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JUNE 2017 (As of 9 June 2017) For updated information, please visit www.ibef.org 1
REAL ESTATE
CAGR: 0.52%
25
4th largest sector in terms of FDI FDI in the sector is estimated to
inflows 24.28 grow to USD25 billion by FY22
CAGR: 2.04%
600 The number of Indians living in
Rapid urbanisation bodes well urban areas will increase from
434
for the sector 434 million in 2015 to about 600
million by 2031
Source: Ministry of Tourism, KPMG, World Bank, Census 2011, TechSci Research
Note: E- Estimated; (1): Data till December 2016
JUNE 2017 For updated information, please visit www.ibef.org 3
REAL ESTATE
ADVANTAGE INDIA
REAL ESTATE
ADVANTAGE INDIA
Attractive opportunities
2015 Growing
Robust demand
demand • Growing requirements of space from sectors
2028E
• Demand for residential properties has surged such as education & healthcare
Market Market
due to increased urbanisation & rising • Growth in tourism providing opportunities in the
size: size:
household income hospitality sector
USD126 USD853
• About 10 million people migrate to cities every • In 2016, India secured 3rd position in the US
billion billion
year Green Building Council (USGBC) annual ranking
• 35 per cent of the population is in young age of the top 10 countries for LEED (Leadership in
bracket (15-35 years) Energy & Environmental Design. This will
• Growing economy driving demand for generate attractive opportunities for companies
commercial & retail space to expand their portfolio
Advantage
India Policy support
Increasing investments
• During April 2000 & March 2017, FDI inflows • The government has allowed FDI of up to 100 per
in construction development in India stood at cent for townships & settlements development
USD24.29 billion & accounted for 8.4 per cent projects
of total FDI inflows into the country • Under the Housing For All scheme, 6 crore houses
• India's commercial capital, Mumbai, attracted are to be built in which 4 crore in rural areas & 2
more than USD2 billion of private investments crore in urban area by 2022
in 2016, for enhancing growth in the • Real Estate Bill was passed in March 2016 to
construction sector. establish a real estate regulatory authority for
regulating & promoting the sector
Source: KPMG, Report on Real Estate Sector in India – Corporate Catalyst India Pvt Ltd,
Department of Industrial Policy and Promotion, TechSci Research, News articles
Notes: FDI - Foreign Direct Investment, NHB: National Housing Bank, 2028E - Estimates for 2028;
Figures mentioned are as per latest data available
JUNE 2017 For updated information, please visit www.ibef.org 5
REAL ESTATE
Source: KPMG Cushman & Wakefield, Knight Frank, CRISIL, www.sezindia.com, TechSci Research
Notes: SEZ - Special Economic Zone. IT - Information Technology, ITeS - Information Technology Enabled Services
FY08
FY09
FY10
FY11
FY13
FY15
FY20E
FY28E
Real Estate Regulatory Act
Benami Transactions Act
Boost to affordable housing construction
Interest subsidy to home buyers Source: KPMG, Report on Real Estate Sector in India – Corporate Catalyst
India Pvt Ltd, CBRE, TechSci Research
Change in arbitration norms Notes: CAGR - Compounded Annual Growth Rate; E-Estimates
Service tax exemption
Dividend Distribution Tax (DDT) exemption
Goods and Services Tax
Demonetization
PR for foreign investors
21.7
20.5
19.3
18.78
18.4
15.1
Relaxation in the FDI norms for real estate sector has been
30.1
26.7
19.7
14.8
done to boost the real estate sector
26
34
Government’s plan to build 100 smart cities would reduce the 2001 2005 2008 2010 2014 2015
migration of people to metro & other developed cities
Urban Rural
In 2017, nearly US$4.2 billion worth of investments are
expected to be invested in India’s real estate sector, as the
country is emerging as the preferred investment destination Source: Ministry of Housing and Urban Poverty Alleviation,
owing to favourable government initiatives RBI, CRISIL, TechSci Research
Notes: E – Estimates,
In March 2017, the State Bank of India (SBI) & the EWS - Economically Weaker Section,
Confederation of Real Estate Developers’ Association of India LIG - Lower Income Group,
(CREDAI) signed an MoU for 3 years to work towards the BSUP - Basic Services to the Urban Poor,
development of real estate sector. IHSDF - Integrated Housing and Slum Development Programme
775
• Demand to grow at a CAGR of 2.0 per cent over the
period 2013-17 across top 8 cities in India
• Developers now focussing on affordable & mid- 315 400
Notable range categories to meet the huge demand 270 245 165 230
trends 105
Notable Trends • During the period January-June 2016, residential
Chennai
Bengaluru
Pune
Mumbai
Kolkata
NCR
Ahmedabad
Hyderabad
sector commanded the largest share of PE
investments with a total value of USD 1.29 billion
(44 per cent)
32
25 26
16 15
• Mumbai, NCR & Bengaluru account for 60 per 13
cent of total office space demand in India by 2017 8 4
• Bengaluru is likely to experience highest demand
over 2013-17 followed by Mumbai & NCR
Notable
Notable Pune
Bengaluru
NCR
Mumbai
Kolkata
Ahmedabad
Hyderabad
Chennai
trends
Trends • Business activity shifting from CBDs to SBDs,
Tier 1 to Tier 2 cities
• As on September 2016, the total prime office
space absorption across 7 leading cities in the
country was about 28 million sq. ft.
Source: Cushman & Wakefield, TechSci Research
Notes: MNC - Multinational Corporation, BFSI - Banking, Financial and Insurance Services,
CBD - Central Business District, SBD - Special Business District, NCR - National Capital Region
JUNE 2017 For updated information, please visit www.ibef.org 11
REAL ESTATE
RETAIL SPACE LIKELY TO SEE STRONG GROWTH
• Currently, retail accounts for a small portion of the Upcoming mall supply across top 8 cities (2015)
Indian real estate market
Scenario
Scenario • Organised retailers are few & the organised retail
space is mostly developed by residential/office space
developers
1%
5% NCR
6% Bengaluru
• Booming consumerism in India
• Organised retail sector growing 25-30 per cent
annually 7% Chennai
Key drivers
Key drivers • Entry of MNC retailers
• India’s population below 30 years of age having
exposure to global retail are expected to drive 8% Hyderabad
49%
demand for organised retail
Pune
10%
Kolkata
• NCR accounts for about 49 per cent of the total
Notable
Notable
Notable
upcoming mall supply 14% Mumbai
• Total mall vacancy is 14.1 per cent across 8 cities
Trends
Trends
trends • Total 213 malls are operational in India
• Demand for retail space on high streets is quite high, Ahmedabad
as well as increase in FDI limit for multi-brand retail will
lead to significantly higher demand for retail space
• NCR & Mumbai are by far the biggest hospitality 118 120
114
markets in India, followed by Bengaluru, Hyderabad 100
Scenario
Scenario & Chennai 82
• Besides hotels, the hospitality market comprises
serviced apartments & convention centres
Chennai
Ahmedabad
Mumbai
Bengaluru
NCR
Hyderabad
Pune
Kolkata
• Serviced apartments appear particularly
Notable attractive within the hospitality space
Notable Trends • Government initiatives to promote tourism in Tier
trends 2 & Tier 3 cities is generating significant demand
for hotels in such cities, especially for budget
hotels
Stock (RHS) AOR (%) (LHS)
STRATEGIES ADOPTED
REAL ESTATE
STRATEGIES ADOPTED
• Outsourced support functions
Superior execution • Focus on delivery capability
• Development of world class infrastructure
• Rationalising costs
• Joint Venture with land owners instead of amassing land banks. For e.g.: Oberoi Realty,
Risk management in
Mumbai based realty firm adopted this strategy while entering the NCR region
land sourcing
• Revenue, area & profit sharing agreement with the land owner
• An architectural, structural & interior studio & a metal & glazing factory
Backward integration • Interiors & wood working factory & a concrete block making plant
• To maintain quality all across projects
• Mergers & acquisition activities would help the real estate players to serve the market in a
better manner
Merger and Acquisitions • In 2016, Quickr India Pvt Ltd acquired rental start-up – Grabhouse, at an estimated value of
USD10 million
• In January 2017, Proptiger.com & housing.com in India merged to become India’s largest
online real estate service company.
JUNE 2017 For updated information, please visit www.ibef.org 17
REAL ESTATE
GROWTH DRIVERS
REAL ESTATE
REAL ESTATE BEING DRIVEN BY POLICIES AND GROWING ECONOMY
Epidemological
Growth drivers Growing economy
changes
1470
1311
1270
1210
Better wages & better standard of living is expected to
1028
result in an increase in urban population in India to above
846
600 million by 2031 from 429 million in 2015
590
Government initiatives such as various urban
429
406
377
development policies & programmes (e.g., JNNURM) are
286
217
expected to contribute to enhanced urbanisation.
11.42%
During April 2000–March 2017, total cumulative inflows in 10.71%
the construction development sector accounted for 7.32 per 9.40%
cent of total inflows into the country 8.38%
7.43% 7.32%
6.53%
100 per cent FDI permitted in real estate projects within Special Share of SEZ exports in total exports of India
Economic Zone (SEZ)
In FY16, exports from SEZs accounted for 27 per cent of total 74% 72% 75% 71% 74% 75% 73%
90% 88%
exports
• A deduction for additional interest of USD746.8 per annum for loans upto USD0.05 million was
Ease in housing sanctioned during 2016-17, in case of 1st time home buyers, where the cost of house is less than
finances USD0.07 million
• Increase in exemption limit from USD3317 to USD4147 will help in household savings
Housing for • During June 2016 to March 2019, 100 per cent deduction for profits would be approved for undertaking
economically weaker housing project of flats upto 30 sq. metres in 4 metro cities & 60 sq. metres in other cities
• As per section 80GG, increase the limit of deduction of rent paid from USD358 to USD896 per annum,
sections
was allowed for the people living on rent
• The government has allowed 100 per cent FDI for townships & settlements development projects
FDI • Provision for reduction in minimum capitalisation for FDI investment from USD10 million to USD5
million which would help in boosting urbanisation
• SEBI released draft guidelines for investments by Real Estate Investment Trusts (REITs) in non-
Widening the scope of
residential segment & Infrastructure Investment Trusts. REIT will open channels for both commercial &
real estate market infrastructure sector
• In December 2014, the government passed an ordinance amending the Land Acquisition Bill helping
Land Acquisition Bill in speeding up the process for industrial corridors, social infra, rural infra, housing for the poor &
defence capabilities
OPPORTUNITIES
REAL ESTATE
EDUCATION SECTOR PRESENTS OPPORTUNITIES FOR REAL ESTATE FIRMS
Kolkata Chennai
• Emergence of nuclear families & growing urbanisation have given rise to several townships that
are developed to take care of the elderly
Senior Citizen Housing
• A number of senior citizen housing projects have been planned; the segment is expected to grow
significantly in future
• Growth in the number of tourists has resulted in demand for service apartments.
Service Apartments • In 2015, number of foreign tourist arrivals in India was recorded at 8 million
• This demand is likely to be on uptrend & presents opportunities for the unorganised sector
.
2012 2013 2014 2015 2016 2025E
Chennai • Emerging as promising commercial destination with Chennai Bengaluru Industrial Corridor, likely to
witness strong demand
Hyderabad • Room demand is expected to be driven by commercial and office space projects in the city
• Projects like Light Rail Transport System, Mono Rail, Eco-Park, Airport expansion etc. are likely to
boost travel which would result in increase in demand for hotel industry
Kolkata
• Government of West Bengal announced its plans to spend USD96.68 million to conserve rivers,
develop parks & vast green spaces, on installing LED lights, safe transport system in the state along
with increasing the green cover under the Green City Mission 2017.
• Improved infrastructure, new airport terminal & upcoming airport in Navi Mumbai expected to provide
Mumbai growth to hotel industry
• Higher Floor Space index, inclusion of hotel projects in infra lending lists provide a positive outlook to
NCR hotel market in NCR
• IT parks are attracting global players & increasing traffic. New business units are likely to increase
Pune business conferences, events which in turn would boost hotel demand
Moreover, many new companies are planning a foray into Kolkatta 0.0%
Indian markets due to huge potential & recently relaxed FDI
norms Hyderabad 21.8%
Bengaluru 16.8%
Ahmedabad 0.0%
Rental rates likely to see a gradual upward trend in Percentage vacancy levels
Bengaluru
31.4
30.9
Supply will exceed demand & hence increase vacancies In
29
Hyderabad
25.8
25.6
23.2
21.4
In 2015, with a share of more than 83 per cent, majority of
18.7
18.2
17.4
transactions in Mumbai was driven by commercial office
16.2
15.1
14.5
14.2
sector
13.3
12.6
12.5
11.3
12
10
Moderate demand, high vacancy & an increased preference
for suburban market with low rentals could pressure the
5
core areas in Pune
4
As of November 2016, Singapore’s DBS Bank announced
Bengaluru
Delhi
Pune
Mumbai
Hyderabad
Chennai
its plans to secure 100 thousand sq. ft. of prime office at
Mumbai’s Nariman Point, on lease basis. With a total tenure
of 9 years, the deal will be the largest transaction in the
history of the area 1
2013 2014 2015 2016
Commercial office sector garnered the 2nd largest share of Sector-wise share of investments (20151)
investments which stood at USD0.3 billion; hospitality sector
has the highest share with investments around USD0.34
billion during January-September 2015
Primal Fund Management has expanded its portfolio to offer 20% Offices
Flexi - Lease Rental Discounting (LRD). By 2018, the fund
aims at securing lease rental discount deals worth USD Residential
1.49 billion
Retail
31.90%
SUCCESS STORIES
REAL ESTATE
DLF: INDIA’S LARGEST REAL ESTATE COMPANY BY VALUE
1940 1950 1980 1990 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: Company website, TechSci Research,
Note: sq ft - Square Feet
JUNE 2017 38
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REAL ESTATE
GODREJ PROPERTIES – UNIQUE ASSET-LIGHT BUSINESS MODEL … (1/2)
Key Facts Distribution of ongoing and forthcoming projects by area
(FY16)
Started its 1st project in Mumbai in 1990
CAGR: 14.5%
416.7
68
CAGR: 30.5%
52.6
46.8
33.1
161.3
26.4
127.2 119.2 23.1
96.2 99.1 90.1 18.7 17
64.5
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Recently launched Gardens Galleria in Bengaluru, Mohali & Noida, Great India Place in Bhopal & Dehradun as well as
Downtown in Mohali
ANSAL API
Hold 8,803 acres of land reserve in the major states of Haryana, Uttar Pradesh, Punjab & Rajasthan
SOBHA DEVELOPERS
It has completed 278 contractual projects as well as 111 real estate projects covering almost 81.64 million square feet
USEFUL INFORMATION
REAL ESTATE
INDUSTRY ASSOCIATIONS
USD: US Dollar
Wherever applicable, numbers have been rounded off to the nearest whole number
Year INR equivalent of one USD Year INR equivalent of one USD
2004–05 44.81
2005 43.98
2005–06 44.14
2006 45.18
2006–07 45.14
2007 41.34
2007–08 40.27
2008 43.62
2008–09 46.14
2009 48.42
2009–10 47.42
2010 45.72
2010–11 45.62
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