
insignificant part of the project is remaining, this cannot be a valid reason to postpone the tax liability. In practice, at the end of the year, the work-in-progress is simply carried forward at
cost. However, the overheads, which cannot be directly attributed to the project cost, have to be debited to profit and loss account. This may result into a loss, which may be carried forward. In the year of completion of project, the profit on the project will be accounted for and the accumulated losses will be offset. When there is only one project, the situation appears to be rather anomalous. However, when there are
several projects getting completed in different years, the fact does not become very glaring. There is insistence by I. T. department not to follow this method as income is deferred to the subsequent year.
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2. In percentage completion method, there is a risk. One may account for the estimated profit on the progress of completion from year to year. However, when the project is completed, it may have resulted in a loss or a profit which is less than what is submitted earlier. Unfortunately, there is no remedy to the over-payment of taxes in the earlier years. Therefore, there is a
tendency to adopt the completed contract basis. When there are a number of projects at varied completion stages, the loss can be offset against the profits of others. But in a single project, this method may pose problems. 3. Section 145 recognises only two methods, viz. Cash or Accrual. The methods viz. described in or
preceding
paragraphs
completion
progressive - have to be fitted into either cash or mercantile. It is more or less settled that these methods can be called as a variant of mercantile method. 4. In cash as well accrual method, one cannot take a
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dogmatic
or
extreme
view.
Thus,
merely
202
because advances are received, there may not be any element of income even in cash system. On the other hand, if a builder enters into
agreement for sale of flats and receives part advances, he need not account for the entire sale merely on the basis of such agreements. One has to decide the correct profitability from year to year in the facts and circumstance of the case. 5. It is interesting to note that when a contract is inclusive of materials and the materials are
supplied by the contract, the profits u/s 44 AD are to be estimated only on net labour payment. (Circular No.684 dtd. 10-6-1994). On the other hand, tax u/s 194C is to be deducted on the entire contract value (Circular No.295 dt. 6-31981 F.No.275/56/79 - IT13) 6. The quantum of profits to be offered to tax often poses problems, since project extends over more than one year. There are cases where the books of account are rejected by the AO and profits are estimated;
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still
the
depreciation,
interest,
203
salary, bonus payable to the partner as provided in Section 40(b), should be deducted. The CBDT circular dated 31-8-1965 be also states from that the
depreciation
must
deducted
estimated profits. (Jain Construction Co. 156 CTR 290 Raj) 7. Many times builder receives the advances
exceeding Rs. 40 lacs. However, in the Profit & Loss Account, profit is computed by taking
difference
between
opening
Work-In-Progress
(WIP), expenses incurred during the year and the market value of closing WIP. The question arises whether Tax Audit is necessary? Sales, Turnover and Gross receipts, though not defined in Income-Tax Act, 1961, have to be considered in commercial sense. The Guidance Note on Tax Audit under section 44AB published by the Institute of Chartered Accountants of
India has also expressed this view. Further, the Honble Supreme court in Challapalli Sugars Ltd. (98 ITR 167) (SC) has accepted that normal rules
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of
accountancy
and
commercial
sense
204
should
prevail
unless
there
is
different
provision in the Act. The Gross Receipts are should assessable advances include as all the It not
receipts should
which not
income. are
include
which
includible in the Computation of Income. Section 145(1) provides that profits/gains should be computed as per the method of accounting followed by the assessee. Thus, the method of accounting should also be considered. The value of WIP in the construction industry can not be considered as sales/turnover. (B. K. Jhala & Associated 69 ITD 141-Pune). The receipt of advance does not pass on the property in the flats/units. In view of this, it can be said that in the above case, provisions of Tax Audit may not be
applicable. This also implies that the receipts of advances by themselves do not give rise to
profits or income.
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8. Method of Accounting The assessee was a builder who sold two buildings in two assessment years. In the third year, there were major receipts from the projects. The
assessee offered the income of all the three years in the third year since he was following Project Completion Method. The AO estimated the income for the first two years. It was also argued by the Revenue that the assessee was not a builder but was only a financier/Supervisor of the building. The land was also not transferred to the assessee. The tribunal held that the assessee was entitled to follow the project completion method and estimation of profits for first two years was deleted. [Happy Home Developers vs. Asstt. CIT-115 Taxman 309 (Mum) (Mag)]. The assessee was engaged in the business of development of land and sale of plots. It sold some plots during the year. However, no profit was offered to tax on the ground that the assessee was following single venture method of accounting.
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It was held that though section 145 permits the adoption of the method of accounting for the income computed under the head Business Income and Income from other sources, the method which allows the assessee to defer the accrued income of a particular year to future year, can not be said to be a proper method of accounting. It will come in the way of section 4 since such profits would not belong to the last year. (Greater Ashok Land & Dev. Co. (P) Ltd. vs. Asstt. CIT 79 ITD 595 Delhi). The assessee was builder, following project completion method. The AO did not accept the assessees method and assessed income on the basis of percentage of work
completed. The CIT(A) accepted the method of accounting and remitted back the matter since not even 60% of FSI was constructed. The ITAT, Mumbai held that though there is no general rule for the specific percentage of the total area of the project which should be considered to be substantially completed, it seemed proper that the income should be taxed in the year in which 75% of the total area constructed by the assessee was sold. (Parekh Properties (P) Ltd. vs. Asstt. CIT 2003 SOT 124 Mum).
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Retention money Treatment while computing the total income and tax liability Often the question arises whether retention amount should be offered to tax due to the fact that such receipt is contingent upon various factors. Since the receipt is
uncertain, it is logical that the same should be offered to tax as and when received. In case the retention amount is not received, the TDS amount on the retention money may have to be forgone. It is worth noting that the old
Accounting Standard (AS-7) permitted both the treatments namely recognition of Income on accrual basis or on
receipt basis. However, the revised AS-7 is silent on this issue. Statutory Disallowances The following statutory disallowances are more commonly attracted in the construction business. Sec. 40A (3): The very nature and magnitude of
transactions is such that payments of expenditure in cash exceeding Rs. 20,000/- become almost inevitable. Explanation to sec.37 : P ayments of protection money, speed money etc are the open secrets of the construction
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business. These may attract disallowance on the ground that the payments are for a purpose or which is prohibited by law. Sec. 40 (a) : Payments to non-residents without TDS. This may be relevant if land is purchased from an NRI; or where foreign experts are hired (e.g. Construction of which is an offence
bridges, dams, etc) Sec. 43B: Statutory and other payments like interest to Banks; as contemplated in sec. 43B, if not paid within prescribed time, will be disallowed. Works Contract Tax may also be a sizeable amount. Tax Incentives Section 80 IA & 80 IB give tax incentives are to the
construction below -
business.
These
incentives
discussed
Concession for infrastructure facilities Under the provisions of section 80-IA, roads, highways, bridges, airports, ports and rail systems are treated as infrastructure facility and the enterprises engaged in
developing or operating and maintaining or developing,

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operating and maintaining such infrastructure are eligible to a tax holiday for five years and a deduction of 30% of profits for the next five years. The enterprise claiming such benefit has to enter into an agreement with the Central or State Government or a local authority or any other statutory authority, by which it has to transfer such facility to the Government or public authority after the specified period. In order to give boost to the investment in surface
transport, water supply, water treatment system, irrigation project, sanitation and sewerage system or solid waste management systems, Section 80IA has been amended to provide that such an enterprise can avail of the tax holiday consecutively for any ten years out of twenty years
beginning from the year in which the undertaking begins operating the infrastructure facility. In the case of other infrastructure, namely, for airport, port, inland port and inland waterways, section 80-IA has been further amended so that ten year tax holiday can be availed of in a block of initial fifteen years.
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The condition that such infrastructure facility should be transferred to the Central Government, State Government or local authority has also been removed. However, an agreement with such authorities for construction of the infrastructure would have to be entered into. Tax holiday to the Undertaking engaged in
development of housing projects Section 80-IB (10) provides that if the undertaking
develops and builds housing projects approved by the local authority before 31-3-2005, 100% of the profits derived from such project will be allowed as deduction. In this case, following points need to be noted
The date of completion of project is not relevant.
If part of the project is sub-contracted, such sub-developer may not be eligible for deduction u/s 80-IB(10).
The project is on the size of a plot of land, which has a minimum area of one acre. The area of plot may spread over more than one location and still will be eligible for
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deduction,
provided
it
is
indivisible
and
approved as one project.
Construction of shopping center/commercial space - Since shopping center/commercial space is integral and necessary part of the housing project, construction of it should not create any difficulty in getting
deduction.
A dilemma has arisen on account of the recent amendment which in fact liberalizes the provisions by extending the date of approval to 31.03.2005. The question is as to whether the benefit which was lost in view of old deadlines (approval before 313-2001 and completion before 31-3-2003) can now be revived? What happens to the intervening years? It is submitted that in view of equity and fairness should not be denied and ,the benefit CBDT should
issue a suitable circular.
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4. Other Issues 1. In some cases, the flats etc. unsold are
distributed among the partners and the firm is dissolved. In the case of V. Chandraprakasa
Nadar & Co. (107 Taxman 31-Madras), it was held that closing stock which is distributed to the partners on dissolution of the firm is to be valued at market value on the date of dissolution and hence when some of the partners in the dissolved firm come together and form a new firm, opening stock of new firm has to be valued at the market price. 2. There was a controversy whether construction activity amounts to manufacture and whether it would be eligible for the benefit of Investment Allowance. However, the Honble supreme Court in the case of N. C. Budharaj & Co. (204 ITR 412) (SC) , held that investment allowance is not available to construction activity. Redevelopment of old societies
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In Mumbai, there are number of old housing societies. These societies demolish the old structure and construct the new one. TDR is purchased for construction of the additional area. This additional area is sold and cost of construction of the new structure is met. This activity of the housing society can be considered as business activity and the profit should be computed accordingly. Applicability of Section 50C Section 50C applies only to capital assets and not to stock in trade . Since the profit from construction activity is income under the head profits/gains from business, the provisions of Section 50C will not be applicable. In case, old property is taken for development, a
reconciliation between the tenants who are rehabilitated and those who are given flats, may be demanded by the AO to establish the genuineness of tenants. Conclusion There are numerous such issues many of which are not yet resolved. When one controversy appears to be resolved, fresh controversies arise due to some amendment or some decision.
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The
attempt
therefore
is
not
to
answer
all
214
controversies but to draw the attention of the readers to their existence.
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LEGAL ASPECTS
Kochhar & Co. is a leading corporate/commercial law firm in India and is one of the largest firms in New Delhi. The
firm is also one of only three law firms in the country with offices in New Delhi, Mumbai (Bombay), Bangalore and Chennai (Madras) and with resident partners in each of these offices. Kochhar & Co. offers a wide range of legal services in the areas of corporate and commercial laws and is engaged in diverse areas of legal practice with emphasis on joint ventures, foreign collaborations, mergers and acquisitions, transfer of technology including laws relating to labour and employment, exchange controls, customs and excise,
taxation, telecommunications, broadcasting, energy, real estate, arbitration and intellectual property. The firm also specializes in the area of regulatory
approvals including Foreign Investment Promotion Board (FIPB) and Reserve Bank of India (RBI) permissions and has been instrumented in establishing various forms of business presence for several multinational corporations including
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liaison
offices,
branch
offices
and
subsidiary
216
companies.
The
firm
represents
some
of
the
largest
multinational corporations from North America, Europe and Japan (including many Fortune 500 companies). The firms office in Mumbai, the financial and commercial hub of India, is located in the heart of downtown in the prestigious World Trade Centre. The Mumbai office, apart from advising clients on all on aspects project of corporate and
commercial capital market
laws,
focuses
finance,
venture capital
investments, transactions,
information banking and
technology, finance,
securities,
shipping and maritime and intellectual property laws. The firm has a substantial presence in Bangalore, one of the prominent cities in South India and popularly known as the "Silicon Valley of India". The Bangalore office is one of the most prominent law offices in Southern India in the area of information technology including internet and ecommerce laws. This office represents some of the largest information technology companies in the world. The Chennai office of Kochhar & Co. is a full service practice and represents some of the largest corporations in the world on a wide range of corporate, commercial and
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business law issues. The important practice areas of the Chennai office include foreign investments, joint ventures, mergers and acquisitions, transfer of technology,
labor/employment laws, environment laws, taxation and real estate. The firm is probably the only Indian law firm to have introduced a client satisfaction programme that lays down important guiding rules, regulations and principles to
provide the highest quality level of service.
All members
of the firm strictly adhere to the firms client satisfaction manual to ensure that amongst other things, quality and response time of the highest international standards are maintained and client satisfaction is optimized. In the past, two partners in the firm have been conferred the National Law Day Award for Excellence in Corporate Law. One of the senior partners in the firm was felicitated in this regard by the Honble Vice President of India in 1999 and the other partner was honoured by the current Union Law Minister, Mr. Arun Jaitley in November 2000.
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STAMP DUTIES ON REAL ESTATE INDUSTRY
WHAT IS STAMP DUTY? When you purchase a property in India you have to pay Stamp Duty on the purchase. This is based on the
purchase price of the property and is less for a property bought as your principal place of residence than it is for property bought for investment. Stamp Duty is levied by the Commissioner for Stamp
Duties and is on a sliding scale from 1.5% to 3.75% for investment property. For your principal place of residence it is levied at 1% up to a purchase price of $250,000 and at higher rates on prices over $250,000.
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CHAPTER 7
FUTURE PROSPECTS OF REAL ESTATE INDUSTRY
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FUTURE PROSPECTS OF REAL ESTATE INDUSTRY

Non-commission revenues will become critical to the profitability formula. More and more menu driven services will be offered. Almost every aspect of the transaction will be part of an electronic. Electronic commerce will require standardization. Standards will cause commodization. The unconnected agent will become the endangered
species. Predictability/accountability will be the keys. The agent will be reevaluated. The Internet business will be a significant market share (25-Interactivity on the Internet will be the norm. A significant share of transactions will be managed from point of contact.
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Meeting Managed
the
customers
definition will use
of
value
will
be
transactions
designated
service
providers at all levels of the transaction. Marketing resources will be invested where they
generate proven results. Range of products and services will be limited only by imagination. The real estate industry should prepare in for an
increasingly empowered dynamics.
technology-driven consumers drive
environment the mark
which
competitive
A plethora of new entrants will emerge to capitalize on technology enabling new business models and value
propositions. Careers in Real Estate The real estate profession has expanded and offers one of the widest career selections in the business world today. Helping industrial people buy and and sell homes, office buildings, property
property
corporation
farmland,
management, land development, mortgage banking, urban

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planning, real estate counseling, appraisal and research are all aspects of a career in real estate. The "voice for real estate" and the industry's national professional organization is the National Association of Realtors. Advantages and Rewards of a Career in Real Estate A career in real estate provides flexibility and freedom to set your own pace. Income directly reflects your efforts, with no limits on what astute, hard-working men and
women can earn. Successful people in real estate are goaloriented, persevering, self-motivated, ambitious and
people-oriented. The rewards of a real estate career are a potential for high earnings, status in the community,
autonomy, time freedom, helping people, the intellectual challenge and the satisfaction from those
accomplishments. Working in real estate allows for independence and choices of environment in which to work, such as affiliation with a large or small firm as a listed salesperson. With more experience and upon passing of an additional exam,
becoming a real estate broker is the next step. Brokers

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can
own
their
own
businesses
and
employ
other
salespeople. Types of Careers in Real Estate Careers in Residential Brokerage - Helping people buy and sell homes, is one of the most important and basic services a real estate agent performs. Agents are experts in the process of buying and selling property, financing, government programs, for example. The real estate
agent's expertise facilitates the transaction, saving clients time, trouble and money. Real estate professionals need to have a thorough knowledge of such areas as real estate law, local economics, fair housing laws, types of financing, mortgages and government programs. Careers in Commercial Brokerage - Commercial brokers specialize apartment warehouses, understand in and income-producing office buildings, centers why and the properties, retail such as and To
stores parks. are
shopping and
industrial properties
explain
good
investments, commercial brokers need to be aware of the growth possibilities of the area where the property is located, current income tax regulations and purchasing arrangements that give the buyer a greater return on
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investment. Commercial brokers may also have to arrange financing. Careers in Industrial and Office Brokerage - Industrial and office brokers specialize in the developing, selling or leasing property used for industry or manufacturing.
Brokers need to understand different types of industries and determine such variables as transportation, proximity to raw materials, water and power, labor availability and local building, zoning and tax laws. Careers in Property Management The property
manager's primary function is to maintain the property in order to produce the highest possible financial return over the longest period of time. More importantly, the property manager is responsible for protecting the owner's
investment. Managed commercial properties are likely to be office buildings might and shopping centers. buildings, Residential apartment
properties
be
apartment
developments, condominiums and groups of homes owned by a single investor. Property managers usually work for real estate firms. However, other opportunities are found in the real estate For department large of banks and and trust
companies.
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housing
commercial
225
developments, managers are often expected to maintain an office or residence on the premises and work with only one enterprise. When living onsite, property managers can
expect to be on call for emergencies at all times, beyond maintaining standard working hours. Careers in Land Development - Land development is one of the most important and challenging specialties in real estate today. Developers turn land into profitable, or
marketable
developments
residential,
commercial
industrial. Site selection is the first decision developers must make. Planning and layout is handled only after the developer determines the need for a project. Before the actual building can begin, developers must first analyze all costs and arrange the financing. Then, they contract for the physical structures and supervise construction. Finally, developers promote the finished development to the
prospects for whom it was planned. Careers in Farm and Land Brokerage - Land brokers deal in land for farming and acquisition of rural land by cities for residential, commercial and industrial expansion. Success as a land broker depends on how accurately the income
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potential
of
the
property
can
be
established.
226
Brokers need a good working knowledge of various factors which determines a farm's capacity to produce, including agricultural knowledge and information such as market centers and transportation facilities. Careers in Real Estate Appraising Real estate
appraisers determine the value of properties. Real estate is appraised to determine many types of values - assessed value for tax purposes, investment value or present value for a potential investor, "book" value for accounting
purposes, rental value for income projections and insurable value. Appraisers need to know acceptable principles of appraisal and related information. They need to have
practical experience, technical education, good judgement and some knowledge of mathematics, accounting and
economics. Careers in Urban Planning - If you would like to improve the environment an and the quality may of people's your lives, career
becoming
urban
planner
fulfill
objective. Urban planners work with local governments and other civic groups to anticipate their city's future growth. They propose Not physical many changes to accommodate exist for this urban
227
growth.
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career
guidelines
planning, but broad general experience is important. Some colleges are now offering degrees in urban planning. Careers in Real Estate Counseling Real estate
counselors are in the business
of giving advice about
property. They are the experts others seek when they want answers to real estate questions. Counselors must know every phase of the real estate business because they use that knowledge in nearly every consultation. Often they will be asked about income opportunities and productive uses of different kinds of properties. There are relatively few brokers specializing in counseling, but the field will grow as investors and owners realize the value of expert advice in developing property and improving income. While accumulating experience in other real estate specialties, people planning to become real estate counselors also continue to study in continuing education programs in financial management. Careers in Real Estate Research Real estate
researchers contribute to the decisions of many other real estate specialists. Brokers, property managers, appraisers, financing experts and counselors all depend on data
provided by research. Research can be divided into two

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main categories - physical and economic. Physical research means studying buildings and structures of all types,
especially in terms of the selection and efficient use of construction materials. Economic research consists of
determining reliable answers to questions like, "How many people hope to buy homes next year?" - "What will it cost them to borrow mortgage money?" and "What percentage of the nation's homes are sub-standard?"
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BARRIERS TO REAL ESTATE INDUSTRY
First, barriers for market access will be removed this year. According to INDIAs WTO commitment, wholly
foreign-funded companies will be allowed to enter its real estate market within three years after its WTO accession, and Sino-foreign cooperative and joint venture real estate companies given national treatment. Following this
principle, Delhi has relaxed the restrictions for overseas investment to enter the citys property market. Though overseas investment in the sector appeared mostly in the form of a joint venture, some foreign companies still plan on setting up wholly owned firms in India. Second, the 2008 Olympic Games to be held in Beijing has spurred the development of the citys real estate industry. Seeing the event as an opportunity, many foreign companies came to seek cooperative partners in property development, including those from the United States, the Republic of Korea and Germany. Third, the increasingly mature market has helped boom the sector. Delhi has also witnessed the improvement of
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the financing market and opening of land transactions, both serving as important conditions for the sound
development of its real estate market. Early this year, Delhi issued a new regulation on the use of land for commercial projects. According to the regulation, the former practice of transferring the right to use land on the basis of agreement is replaced by auction, public bidding and other open ways, which is seen as a tangible step toward the establishment of an open,
transparent and regular real estate market. The ongoing designing of the overall layout of Delhi will be completed opportunities themselves. at the end of this for The overseas design is a year. By then more will present for the
investors new
blueprint
development of Delhi .
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CHAPTER 9 CASE STUDIES
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CASE STUDY
GREAT PROSPECTS With about 40 cities that have a population of more than 1 million, India is a very attractive market for large retail players. Both disposable incomes and consumer spending are rising. These are the fundamentals driving the change within Indias holds retail sector. The growth of for organized retailers,
retailing
immense
opportunities
developers, institutions and investors. The organized retail sector in India grossed over Rs.20,000 cr in 2002, a mere 2 per cent of total retail sales. This is expected to grow to 6 per cent by 2006-2007, when the sector is expected to gross more than rs.40,000 cr. The top 10 cities account for 95 per cent of organized retail business and the top six for over 80 percent. The total additional real estate demand from organized retailing
across the top six cities by 2007 is expected to be about 25 million sq.ft. Mall developments are expected to
account for over 80 per cent of this opportunity.
Obstacles to growth
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Several factors are responsible for the slow transition to organized retailing of in India. brands, These tax include the to slow the
proliferation
retail
advantages
unorganized sector lack of many attractive catchments, and the relatively unorganized and unstructured nature of real estate markets If these factors are set right, we could have a differentiated retail real estate market with low rental rates and a high level of product innovation. So far, apparel and food have dominated organized
retailing in India. Most existing players plan to double / treble their investments in the next three to four years. Many corporate players have entered organized retailing business and more are expected to enter in the coming years. Most of these are national players. Foreign retailers have so far entered the market through the franchise route. The emergence of India as the preferred sourcing base for some of the worlds top retailers is leading to a rise in the manufacturers learning curve thereby resulting in greater product proliferation. This will be a vital factor when large international retailers plan their forays into India.
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While the past three years have seen large growth and entry by a number of players into retailing, most of the activity remains concentrated in the top five-six cities. As the markets within the top cities mature, more and more opportunities will emerge in the second tier urban clusters. In addition, smaller towns also have opportunities for a differentiated retail play. In the top cities, most organized retail developments
occurred in a scenario where demand for retail space exceeded supply. In future we could witness a scenario where sharply differentiated real estate offerings will first come to the market, and this will in turn create demand for space. This will hold true specially in the under-served second tier markets, and the under served catchments within top tier cities. Therefore, analysis of the location, up-to-date market
information regarding the nature of space requirement, usage patterns, etc will assume great importance, specially in the under-served retail markets. Existing up-market retail locations will witness newer
formats. Retailers could enter into joint ventures with

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landlords, thereby sharing, and thus reducing, the latters risks. Real estate rentals could get pegged to the amount of sales or to some other common denominator. But this format will emerge when retail markets mature and mall developers operate in a competitive environment for
gaining a larger share of the retail pie.
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CHAPTER 10 OPERATION MANAGEMENT IN REAL ESTATE INDUSTRY
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OPERATIONAL MANAGEMENT IN REAL ESTATE INDUSTRY
Operation Real estate operation may be carried on (a) for the purchase and sale of land, (b) for the purpose of building, (c) for the purpose of lending money upon mortgages. The purchase and sale of land is that branch of operation which concerns itself with dealing in land as a thing to be bought and sold for profit and loss. It may be divided into two parts : (1) Speculation, pure and simple, by which land is bought in the hope of a rise in value and resold when that hope is either realized or known to be unfounded. (2) Development of land, the most conspicuous part of which is the development of vacant tracts by buying them wholesale in their wild condition, making them marketable by bringing them to such a state of development as is implied by putting streets through them, pre-paring them for use and then selling them in small parcels. This is a
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most important and useful part of the commercial side of the real estate business, and has resulted in the
development and settlement of many parts of the country. That portion of real estate operation which concerns itself in building may be similarly divided into, (a) Speculative building which consists in building
structures primarily for sale, and not necessarily for the use of the constructor, and (b) Building for investment which consists of the erection of structures for rental or primarily for the use of the person conducting the operation. That form of operation which is concerned with the lending of money upon real estate security is divided into two parts, (a) the making of permanent loans, (b) the making of building or temporary loans. Permanent loans are moneys lent upon mortgages at
current rates of interest, the security being deemed by the lender sufficient to afford an ample margin between the
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amount of the loan and the actual value of the property, the sum being loaned usually for a definite time. Building and temporary loans are moneys lent for
investment in property, to aid either in putting structures upon it, repairing structures or in the development of wild tracts, the intention being that the money be repaid when the development or reconstruction is finished. Because of the greater risks in the operation and the greater necessity for supervision by the lender, there is compensation in an increased rate of interest over and above the fair value of the loan of the money. For that reason it is to the interest of the borrower that the loan be made permanent and not temporary as soon as may be. Agency.Agency is that branch of the real estate business which engages the attention of the greatest number of persons who are concerned with the business, and in that respect it is of prime importance. It is divided into two parts, brokerage and management. A broker is a person who for compensation, usually
proportioned to the value of the subject-matter, brings about transactions between principals.
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Brokerage has two divisions according to the kinds of business which usually engage the attention of the broker. The sales broker is a broker who devotes his time and attention to the bringing about of the sale or exchange of real property. A loan broker is one who gives his attention to the
obtaining of loans upon the security of real property. One man may practice both branches of the business, or a specialist may devote himself to either of these branches. Management, the second branch of agency, is the
operation of deriving income and caring physically for real estate structures. It concerns itself not only with the
deriving of income, but with the keeping down of expenses and the care in making expenditures. It is popularly known as "Agency." Real estate, property and real property defined.Real
estate is a form of property. Property is the right to possess and use. Real property, a technical legal word, is the right to possess and use land for a time which may last for a life or lives or longer. All other property is, in the eyes of the law, personal property. A lease for 999 years,
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which is not measured by any life, but which must expire at a definite time, is less in term of time, in the eyes of the law, than a conveyance of a piece of land, the duration of which is measured by a life or by several lives. When we speak of real property we use the words in their technical legal sense. When we speak of real estate as a commodity and as a business, it embraces the various parts of the business which engage the attention of those who follow it as a vocation, and includes interests which in the eye of the law are not real property, as for example, leases, mortgages, etc. Every business has in view finally, commercial transactions resulting in the transfer of property of some kind; so in our study of the real estate business we have in mind the transfer of title to real property, and among the various subjects we shall consider, are the interests which there may be in land, limitations on ownership, the making of a contract, the conveyances used, the liens which may affect a piece of propertyall of which have an important
relation to a final commercial transaction, the transfer of title to real property.
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The
methods
of
dealing
in
real
estate
and
the
laws
governing it are not arbitrary and were not made for the mystification of others or for the purpose of multiplying legal fees. All systems of law are expressions of two things, the historic customs of the people whom they affect, and the modification of those customs, as changes made those modifications advisable.
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CHAPTER 11
MAINTENANCE AGREEMENTS
A stormwater maintenance agreement is a formal contract between a local government and a property owner
designed to guarantee that specific maintenance functions are performed in exchange for permission to develop that property. Local governments benefit from these
agreements in that responsibility for regular maintenance of the Storm water Treatment Practice (STP) can be placed upon the property owner or other legally recognized party, allowing agency staff more time for plan review and
inspection. Maintenance agreements can be an effective tool for
ensuring long-term maintenance of on-site STPs. The most important aspect of creating these maintenance
agreements is to clearly define the responsibilities of each party entering into the agreement. Basic language that should be incorporated into an agreement includes the following:
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1. Performance of routine maintenance Local governments often find it easier to have a
property owner perform all maintenance according to the requirements of a Design Manual. Other communities
require that property owners do aesthetic maintenance (i.e., mowing, vegetation removal) and implement
pollution prevention plans, but elect to perform structural maintenance and sediment removal themselves. 2. Maintenance schedules Maintenance requirements may vary, but usually
governments require that all STP owners perform at least an annual inspection and document the maintenance and repairs performed. An annual report must then be
submitted to the government, who may then choose to perform an inspection of the facility. 3. Inspection requirements Local governments may obligate themselves to
performing an annual inspection of an STP, or may choose to inspect when deemed necessary instead. Local
governments may also wish to include language allowing
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maintenance
requirements
to
be
increased
if
deemed
necessary to ensure proper functioning of the STP. 4. Access to STPs The agreement should grant permission to a local government or its authorized agent to enter onto property to inspect STPs. If deficiencies are noted, the government should then provide a copy of the inspection report to the property owner, and provide a timeline for repair of these deficiencies. 5. Failure to maintain In the maintenance agreement, the government
should repeat the steps available for addressing a failure to maintain situation. Language allowing access to STPs cited as not properly maintained is essential, along with the right to charge any costs for repairs back to the property owner. The government may wish to include
deadlines for repayment of maintenance costs, and provide for liens against property up to the cost of the
maintenance plus interest.
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6.
Recording of the maintenance agreement
An important aspects to the recording of the maintenance agreement is that the agreement be recorded into the local deed records. This helps ensure that the maintenance
agreement is bound to the property in perpetuity. Finally, some communities elect to include easement
requirements into their maintenance agreements. While easement separate agreements legal are often secured through a
agreement,
recording
public
access
easements for maintenance in a maintenance agreement reinforces a local government's right to enter and inspect an STP.
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DOCUMENTS NEEDED BY BUILDERS

A home is typically the biggest financial purchase a person or family ever makes. Information, planning, and selfdiscipline are your best assurance of keeping costs under control.
Assets
List available cash such as checking and savings accounts or certificates of deposit near maturity. Will additional cash accumulate during construction? Homebuyers
typically need cash for loan application feels, the down payment, closing fees, and move-in expenses. Consider assets you can turn into cash, such as the equity in a home you already own. Other assets might include a cash gift from a family member, an inheritance, maturing
bonds, or the cash value of an insurance policy. If you are a first-time buyer, you may also use an IRA or 401(K) loan but consult a tax professional before doing so.
Basic Financing Terminology: Pre-qualifying Smart buyers today request an informal review of their
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financial positions to determine how much money they can borrow. While pre-qualifying does not obligate you and a particular lender to do business together, it can establish your budget, identify financial details that might interfere with your plans (such as an error on your credit report), and help you compare loan programs.
Many
lenders
use
computer
programs
to
match
their
financial and credit data to the requirements of various loan programs and identify those that fit their
circumstances. The amount you can borrow is based on factors such as your assets, how much you owe, your income, and the length and stability of their employment.
Loan Application
Assemble the required financial documents and information prior to their application. Their lender can provide a list of needed items. Read any documents and ask any questions before you sign them. They should receive a copy of each document they are asked to sign. Expect to pay for a credit report and an appraisal when they submit the
application.
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Down Payment
The down payment is the difference between the price of the home and the amount of the loan they obtain. The deposit they give to the builder and items they pay for during construction may count toward the downpayment.
Closing Costs
Charges associated with the transfer of ownership make up their closing costs. They are often estimated at 2 to 3 percent of the loan amount but can vary from state to state.
Fixed-Rate Mortgage
With a fixed-rate mortgage the interest rate stays the same through the term of the loan.
Adjustable Rate Mortgage
If the interest rate on a mortgage can be changed, the mortgage is an adjustable rate mortgage (ARM). ARMs are easier to qualify for because their initial low interest rate results in a lower payment. Based on the terms of the loan
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program, the rate can be adjusted up (or down) over the term of the loan-usually in 1-year increments.
Balloon Mortgage
Some lenders offer loans that mature before the loan is fully amortized.
Origination Fee
Lenders typically charge an origination fee. This fee pays the lender for the services of the loan officer and staff who process their loan application.
Discount Points
These points are a one-time charge sometimes levied by the lender. You may use points to achieve a lower
permanent interest rate because they pay some of the interest in a lump sum up-front at the closing.
Principal, Interest, Taxes and Insurance (PITI)
Mortgage payments are made up of principal, interest, taxes, and insurance. The principal and interest are
calculated based on loan amount, interest rate, and term

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of the loan. In the early years most of their monthly payment principal applies only to interest, A and it reduces of their the loan
slightly.
portion
mortgage
payment may be set aside in an escrow account to pay your local property taxes and their homeowner's hazard insurance. This insurance usually covers theft, fire, wind, hail, and other catastrophic damage to the structure.
FHA Insured Loans
The Federal Housing Administration does not lend money; it insures mortgage loans. Some FHA programs require as little as 3 percent down, although maximum loan amounts limit the loan amount available by area.
VA Guaranteed Loans
Veteran Administration loans are available to qualifying veterans of military service. VA loans are guaranteed
rather than insured. The VA guarantees 25 to 50 percent of the loan and thereby protects the lender from loss.
Conventional These loans are neither FHA insured nor VA guaranteed.
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Most conventional lenders prefer a 10 to 20 percent or greater down payment, but some require as little as 3 percent down.
Good-Faith Estimate
The Good-Fait Estimate lists the costs they are likely to incur at the closing of your new home.
Truth-in-Lending Disclosure
The Truth-in-Lending Disclosure shows the cost of their financing as a percentage and as a dollar amount. This form also tells they whether prepayment penalties apply and shows the charge for a late payment.
Credit Report and Verifications
Their lender obtains their credit report at the time of application and may update your credit report prior to closing it if more than 30 days have passed. The lender also verifies information on the application. You will be asked to sign verification forms covering employment,
deposits, and your current mortgage company or landlord.
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Appraisal Costs vary for appraisals, but $250 to $400 is common. The appraiser determines the fair market value your
completed home will have.
Loan Lock
The lender promises to provide a loan to they at a quoted (locked) rate. Until you lock your loan rate, the interest rate for your mortgage can increase or decrease.
Loan Approval
At the time of application, their lender estimates the time needed to obtain approval. Add a week to this estimate and expect that some last-minute details will need your attention. The loan approval should be in writing and state clearly (a) that your loan has been approved; (b) the loan amount, type, and rate; (c) the time period for which the loan offered is valid; and (d) any conditions of approval or contingencies, such as closing on the sale of a previous home. Many people find applying for a mortgage intimidating or frustrating-or both. Completing all forms involved can take
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time. Keep focused on your goal-that new home for you family.
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CHAPTER 12
COST BENEFITS ANALYSIS
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COST BENEFIT ANALYSIS IN REAL ESTATE INDUSTRY

An Introduction to Key Technical Considerations Once a decision to carry out a cost-benefit analysis is made, the conceptual concerns raised above are set aside and the pragmatic business of specifying the overall framework to be used, the input variables to be included, how to measure them, and many other decisions must be made. These decisions are not inconsequential, because seemingly innocuous choices, if arbitrarily made, can cause large swings in the outputs of the analysis. We provide an introduction to key technical choices. Cost-Benefit Analysis and Time In many applications of cost-benefit analysis, the analyst must measure the net benefits of projects or policies that generate costs and benefits over a period of time, with costs and benefits often occurring in different time periods. This increases the complexity of the analysis, because a dollar of costs or benefits ten years from today is not directly comparable to a dollar of costs or benefits today. Because comparisons require a common metric, cost-benefit analysis uses a process called discounting to express all future
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costs and benefits in their present value equivalent. This takes place by discounting costs and benefits in each future time period and summing them to arrive at a present value. For example, at a ten percent discount rate, the present value of one dollar ten years from now is 37 cents and the present value of one dollar fifty years into the future is 0.67 cents. In general, the longer the time frame, and the higher the discount rate, the smaller will be the impact of any given year on total net benefits. This gives rise to one of cost-benefit analysis's weaknesses. Because the discounting process calculates its results from the present generation's perspective, one needs to be concerned about
intertemporal equity issues, that is, to the fairness of the decision to future generations. In fact, costs that occur far into the future may be given little weight in traditional cost-benefit analysis.
Sustainability has developed as a additional consideration for public policy decision making precisely because of the concern that the process of discounting may steer us towards policies that overly emphasize short term gain. Like the consideration of efficiency, consideration of sustainability provides the decision maker with additional information, but does not by itself make the decision.
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Choice of Input Values Carrying out the present value calculation is mechanical, but the choices of values for input variables will ultimately determine the results of the analysis. Choices may be divided into parameter values and benefit and cost values. Parameter choices include:
the discount rate future rates of economic growth future rates of population growth future rates of inflation future rates of technological change
Benefit and cost choices in real estate industry includes:
Benefits in real estate industry monetary values for marketed goods monetary values for non-marketed directly used goods monetary values for non-marketed passively used goods goods for which monetary values cannot be measured
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Costs in real estate industry monetary values for marketed input goods monetary values for non-marketed directly used goods that must be given up
monetary values for non-marketed passively used goods that must be given up
costs for which monetary values cannot be measured
Because the values chosen for these variables will significantly influence the final values calculated, the decision maker must satisfy herself that the values chosen are reasonable. Dealing with Uncertainty In addition, there is uncertainty in every variable estimated, including the most important categories of costs and benefits. For these reasons, it is important that a cost-benefit analysis does not present a single number as the sole estimate of net present values. Rather sensitivity and scenario analysis should be conducted to illustrate how the results change with different analytical choices and with variation in the uncertain levels of key costs and benefits. Finally, it should be noted that the cost-benefit approach, in itself, is
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a choice. In business decisions, other simpler models are commonly applied. Choosing among Alternatives Cost-benefit analysis is a tool for choosing among a discrete set of alternatives. For example, there may be several alternatives for dealing with a contaminated waste site. The site can be left the way it is, the waste can be contained, or the site can be completely remediated. Both the containment alternative and the remediation alternative may be further divided into alternatives based on options available in the technologies to accomplish each goal. Notice that by convention one of the alternatives to be examined is the option of doing nothing. Krutilla and Fisher (1985) provide a thorough discussion of the comparison of alternatives in their analysis of several proposed hydroelectric dams in the Hell's Canyon area of the Snake River. Other types of environmental decisions which involve the comparison of a discrete number of alternatives include modifications of the transportation system, upgrades of sewer systems, alternative land uses, alternative uses of brownfield areas, and the development of locally undesirable land uses such as waste storage or disposal areas, power production facilities, hog farms, and other polluting facilities.
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Choosing from a Continuum In contrast, many environmental decisions do not involve the choice among a discrete number of alternatives, but rather involve a choice from a continuous distribution of an environmental variable. For example, there exists a continuous distribution of potential levels of dissolved oxygen in a particular river, yet decision makers must choose a single level, which ideally would maximize regional quality of life. Marginal damage function analysis is a tool that is related to cost-benefit analysis that is designed to help decision makers with this type of choice. Carrying out a cost-benefit analysis is a technical exercise involving numerous choices and calculations. The more complicated the decision being addressed, the more care should be taken to identify and measure key variables and to analyze them appropriately. However, the technical nature of the analysis should not obscure the fact that the exercise is being carried out to inform the decision process. Each decision going into the analysis must be documented and described in a manner that those who are party to the decision process can themselves assume that the choices are sound.
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Cost-Benefit Analysis in Real Estate Industry Listed below are essays that discuss specific issues in cost-benefit analysis. These issues include:
The process of discounting that converts future values to present values
The choice of the discount rate Calculating Present Values when time periods differ Uncertainty and Cost-benefit analysis Dealing with costs and benefits which are difficult to measure Sensitivity and Scenario Analysis Selected References on Cost-Benefit Analysis
Cost-benefit analysis is an analytical tool, analogous to financial decision making in the private sector, that is modified to take into account the broader set of benefits and costs the public policy maker must address. It calculates the present value of net costs and benefits indicating the decision that obtains the greatest benefit at least cost. Cost-benefit analysis provides much useful information to the political process, but should not be used as a one dimensional
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test
of
desirability.
Other
decision
making
concerns
include
sustainability, equity, and other social values. The current laws relating to managing Information Technology (IT) in the Federal government require a Cost-Benefit Analysis (CBA) prior to implementing an IT project. Cost-Benefit Analysis can be as simple as deciding to buy a new keyboard for your computer when the keyboard stops working after a drink is spilled on it. The process described in this guide would be appropriate for a project as large and complex as modernizing the Internal Revenue Service tax systems. A Cost-Benefit Analysis should be commensurate with the size, complexity and cost of the proposed project, and project managers have to decide what level of analysis is necessary for a specific project in their IT management environment. PURPOSE This document provides guidance for preparing a CBA for an IT project in the National Institutes of Health (NIH). It was developed to assist technical and administrative personnel in preparing CBAs, it can also be used by managers to determine if a CBA appropriately supports decisions to invest funds in an IT project. Some parts of this guide could also be used to perform an A-76 study.
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STRUCTURE
Section 2 addresses the general concepts of cost-benefit analysis.
Section 3 contains an overview of the entire process. Section 4 provides a detailed description of the individual steps.
Appendices contain a glossary of terms, detailed descriptions of cost categories, lease-purchase guidance, and discount factors.
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CONCLUSION AND RECOMMENDATION

Conclusion The Indian real estate sector continues its steady progress with overall sales activity going up significantly in the past six months. And the driving factor behind the entire
process has been the information technology (IT) sector which has contributed considerably to the demand side. Moreover,the nature of demand has also undergone a
complete transformation. From small floor plates of 1,000 sq ft to 5,000 sq ft, the demand has shifted to large contiguous floor plates of 6,000 sq ft to as high as 20,000 sq ft. This has forced builders/developers to offer large floor plates as office space in case of both lease and capital values. "In a buyer's market, sellers will have to offer products as per the requirement of buyers. In this market, only those builders catering to the need-based demand can succeed," said Uday Mathur of Chesterton Meghraj. Most of the metros are today gearing up to meet
the demand for large floor plates in accordance with the international trend. No longer is work station space per
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person limited to a mere 50-70 sq ft. Most of these IT companies are looking out for larger office spaces to meet their 100-120 sq ft per person work station need. Partho Gupta, a Mumbai-based software consultant, states that the bottomline is to enhance the productivity level of staffs by providing a conducive working ambience. "The nature of job in this sector is such that one needs a particular kind of surrounding for achieving an optimal efficiency level," added Mr Gupta. report, many According to a Cushman & Wakefield are viewing Bandra-Kurla
multinationals
complex as the preferred destination for large commercial space requirement as there are limited options for large contiguous spaces of comparable quality in south, central and north Mumbai. "Earlier it was the price (capital value & rental) factor that governed the relocation process to a large extent. However, now in the last one year or so, companies are relocating their offices in search of large floor spaces," opines Mr Ashok Kumar, director, Brooke International. Never before the industry had experienced this kind of demand for large floor plates for office spaces. Adding to this demand is the recent emergence of dotcom start-ups. According to an estimate, in the past eight
267
IIMT
months, one out of four transactions belonged to dotcom or net-related business. Even as the initial hype has cooled down considerably, these dotcom ventures have played a big role in boosting the demand. Aashish Velkar, director, Cushman & Wakefield is still very bullish about the
dotcom-driven demand. "On the positive side, mergers and acquisition have already started in the dotcom business. This will provide consolidation to the entire business and help these companies sustain in the longer run. According to Velkar, once again Bangalore is emerging as the
favourite IT destination if one goes by the transactions that have taken place in the past three months. The
Bangalore market is fundamentally very sound, today and it is giving Hyderabad and Pune a run for their money. "I think Bangalore market is gaining its lost glory after three years of dull phase. The prices are so reasonable that one finds it difficult to resist," said Mr Velkar. Even in
Mumbai, as per a Cushman & Wakefield monthly report, sales activity continues to be buoyant with a number of transactions residential recorded sectors, both in the a commercial greater and
emphasising
`end-use'
participation in the investment market. Most of the newer

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IIMT
constructions Grade'
in
the with
Bandra-Kurla amenities
complex such as
provide central
'A air
buildings
conditioning, basement car parking, fire fighting facilities and large contiguous floor plates measuring up to 20,000 sq ft on a single floor. In Mumbai, rental values in CBD is
in the range of Rs 90-200 per sq ft per month with a 12month forecast of Rs 95-195. In the central district, rental is hovering around Rs 50-115 (12-month forecast Rs 55115). The suburban district is quoting rentals in the range of Rs 37-115 (12-month forecast Rs 30-115). Similarly, in the capital value segment, the price in CBD is hovering around Rs 8,000-16,000 per sq ft (12-month forecast Rs 8,500-16,000), while the central district is quoting a price range of Rs 4,700-9,000 (forecast Rs 4,500-9,000).
Suburban district is quoting a price of Rs 2,500-10,500 (Rs 2,200-10,500).
Recommendations After the government has recently allowed foreign direct investments (FDI) in defence as also banking and
pharmaceutical sectors, the question is now being asked as

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to when the real estate sector will be finally opened up for 100 per cent FDI. This is the sector that needs such investments the most, in view of the existing huge
demand-supply gap as also lack for adequate resources. Since the real estate sector is a key component of the infrastructure of any economy, factors inhibiting its growth have a subsequent negative impact on the economy. As per a study conducted by the United Nations, by the year 2015, 10 of the world's 15 largest cities will be in Asia (excluding Japan) and three of these will be in India. And Hence, thet government should take initiative to overcome any short of any economic bottlenecks. The development of new towns and cities which are on the anvil, requires huge amount of investments and technical expertise which cannot be met by the domestic developers which still work in a very disorganised manner. In order
to attract investment, it is imperative that the government increases the comfort level of the investors through
appropriate legal measures and an effective regulatory framework, besides allowing repatriation of profits.
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India has strong occupier demand in the IT sector, tackling the realities of corporate and legal restructuring as it impacts property in moving forward e.g. addressing the inequities of the rent act legislation in Mumbai or VRS in selected industries with significant real estate holdings, but there remains a long way to go. It is the responsibility of the government to think in this area. Since the real estate in the country has always been characterised by lack of transparency, poor project
performance of developers lacking credibility and other factors of an unorganised, unstructured nascent market, foreign investors would be extremely cautious before
bringing in large-scale investments. Moreover, legislations allowing FDI will not be sufficient. Other complementary measures (following such the as lead scraping given by of the ULCRA by the states
central
government),
reforming the Rent Control Act, rationalisation of stamp duties and property tax etc will need to be undertaken. Other proposed in reforms the include the development of of
securitisation
sector,
enactment
suitable
foreclosure laws, giving fiscal incentives to real estate market like lower interest rates, tax incentives, secondary
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mortgage market, etc.
"India has high cost of capital
which makes real estate more expensive and FDI can certainly help the industry on this front Besides FDI the government should formulate policies to develop and encourage both international and domestic funds like Real Estate Investment Trusts (REITS), Real Estate Mutual Funds. Measures to provide cheaper and better housing, increase in supply of quality offices,
factory and retail space, developments which will check prices, improvement in overall infrastructure, all of which will have a multiplier effect, accelerate foreign investments and increase employment. "While finalising the policy guidelines, care needs to be taken to ensure that this investment does not flow only into purchase of small pieces of land and construction of buildings thereupon of but essentially directed of to `on wards site'
development
townships,
provision
infrastructure and contribution towards the construction of housing for economically weaker section of society FDI will enable the organized sector to fund large projects and
IIMT
township
projects
which
are
unaffordable
and
272
unviable. The government policy with regard to FDI should be bold providing integrated and for the entire different as package needs percentage stand of to be modular with and
investments commercial
cities,
also
alone
corporate projects.
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BIBLIOGRAPHY
NEWSPAPERS
1. 3. 4. 5.
BUSINESS TIMES : 12-01-2005, PAGE5 ECONOMIC TIMES : 12-02-2005, PAGE 6 TIMES OF INDIA : 12-01-2005, PAGE 3 BUSINESS STANDARD
WEBSITE 1. 2.
3.
WWW.GOOGLE.COM
12-03-2005 TIME : 9.30AM
WWW.ALTAVISTA.COM 14-03-2005 TIME : 10.30PM
wwww.tajhitech@indiatimes.com
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