Customers Investors Estate

Published:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

This research work is related to customers and investors research study, titled “CUSTOMERS OR INVESTORS PERSPECTIVE ABOUT INVESTING IN REAL ESTATE” in high tech cities like Greater Noida, Ghaziabad, Noida and New Delhi.

The research addresses the factors influencing the customers and investors decision to allocate resources to real estate. The survey includes a sample of major customers and investors via a questionnaire. They answered question about their target real estate allocation, their plans to increase or decrease their allocation, the major reasons for investing in real estate, and their view point on major factors which are to be considered by a company before starting a company.

The major empirical findings are:

  • Customers/Investors have a short history of real estate investment but are currently increasing their allocation to the real estate, more so than Equities, Debt, and Commodities.
  • Legal and regularity risk, Hard to determine the best opportunities and Risk of poor professional advice are given as the risk involved for real estate investing.
  • Despite of developers investing their large part of funds on Entertainment centers like Shopping Malls, Multiplexes etc. large part of customers prefer to invest in Residential Projects such as Plots , Group Housing, and Townships.
  • Residential Property is gaining as an attractive mode of investment of middle class people leading to growing demand.
  • With the shifting of more and more companies and offices to the suburbs, growth in suburban residential real estate market has also been witnessed. Lavish townships with good quality construction replete with luxurious amenities and facilities are now coming up. Survey reveals the factors or specifications needed by the customers where they are investing their funds and also the lack of facility in their previous or current residence.
  • Despite the billions of money spent on brand advertising, customer's rate - strength as a weak influence at best on their purchase decisions.
  • The most important factors influencing the real estate allocation decision are statistical estimates of risk and return, advice from external consultants and long term historical performance.

During the course of this research work I was provided with an opportunity to interact with the number of people to receive their responses for questionnaire gave a glimpse of the behaviors of people and how a researcher should proceed to elicit the responses comfortably. The experience gathered during this research study will help me to understand the real estate sector and customers perception about investing in real estate.

CHAPTER 2

REAL ESTATE IN INDIA

Source: Knight Frank Research

Real Estate Boom in India:

India, like many other parts of the world is zooming away in the face of a real estate boom. In India there is a real estate boom in any direction you wish to see. Whether it is Bangalore, Pune, Calcutta or Hyderabad or even already sky high Mumbai and Delhi -the story is the same.

Now apartments are more than just houses. They are about lifestyle. So while the first housing colonies had nothing but a security guard, these new housing colonies have a gym (spa, Jacuzzi, steam), swimming pool (heated, lined with Italian marble).

Some have a multiplex, shopping complex. There are those which offer a servant entrance. The next step is creating an ambience. What does on differentiate in a house? So you now have themed houses.

The concern is that in India, the stock prices are at the height of a boom. As it happens, a boom in one sector translates into a boom in another sector with invertors rushing to park their money in a safe place. Also, add the foreign exchange glut in India fuelled to a great extent by software engineers parking their dollar salaries in real estate (especially near the tech hubs). Low interest rates (relatively, as compared to 10 years back) over the last few years made bank loans easier.

Driven by positive growth in the economy, real estate in India is booming. The year 2006 started as on a promising note when the Government of India opened the construction and development sector in February 2006, and allowed 100 percent foreign direct investment (FDI) under the ‘automatic route' in order to spur investment in the vital infrastructure sector. The government has thrown open the lucrative parts of the Indian reality market to global investors for the first time.

The relaxation of the FDI ceiling saw big names joining hands with the Delhi based developments to announce India's largest FDI in the reality sector. Groups showing interest in India include major Indian and International Companies.

The development of real estate in India focuses on two primary areas: retail and residential.

  • The global real-estate consulting group Knight Frank has ranked 5th in the list of 30 emerging retail markets and predicted an impressive 20 percent growth rate for the organized retail segment by 2010.
  • The organized segment is expected to grow from a mere 2 percent to 20 percent by the end of the decade, it said.

The boom is also attracting interest from foreign players. In recent years, non-resident Indians (NRIs) have played a very important role in transforming the Indian real estate market. Opening-up of the Indian economy provided them with new opportunities and they have shown a great deal of confidence in the changed set up. Since 1994, NRIs have invested in sizeable amount, of which a big chunk has found its way into the property market. Anticipation by NRIs has brought about a lot of maturity in the market which in the past had solely banked on the actual users.

2.1 COMMERCIAL

  • India has been hit by the global outsourcing waves. If IT/ITES continues to grow at the estimated growth rate for the next four years it will be an approximately US$24 bn. Industry by FY 2010.
  • NASSCOM-MCKINSEY surveys have predicted that the ITES sector in India will provide jobs to 1.1mn sq. ft. of office space.
  • Over the course of the past five to ten years, the major occupier of the commercial real estate has been the IT/ITES/BPO sector as opposed to banking, finance, multinational, corporate and large Indian manufacturing companies. Almost 80 percent of demand for commercial space today is thanks to the above sector.
  • Accordingly, a shift is happening towards cheaper and larger locations in the suburbs closer to dense population pockets supplying quality workforce at competitive rates. Thus, a gradual decline in the status of the CBDs, which is already experiencing vacancy rates of over 20-30 percent, is expected over time.
  • More and more developers are building quality built-to suit space catering to the end user in the suburbs. In a nutshell, there will be a huge demand for commercial space in suburban area of major cities.
  • Most developers are providing a more efficient and better class of product than they were five years ago. At cheaper costs. These products are of a global standard and developers are using new age technologies in order to reduce delivery times.
  • The capital values of commercial properties have moved up by 10-12 percent over the past 12 months, even though the rental values have remained the same. This disparity will cease once the interest rates moving upwards.
  • Looking into the future, we expect supply to continue to match demand. A number of developers will put up quality products on to the market, thereby stabilizing rental property rates.

2.2 RESIDENTIAL

  • Residential property is gaining ground as an attractive mode of investing for middle-class people leading to growing demand.
  • The residential market has picked up due to the lower interest rates coupled with easy accessibility to loans.
  • The increase in prices of residential properties nationally has been 15-20 percent. This can be largely attributed to the increase in the land prices as well as the input costs.
  • With the shifting of more and more companies and offices to the suburbs, growth in the suburban residential real estate market has also been witnessed. Lavish townships with good quality construction with luxurious amenities and facilities are now coming up.
  • The demand for good housing is evident, as most of these developments have witnessed a pre-construction booking of 75-80 percent and even 100 percent in some cases, both by end users and investors.
  • There is the total national housing shortage of 41 mn. Units. Out of the above, close to 80 percent consists of housing for the weaker section.
  • A study has shown that 50 percent of the formal housing in the country is accessed through the rental route and not ownership. It is thus pertinent to put in place an environment to encourage more stock of rental housing.

2.3 Retail

  • Retail is considered the world's largest private industry with total sales of US$ 6.6tn. With close to 12 mn. Outlets, India has the largest outlet density in the world. The consumers demand for international quality ambience, convenience and infrastructure will drive future growth.
  • Retailing is becoming the next boom industry with organized retail being a market of US$6 bn. It is due to the growing eight fold in the coming decade. It is expected that the share of modern retail shall grow from about 8 percent in 2007 to 20 percent by the end of the decade.
  • The total retail industry growing exponentially at 8.5 percent per annum and consumer spending has increased at 12 percent per annum during the last 3 years.
  • The Indian consumer today is evolving. The increased purchasing power of the urban educated middle class, more exposure to brands and products through television and foreign trips, and the growing number of working couples has led to a change in buying habits and thus the retail scope in India today about 50 mn. Sq. ft. of organized retail space will be coming up across the country by the year 2010.
  • However, the real estate industry is at a critical point. Currently, we have a depleting pool of retailers and successful department store chains with a lot of shopping center space competing for the same tenants. This accordingly, creates an opportunity for foreign retailers. There is a dire need to allow 100 percent in retailing.
  • Developers who can show most ingenuity in creating an interesting environment, both from a shopping and an experimental standing point, will be the ones that will create an asset that will withstand the test of times.
  • A notable trend in the market is the development of integrated retail-cum-entertainment centers. An increasing number of retailers are focusing on malls as opposed to stand-alone developments. Several factors determine a retailer's attraction towards a particular mall. A recent survey revealed that, for a retailer, the most important parameters in selecting a mall as a potential location are:
  • Consumer demographics
  • Developer reputation
  • Cost of leasing space
  • Quality of other tenants
  • Car parking
  • Support facilities
  • Infrastructure
  • Maintenance

Whilst the number of shopping malls has seen a surge in the recent past, the future development is now focused on providing for leisure activities as well. A significant number of multiplexes are being developed as an integral part of retail malls, along with amenities such as food courts and video game parlors. PVR, INOX, Satyam Cineplex's and Shringar Films are diving the multiplex business expansion across the nation while Appu Ghar, The Delhi Based Amusement Park, has plans of starting operations in at least two new locations.

The next step in the evolution of malls in India is specialty malls and theme malls that cater to a specific target audience. These would include wedding malls, auto malls, home accessories and life style malls, factory outlet malls, etc.

Some of these chains after setting up in the metros are already looking to foray in to the non-metros to reach out to a broader customer base.

Source: Knight Frank Research

Source: Knight Frank Research

2.4 GROWTH DRIVERS OF REAL ESTATE

Indian Real Estate Market Growth Drivers:

Source: www.bnicapital.com/GrowthDrivers

  • The robust growth in IT sector has pumped the growth in real estate sector. An estimation of 70 percent of new construction is for the IT sector.
  • Retail sector is growing at a fast pace. India has been ranked as 5th in the list of 30 emerging retail market and 20 percent growth is predicted for the organized retail segment by 2010.
  • Spiraling demand for hotel rooms has bought boom in hotel industry. The demand supply will remain over 50 percent beyond 2009 generating substantial business for real estate.

“THE CORRELATION BETWEEN THE STOCK MARKET AND THE PROPERTY MARKET IS MARGINAL ENOUGH TO BE INSIGNIFICANT. WHILE THE STOCK MARKET IS DRIVEN BY INVESTORS ON A DESIRE-TO-EARN BASIS, THE PROPERTY MARKET IS DRIVEN BY THE END USERS ON A NEED-TO-USE BASIS.”

2.5 MAJOR PLAYERS IN INDIA

Real Estate Developers:

DLF

UNITECH

ANSALS

PARSVNATH DEVELOPERS

OMAXE LTD.

ELDECO &

EROS

CHAPTER 3

RESEARCH METHODOLOGY

Research methodology:

3.1 Primary Objectives:

1. Study the profit margins of Real Estate developers in different projects.

2. Study of competitors.

(DLF, ANSALS, UNITECH, PARSVNATH, and OMAXE)

  • Project details
  • Market share
  • Present and future developments plans.

3. Study the customer/investor perception about investing in Real Estate in NCR.

  • Interest in investing in real estate.
  • Reasons for investing in real estate. (Short term, Long term, End use, Recurring Returns)
  • Risk factor in real estate and Return.
  • Project they like to invest their funds. (Office Spaces, Plots, Shopping Malls, Multiplexes, Group housing)
  • In which assets class they find themselves most comfortable. (Real Estates, Equities, Debt and Commodities)
  • Their need for specifications and factors they find appropriate where they are investing their funds.
  • Lack of facility in previous or current residence.

4. What are the risk and return factors in investing in real estate.

5. Why they invest in real estate and for what reason.

3.2 Hypothesis:

(1) H0: The customers have interest in investing in real estate.

H1: The customers do not interest in investing in real estate.

(2) H0: The developers are successful in solving the problems and providing necessary specifications to customers.

H1: The developers are unsuccessful in solving the problems and do not provide necessary specifications to customers.

3.3 Research Design:

The study is to conduct on the part of business expansion plan of Dreamland promoters and Consultants Pvt. Ltd. to expand their business and solve customer's issues. On this part, Market Survey is conducted to know the customer/investor perception about investing in real estate.

In this research focus is on current customers views about real estate as an asset class.

The approach is direct. The survey is going to be done through a large sample of major customers/investors via questionnaire in NCR.

3.4 Sample Design:

The sample size for the above study was a total of 200 from the whole NCR. The respondents of a sample are selected using non-probability procedures. The target respondents were HNI's (High Network Individuals), upper segment of middle class, high level executive workforce of corporations.

3.5 Scope of the study:

Among the study key findings are:

  • Customers have a short history of real estate investment but are currently increasing their allocation to the real estate, more so than equities, debt and commodities.
  • Legal and regulatory risk, hard to determine the best opportunities and risk of poor professional advice are given as the main reason for real estate investing.
  • Despite of developers investing their large part of funds on entertainment centers like shopping malls, multiplexes etc. large part of customers prefer to invest in residential projects such as plots and group housing.
  • Residential property is gaining as an attractive mode of investment of middle class people leading to growing demand.
  • The most important factors influencing the real estate asset allocation decision are statistical estimates of risk and return, advice from external consultants and long term historical performance.
  • Despite of billion of money spent on brand advertising, customer's rate brand-strength as a weak influence at best on their purchase decisions.
  • With the shifting of more and more companies and offices to the suburbs, growth in the suburban residential real estate market has been witnessed. Lavish townships with good quality construction replete with luxurious amenities and facilities are now coming up. Survey reveals the factors or specification needed by the customers where they are investing their funds and also the lack of facility in their previous or current residence.

3.5 Limitations:

  • Our respondents locate real estate much more than any other asset class such as equities, debt and commodities. But they mention that the cost associated in investing in real estate is much more than these classes.
  • The potential relevance of uncertainty is immediate evidenced from many of the questionnaire results. In many questions, we observe significant differences in the “Don't know” response.
  • In one of our question in questionnaire we ask the factors you find appropriate for risk in real estate. i.e. asset volatility, lack of reliable valuation data, legal and regularity risk, risk of poor professional advice, hard to determine best opportunities.

May be some of the factors are hard to determine and uncontrollable and unavoided.

  • The key fact is the ability to service the debt. The general thumb rule for debt serving is to restrict all EMI payments to 45 percent of the investor's disposable income. This figure could vary according to the age of the person and his financial commitments. 25 years old unmarried person with no commitment can commit even to the extent of 75 percent of his disposable income to servicing a home loan EMI. But a 40 years old person with a wife and a child may struggle to service an EMI of 55 percent of his disposable income. The quantum of loan and structuring the EMIs has to carefully plan before hand to fall in debt trap.
  • In reality asset allocation is far more sophisticated process. It varies from person to person and depends on person's financial plan, background, disposable income, age, and investor's preferences.
  • Consider middle-aged person from a middle class background seeking a stable life long job. He cannot be expected to invest in equities and property. His preference would be bank FDs. On the other hand, a market savvy young couple in the corporate sector with high surplus would prefer to invest in property.

CHAPTER 4

CRITICAL REVIEW OF LITERATURE

Critical Review of Literature

A just released customer/investor research study, titled Customers/investors perception about investing in real estate throws a light on institutional investors and customers face a complex set of choices with respect to the composition and management of investment portfolios.

In this research we collected information about the real estate allocation choices, beliefs and view points of customers/investors.

Our investigation of the asset allocation gives interesting results.

  • Our respondents locate real estate much more than any other asset class such as equities, debt and commodities. But they mention that the cost associated in investing in real estate is much more than these classes.
  • The potential relevance of uncertainty is immediate evidenced from many of the questionnaire results. In many questions, we observe significant differences in the “Don't know” response.
  • In one of our question in questionnaire we ask the factors you find appropriate for risk in real estate. i.e. asset volatility, lack of reliable valuation data, legal and regularity risk, risk of poor professional advice, hard to determine best opportunities.

May be some of the factors are hard to determine and uncontrollable and unavoided.

  • The key fact is the ability to service the debt. The general thumb rule for debt serving is to restrict all EMI payments to 45 percent of the investor's disposable income. This figure could vary according to the age of the person and his financial commitments.
  • In reality asset allocation is far more sophisticated process. It varies from person to person and depends on person's financial plan, background, disposable income, age, and investor's preferences.
  • Consider middle-aged person from a middle class background seeking a stable life long job. He cannot be expected to invest in equities and property. His preference would be bank FDs. On the other hand, a market savvy young couple in the corporate sector with high surplus would prefer to invest in property. The age factor should be properly defined before targeting.

Comparison of role of risk and uncertainty with US Market

  • Diversification and inflation hedging are given as the main reasons for investing in real estate in US market.
  • The expected risk & return of real estate is perceived as midway between US stocks and bonds.

CHAPTER 5

REAL ESTATE INVESTMENT

5.1 Industry profile

India, like many other parts of the world is zooming away in the face of a real estate boom. In India there is a real estate boom in any direction you wish to see. Whether it is Bangalore, Pune, Calcutta or Chennai or Hyderabad or even already sky high Mumbai or Delhi - the story is same.

Now apartments are more than just houses. They are about lifestyle. So while the first housing colonies had nothing but a security guard, these new housing colonies have a gym (spa, Jacuzzi, steam), swimming pool (heated, lined with Italian marble) some have a multiplex, shopping complex. There are those which offer a servant entrance. The next step is creating an ambience. What does one differentiate in a house? So you now have themed houses.

The concern is that in India, the stock prices are at the height of a boom. As it happens, a boom in one sector translates into a boom in another sector with invertors rushing to park their money in a safe place. Also, add the foreign exchange glut in India fuelled to a great extent by software engineers parking their dollar salaries in real estate (especially near the tech hubs). Low interest rates (relatively, as compared to 10 years back) over the last few years made bank loans easier.

Driven by positive growth in the economy, real estate in India is booming. The year 2006 started as on a promising note when the Government of India opened the construction and development sector in February 2006, and allowed 100 percent foreign direct investment (FDI) under the ‘automatic route' in order to spur investment in the vital infrastructure sector. The government has thrown open the lucrative parts of the Indian reality market to global investors for the first time.

The relaxation of the FDI ceiling saw big names joining hands with the Delhi based developments to announce India's largest FDI in the reality sector. Groups showing interest in India include major Indian and International Companies.

With property boom spreading in all directions, real estate in India is touching new heights. However, the growth also depends on the policies adopted by the government to facilitate investments mainly in the economic and industrial sector. The new stand adopted by Indian government regarding foreign direct investment (FDI) policies has encouraged an increasing number of countries to invest in Indian Properties.

India has displaced US as the second-most favored destination for FDI in the world. As the investment scenario in India changes, India which has attracted more than three times foreign investment at US$ 7.96 billion during the first half of 2005-06 fiscal, as against US$ 2.38 billion during the corresponding period of 2004-05, making India amongst the "dominant host countries" for FDI in Asia and the Pacific (APAC).

The positive outlook of Indian government is the key factor behind the sudden rise of the Indian Real Estate sector - the second largest employer after agriculture in India. This budding sector is today witnessing development in all area such as - residential, retail and commercial in metros of India such as Mumbai, Delhi & NCR, Kolkata and Chennai. Easier access to bank loans and higher earnings are some of the pivotal reasons behind the sudden jump in Indian real estate.

Why Invest In Indian Real Estate? Flying high on the wings of booming real estate, property in India has become a dream for every potential investor looking forward to dig profits. All are eyeing Indian property market for a wide variety of reasons:

  • It's ever growing economy which is on a continuous rise with 8.1 percent increase witnessed in the last financial year. The boom in economy increases purchasing power of its people and creates demand for real estate sector.
  • India is going to produce an estimated 2 million new graduates from various Indian universities during this year, creating demand for 100 million square feet of office and industrial space.
  • Presence of a large number of Fortune 500 and other reputed companies will attract more companies to initiate their operational bases in India thus creating more demand for corporate space.
  • Real estate investments in India yield huge dividends. 70 percent of foreign investors in India are making profits and another 12 percent are breaking even.
  • Apart from IT, ITES and Business Process Outsourcing (BPO) India has shown its expertise in sectors like auto-components, chemicals, apparels, pharmaceuticals and jewellery, where it can match the best in the world. These positive attributes of India is definitely going to attract more foreign investors in the near future.

The relaxed FDI rules implemented by India last year has invited more foreign investors and real estate in India is seemingly the most lucrative ground at present. The revised investor friendly policies allowed foreigners to own property, and dropped the minimum size for housing estates built with foreign capital to 25 acres (10 hectares) from 100 acres (40 hectares). With this sudden change in investment policies, the overseas firms can now put up commercial buildings as long as the projects surpass 50,000 square meters (538,200 square feet) of floor space.

Indian real estate sector is on boom and this is the right time to invest in property in India to reap the highest rewards.

5.2 Company profile

In a Short span of time, ‘Dreamland Promoters & Consultants' has established its reputation as the rising star of Indian star of Indian real estate industry. The extraordinary achievements of the company are unparalleled and have quickly translated into truth and faith of its customers and associates. Dreamland Promoters and Consultants Pvt. Ltd., is an upcoming name in the field of housing development.

Promoted by the young and visionary, Mr. Pawan Bhadana, Dreamland, an ISO 9001:2000 company is bound together with energies of youth and wisdom of experience. A thorough real estate professional with an experience spanning over 10 years, Mr. Bhadana himself is a man of ideologies. Under his dynamic leadership, Dreamland has achieved milestones that were hitherto. However, foe him success has come not just in the form of business volumes, but as love and appreciation of all concerned.

Dreamland understands that a home is not just by brick and mortar. Behind the construction of every home, lie the dreams and aspirations of a family. To match their expectations and to really make their dreams come true, lot of care and a lot of commitment has to go right from designing it the finishing part. And to supplement such wonderful home, a pleasant environment also needs to be created. This is the reason that the company has associated with itself the best architect, planners and construction professionals.

Vision:

To play an important part in the process of housing development in our nation by creating a reputed organization of globally appreciated standards based on integrity, values and trust.

To contribute to the case of society by initiating and supporting educational, cultural and health development activities particularly for underprivileged children

Mission:

To develop & deliver quality housing and to work towards achieving excellence in our field

Apart from its present sphere of business, Dreamland has mega plans to diversity and excels in other fields, including: Media, IT, Education, Hospitality.

To carry out its corporate social responsibilities, the establishment of ‘Dreamland Foundation' is on the cards. To start with, the foundation will cater to the education needs of underprivileged children.

MD's Message

Mr. Pawan Bhadana

M.D., Dreamland Promoters & Consultants Pvt. Ltd.

“We aim to create real value for our customers by adopting quality standards that match the best in the world. Encouraged by the trust of our valued clients as well as our partners, we strive to establish benchmark in real estate development and turn many dreams into reality.”

FUTURE PROSPECTS:

Dreamland Group has embossed its name on the ground of Indian real estate sector. Headed by the visionary, Mr. Pawan Bhadana, CMD and driven by a dedicated team of real estate professionals, Dreamland Group is committed to create exceptional projects that offer real value to its customers.

Up surging with widely recognized and appreciated projects, the group already has to its credit the grand success of Golf View City at Hapur (approved by the H.D.P.A.) and The Willows-Lifestyle Apartments at Ghaziabad (approved by G.D.A.) that are currently under development.

With its upcoming residential project, Dynasty Apartments, Dreamland is all set to promote and develop ‘Bhiwadi', the latest destination for real estate development. Here, the group proposes to develop a residential project consisting of apartments and plots. Dreamlands, Dynasty Apartments will incorporate latest international technologies in construction and interiors. Special attention is being given for the aged and handicapped and special facilities are being provisioned to make them feel comfortable.

Taking its commitment further, Dreamland has also proposed ambitious projects at Noida (Residential Apartments), Greater Noida (Residential Apartments) & Faridabad (Commercial) among others.

COMPANY PROJECTS

THE WILLOWS

Come Home to India's First City

Enjoy a life wrapped in futuristic lifestyle, Luxury and Comfort. At the Country's first Global city, is the Crossing Republic. The one and only city in the country planned to bring a whole new world within and arm's distance not just for you and your family, but for your coming generations as well as with world-class ambience, Meticulous Design, Premium Infrastructure and Futuristic facilities within the premises.

Contemporary Design

The entire city is a perfect of Residential, Commercial and Recreational options where each buildings facade, Color and Heights in designed in sync with the architectural details of other buildings.

Futuristic Facilities

Answering the needs of an organized and comprehensive lifestyle, Crossing Republic also plans kindergartens, Primary and Secondary Schools and even a College and a university within the city. Intelligent planning to meet the Current and Future needs of the residents, Crossing Republic offers world-class Commercial options from malls, Retails, Outlets, Small offices to large corporate workspaces.

Stretching Water Bodies

Set next to the Hindon River, Crossing Republic is blessed with ample source of pure water. Besides, Refreshing and cascading water within the premises will fill your life with refreshing energy.

Recreational Wonders

A huge international-standard central park with lots of Water bodies, Play areas, Entertainment zones will refresh one's life with ideal balance of open spaces and landscaped greenery.

Strategic Location

Strategically located on the upcoming Delhi NCR Ring Road, Crossing Republic is directly connected with three expressways, NH-24. (2010 Commonwealth Games main road, Eastern Expressway and Noida-Greater Noida Expressway)

Convenient Approach

Close Proximity to two metro stations will connect this place with all the areas of NCR in the near future. Sprawling over an area of 50 acres, crossings Republic is indeed an epitome of modern development and vision that offers a future-proof living.

GOLF VIEW CITY

GOLF VIEW CITY is not just a residential township, it is a whole new world that offers you a unique lifestyle crafted for only a few who value fine taste.

Located in one of the most picturesque sites, Golf View City on the National Highway-24, surrounded on three sides with densely lush green belt, the locality has a certain freshness of virgin countryside that can make any nature lover jump with joy!

Golf View City is all about world-class facilities and comfortable living. The planning is immaculate. Golf View City is an address that announces your arrival in life….it transcends you to a different world. The ultimate greens of your dreams that will up-grade the standards you had set for yourself.

Golf View City brings you a perfect fusion of man and nature. It is a unique amalgamation of undulating greens, open spaces, interesting architecture and efficient facilities.

So pamper yourself and let your senses take over. After getting overwhelming response from Dreamland heights of Dreamland Promoters & Consultants Pvt. Ltd. in Crossing Republic, NH-24 (Ghaziabad), Dreamland is now bringing a world class Township Golf View City at Hapur Bye Pass on NH-24.

Golf View City is strategically located on Hapur Bye Pass, yet tucked away from the heavy traffic of the highway. Surrounded by 100 meters broad greenbelt, it has in store for you-peace of mind, comfort and satisfaction.

Golf View City is complete in itself, spread over several acres of land. Its unique value offerings that make Golf View City really exclusive, it offers the occupant with a comprehensive modern city infrastructure comprising internal amenities centers and facilities of all kinds, the township brings with it unmatched life filled with an absolute charm of nature.

Golf View City certainly has the perfect offerings to transform your dream home into reality.

5.3 SWOT Analysis

STRENGTHS

  • R & D with Dreamland have developed excellent R & D and building and developing capabilities, which has build a strong customer base and establish market leadership through the high quality of its units quality.
  • The increasing demand for the real estates presents a great opportunity for The Dreamland Promoters and Consultants Pvt. Ltd. to increase and scale up the production.

WEAKNESS

  • Dreamland has low presence in commercial projects. It has no units of commercial projects.
  • Dreamland is mainly focused on residential projects.
  • Not looking towards the scope of western UP where demand of residential projects is increasing.
  • Few Projects, thereby less coverage in the market.

OPPORTUNITIES

  • There is a scope of business as there is a demand for real estates.
  • The big IPO (initial public offering) is a big opportunity of the company.
  • The concept of wedding mall.

- The theme based malls are the way to the future.

THREATS

  • Dreamland has the biggest threat from the global and large players in the real estate like DLF, UNITECH & OMAXE.

CHAPTER 6

STUDY OF COMPETITORS

THE COMPETITORS

  • DLF
  • UNITECH
  • OMAXE.
  • ANSALS
  • ELDECO
  • EROS
  • PARSVNATH DEVELOPERS

DLF

DLF presently has its land bank in 31 different cities, through with a small presence (less than 100 acres) in 20 of these. In addition to 574 mn Sq. ft. land bank, DLF has 23 super luxury hotel sites, a golf course and clubs.

Too large dependence on Gurgaon:

The total land bank of 10,225 acres is highly skewed in favors of Gurgaon and to some extent Kolkata too. DLF has approximately 72 percent of its total land bank in Gurgaon (46 percent) and in Kolkata (23 percent) together.

Land cost and current debt levels

DLF has a total debt of Rs. 94.5bn and an outstanding amount of Rs. 55.4bn towards land Rs. 94.5bn and cost. Of the total debt of Rs. 94.5bn, 75 percent is on a floating rate basis which is a risk in a rising outstanding land interest rate environment. DLF had capitalized Rs. 1.1bn out of the total interest charge of cost is Rs. 2.8bn for FY06 and estimated the interest charge for FY10 would be Rs. 5.4bn, on a conservative basis, as interest rates have gone up by roughly 150 percent in the last nine months.

A quick snapshot on area developed, under construction and planned

A total of 10,255 acres translates into 574mn. Sq. ft. of saleable area, the total 574mn sq. ft. involves the development of plots of 46mn sq. ft., residential apartments of 377mn sq. ft. DLF is of the opinion that its present land bank is sufficient for the next 10-11 years. Out of 574mn sq. ft., DLF has a total of 46mn sq. ft. under development as of 30 November 2006, between FY07-09 with 9m sq ft under residential; 26m sq ft under commercial and 11m sq ft under retail development.

Snapshot of DLF past and future developments plans

Development

Completed

In Progress

Planned

Plan for year

2008-09

Plots

195

-

46

-

Residential

17

9

375

69.8

Commercial

6

26

62

48.2

Retail

2

11

45

31.7

UNITECH

The Rs. 1600crores Unitech Group is one of the Major Township Planning and real estate development companies in India and has a diverse business portfolio of heavy construction, leisure and entertainment projects, hospitality business and residential property developments.

After playing second fiddle to DLF in Gurgaon, the low-profile Unitech Group is gradually asserting itself in the real estate market of the national capital region. In May 2006, in an upset of sorts, Unitech got the better of DLF by grabbing 345 acres of prime land in Noida for whopping Rs. 1582 crores. Unitech has a land bank of 10500 acres whose breakdown is shown below and its future plans are of 500m sq ft for the year 2008-09 for which they need huge amount of funding.

Unitech Builder plans to use the Noida land to make 4000 top-of-the-line apartments priced at Rs. 2 crores (Rs. 20 million) each. The investment required to build this dream residential project: Rs. 3000 crores (Rs. 30 billion). Besides inking this mega deal, Unitech has been on a land-buying spread across the country - from Gurgaon to Kolkata, Kochi, Hyderabad and Chennai - to establish a pan-Indian presence. In the last few months, the Group has created a land of over 8,000 acres.

PARSVNATH

Parsvnath developers announced that they would invest Rs. 1600 crores over the next three years to construct a metro station cum shopping mall near the Commonwealth Games Village in the National Capital. The metro station cum shopping mall is spread over 7.3 acres and about 3.65lakh sq. ft. of retail space would be developed. This will be the 12th mall which the Parsvnath will develop at metro stations, owned by Delhi Metro Railway Station Corporation, a building operator transfer basis.

Parsvnath projects cover saleable area of 134 million sq. ft, including owned land development rights; this does not include land owned in SEZ business. Ongoing projects are spread over 17 states and 46 cities.

Upcoming Projects

No. of Projects

Saleable Area

Land Cost

Development & Construction Cost

Total Cost in Rupees

Total Cost in US$

Residential

31

32.88

1344.9

3978.32

5323.3

1183

Commercial

21

4.91

795.68

800.12

1595.8

354.62

Integrated Township

21

86.06

1121.0

7405.8

8526.8

1894.8

IT Park

4

6

4.55

915

919

204

DMCR

6

1.46

276.64

260

536

120

Hotels

17

2.69

247.31

627

875

200

Total

100

134

3790

14000

18000

4000

Projects under Development

OMAXE

It started in 1987 as a vision, to realize the dreams of millions across the length and breath of our country, is today an ISO 9001:2000, D&B 5A2 rated organization that proudly boasts of over a 100 successfully completed projects under its belt. At OMAXE we believe that our spectacular performance, extra-ordinary growth and spotless track record over the past 19 years are proof of the infinite possibilities that lie within us. It is the belief that puts OMAXE in the forefront of this multi-billion industry as a pioneer with an unshakeable reputation for delivering what is unconceivable for others. It also beckons us to continue realizing the dreams of million into reality.

OMAXE, one of the India's fastest growing Real Estate developers, has registered its presence across the country with a healthy mix of projects that range from well planned office spaces to international standards townships, group housing, state of the art malls, commercial complexes, multiplexes, theme malls, resorts, hotels, service apartments etc. The company has also diversified into IT parks, bio-technology parks, SEZs etc.

Today, OMAXE enjoy a reputation of being one of the India's premier Real Estate Developers with an indelible focus on customer satisfaction. This feat has been achieved through the adoption of quality system standards that integrate technological and design innovations with a strong technical base to provide state of the art real estate options.

At OMAXE, the human mind and spirit continue to be our most precious resource and a critical ingredient in the spectacular success of our endeavors. Today OMAXE boasts of over 800 qualified men and women who are successfully turning their dreams, and dreams of million into reality.

Having registered phenomenal start based on the successful acquisition and implementation of a large number of highly challenging and hugely varied projects, all in a short span of under two decades, OMAXE today enjoys the reputation of being North India's fastest growing Real Estate Developer.

CHAPTER 7

DATA

7.1 Data Collection

As a preliminary for the business development of the company it was essential to find the customer/investor perception about investing in real estate.

For collecting the information a questionnaire was designed focusing on the main cities in NCR like Greater Noida, Noida, New Delhi and Ghaziabad where the company is operating its projects.

The respondents in our sample size are professionals from major public and private institutions which include managers, consultants, proprietors, business class etc. Approximately 200 questionnaires were filled and ultimately collected 169 with positive response that they have their interest in investing their funds in real estate.

Table 1 summarizes the total sample size which reflects that majority of respondents have their interest in real estate.

Table: 1 Sample size and Respondents:

City

Total Respondents

Interested in Real Estate

Greater Noida

50

42

Noida

50

44

Ghaziabad

50

40

New Delhi

50

43

Total

200

169

7.2 Primary Data

The whole of the study is primary data based oriented through a questionnaire. The contents of the questionnaire are:

  • Interest in investing in real estate.
  • Reasons for investing in real estate. (Short term, Long term, End use, Recurring Returns)
  • Risk factor in real estate and Return.
  • Project they like to invest their funds. (Office Spaces, Plots, Shopping Malls, Multiplexes, Group housing)
  • In which assets class they find themselves most comfortable. (Real Estates, Equities, Debt and Commodities)
  • Their need for specifications and factors they find appropriate where they are investing their funds.
  • Lack of facility in previous or current residence.

The questionnaire is attached in annexure.

CHAPTER 8

FINDINGS AND ANALYSIS

Findings and Analysis

The company, Dreamland Promoters and Consultants Pvt. Ltd. has presently 3 projects out of which 2 have been already cleared and one is yet to be executed. The developers expect 30-40% returns/profit margins, although it varies from projects to projects due to various reasons like time, cost of purchase, etc.

8.1

Question 1 among the questionnaire reflects the real estate investment policy specifically. We asked our respondents do you have interest in investing your funds in real estate.

The answer to the question 1 indicate that a surprising number of respondents, nearly 169 out of 200 have their interest in investing their funds in real estate.

Exhibit 1: Question 1

Do you have interest in investing in Real Estate!

Interpretation:

Certain increase in property prices in the last four years, high income, cheaper loan rates, no longer adverse to debt and ready to discount future earnings today could be the main reasons for development of interest in real estate of customers.

8.2

Reasons for the customers/investors for investing in real estate, may it be Short term returns, Long term returns, End use or recurring returns. Different respondents from different cities show different perceptions. End use and long term investment are the two reasons among four who votes majority of respondents.

Exhibit 2: Question 2

Reasons for investing in Real Estate!

Interpretation:

Since real estate has beaten all forms of investment in last four years and sought to be emerging as a key element in customers/investors portfolio and by paying an EMI instead of paying taxes and rent they develop a compulsory saving habit and create a valuable asset for a long period of time could be a possible reason for this above result.

8.3

The question mentioned states about the top risk factors associated with the real estate investing. Asset volatility, lack of reliable valuation data, legal and regularity risk, risk of poor professional advice, hard to determine the best opportunities are the various risks associated with real estate and mentioned in questionnaire.

Exhibit 3: Question 3

Top risk factors in Real Estate!

Interpretation:

Risk of poor profession advice, legal and regularity risk, hard determining the best opportunities are the top three factors. Change in government policies, change in trend and fashion cold be the main reason for above.

8.4

Various big players had registered its presence across the country with a healthy mix of projects. The question revolves around the same perception about customers/investors view in which project they would like to invest. - Office Spaces, Shopping Malls, Plots, multiplexes & Group Housing are few of the projects.

Exhibit 4: Question 4

Project in which customers/investors like to invest!

Interpretation:

There's been an evident shift in perception and mindset in the Indian middle class over the last five to ten years, thanks to the impact of liberalization and opening up of the Indian economy, a rise in average income across households, and a palpable desire to own things ‘now'. The most crucial aspect of this ‘shift' in the consumer's mindset is perhaps explained by the fact that the young (or Next Generation) are more in charge of their lives and eager and impatient to assume the world. It's a generation that is independent, self-reliant and nuclear in nature. And it is this eagerness that is succeeding that has fuelled a drive to own what one desires the most: a home, a car and a healthy lifestyle. Other drivers have been incentives from the government to buy homes, improved quality of buildings and property services and a bouquet of financial options. Tax concessions, property price dips and lower interest rates have also helped.

8.5

The question ask “on a 5-point scale,….how does the long term expected return for the real estate component and your portfolio compare with the long term expected return for the following asset class in your portfolio”?

In which of the following asset classes are you most comfortable in investing your funds.

The research report that most respondents believe real estate has an expected return a little above that for equities and debt. They expect commodities too significantly and somewhat less.

What factors might explain this apparent contradict?

  • First, allocation might not be based on modern portfolios theory.
  • Second additional factors affecting risk and return estimates-such as higher relative cost of real estate.
  • Consistent with this notion is the real estate has done well relative to stocks and bonds recently, a number of customers reported investing in real estate only recently.

8.6 & 8.7

The question asks about the factors or specifications to be included by developer where the customers/investors are investing their funds.

The factors listed below are most demanding among all:

  • Affordable price range.
  • Availability of loan at low interest rates.
  • Easy payment plan.
  • Clear title of property.
  • Resale value.
  • Connectivity to schools, hospitals, entertainment centers.
  • Peaceful locality
  • Pollution free environment.
  • Quality construction and maintenance.
  • Safety and Security, Water Availability, Power Back-Up, Car Parking, Recreational Facility, Club Membership etc.
  • ROI (Return on Investment)

CHAPTER 9

RECOMMENDATIONS

Recommendations:

  • In reality asset allocation is far more sophisticated process. It varies from person to person and depends on person's financial plan, family background, disposal income, age, and investor's preferences. So before targeting the customers the company should consider the factor.
  • Consider middle- aged person from a middle class background seeking a stable life long job. He cannot be expected to invest in equities and property. His preference would be bank FDs. On the other hand, a market savvy young couple in the corporate sector with high cash surplus would prefer to invest in property. The age factor should be properly defined before targeting.
  • Company should state to its customers that since real estate has beaten all forms of investment in last 4 years and sought to be emerging as a key element in customer's portfolio and by paying an EMI instead of paying taxes and rent, they develop a compulsory saving habit and create a valuable asset for a long period of time.
  • Tremendous demand for residential property such as group housing, residential plots, and townships rather than commercial property. The company should focus on developing the residential property more rather than commercial property.
  • There should be an option for discount for customers from registered dealers of the company.
  • Customers should be approached and asked them to see sample flat without forcing them to buy the flat. The conveniences should be born by the company.

CHAPTER 10

BIBLIOGRAPHY & REFERENCES

BIBLIOGRAPHY:

  • http://www.dreamlandindia.com
  • http://www.ssrn.com
  • http://www.unitechgroup.com
  • http://www.omaxe.com
  • http://www.dlf.in
  • http://www.parsvnath.com

CHAPTER 11

ANNEXURE

Questionnaire

What are the customer's and investors perceptions about investing in Real Estate!

Introduction

Thank you for taking the time to complete the survey. Your feedback is integral to our academic research how customers think about investing in real estate. Specifically we want to uncover why the real estate is such a limited part of most of the customers and organization portfolios.

Your answer will remain strictly confidential and will be used for research purpose only. The survey should take about 5-7 minutes to complete. Thank you once again for your time.

NAME: AGE:

ADDRESS: OCCUPATION:

1. Do you have interest in investing your funds in Real Estate?

[ ] Yes [ ] No

If yes, please answer the following questions.

2. Have you ever invested your funds in Real Estate?

[ ] Yes [ ] No

3. Reasons for investing in Real Estate?

[ ] Short Term Return [ ] Long Term Return

[ ] End Use [ ] Recurring Return

[ ] we do not invest in Real Estate

4. Top risk factors in real estate and return?

[ ] Asset volatility [ ] Lack of reliable valuation data

[ ] Legal and Regularity risk [ ] Risk of poor Profession advice

[ ] Hard to determine the best opportunities [ ] any other

5. Various big players had registered its presence across the country with a healthy mix of projects. In which project you would like to invest your funds.

[ ] Office Spaces [ ] Shopping Malls

[ ] Plots [ ] Multiplexes

[ ] Group Housing [ ] Any Other, Please specify_________

6. For which of the following assets classes are you most comfortable in investing your funds.

Least Comfortable Most Comfortable

1 2

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