A STUDY OF THE REAL ESTATE SECTOR CONTEMPORARY TRENDS

AND GROWTH OPPORTUNITIES

Internship Report submitted to Dayananda Sagar University in partial

fulfillment of the requirements for the award of

Masters of Business Administration

Submitted by

CHETHAN T R
USN:CMS16MBA006

under the guidance of

Prof. Dr. Anupama Ghoshal

School of Commerce & Management Studies

Dayananda Sagar University

Bangalore

Dayananda Sagar University

BANGALORE

2017

1
 DECLARATION

I hereby declare that the internship entitled A Study Of The

Real Estate Sector Contemporary Trends and Growth
Opportunities submitted to Dayananda Sagar University in
partial fulfillment of the requirements for the award of MBA,
is a record of independent internship work carried out by me
under the supervision and guidance of Dr.Anupama Ghoshal
Asst.Professor, School of Commerce & Management Studies,
Dayananda Sagar University, Bangalore. This work has not
formed the basis for the award of any Degree and has not
been submitted previously to any other College/University.

BANGALORE .

.October, 2017 Chethan T R

Prof. Dr. Anupama Ghoshal

Asst.Professor

SCMS-DSU

Bangalore
2
 CERTIFICATE

I certify that this internship entitled A Study Of The Real

Estate Sector Contemporary Trends and Growth
Opportunities submitted to Dayananda Sagar University in
partial fulfillment of the requirements for the award of MBA,
is a record of independent internship work carried out by
Mr.Chetan T.R under my supervision and guidance. This
work has not formed the basis for the award of any Degree
and has not been submitted previously to any other
College/University.

BANGALORE Prof. Dr.Anupama Ghoshal

.October, 2017 Summer Internship Guide

3
 ACKNOWLEDGEMENT

I would like to express my gratitude to everyone who

supported me throughout the course of this internship. I am
thankful to my faculty guide Dr.Anupama Ghoshal for her
support and guidance. I would like to also like to thank our
Dean, Dr.Punith Cariappa for inspiring me to fulfil the
internship work and providing me the support and
infrastructure for completing my project. I take this
opportunity to also acknowledge and thank everyone in SKS
Land Developers without whose support and help I would
not have been able to conduct this research as part of my
Internship work.

Chethan T R

4
 EXECUTIVE SUMMARY
The Indian economy experienced robust growth in the past decade and is
expected to be one of the fastest growing economies in the coming years. The
Indian economy is forecasted to grow at 7.2 per cent in FY18 and by 2022 the
real estate and construction sector in India is expected to generate 75 million
jobs and emerge as the largest employer in the country. The real estate sector of
Bangalore is expected to provide positive returns. The areas of the city like
Kanakapura Road, Mysore Road, the Central Business Districts and
Thanisandra-Hennur road belt are expected to be promising in their investment
potential. Co-working spaces are popping up across Indian metros as well as
Tier-II cities, providing start-ups with flexible working options at affordable rents.
Affordable housing in India is is also expected to provide growth impetus to the
sector. Around one crore houses are expected to be built in rural India by 2019,
and this vital segment will now see cheaper sources of finance - including
external commercial borrowings (ECBs). The real estate sector is expected to
have large capital infusions from global and domestic investors. Real estate
contribution to Indias GDP is estimated to increase to about 13 per cent by 2028.
The market size of real estate in India is expected to increase at a CAGR of 15.2
per cent during FY2008 2028E and is estimated to be worth US$ 853 billion by
2028. Increasing share of real estate in the GDP would be supported by
increasing industrial activity, improving income level and urbanization. Mumbai
and Bengaluru have been rated as the top real investment destinations in Asia.
The government has launched around ten key policies for real estate sector in
2016, which are the Real Estate Regulatory Act (RERA), the Benami
Transactions Act, efforts to boost affordable housing construction, interest
subsidy to home buyers and modifications in arbitration norms etc. SKS Land
developers may diversify into commercial and domestic real estate requirements
space and cater to the customized requirements for the sector suitably
depending on the specific requirements. Quality control and execution of projects
on a timely basis will be an important determinant factor for the superior success
of the company.

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 Table of Contents

Page No.

List of Figures 7

Chapter I Introduction 8 12

Chapter II Company Profile 13 16

Chapter III Internship Methodology 17 - 18

Chapter IV Data Analysis 19 25

Chapter V Findings 26 27

Chapter VI Conclusions & Recommendations 28 - 29

Bibliography

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 LIST OF FIGURES

Sl. No. Graph No. Title of graph Page No.

1 4.1 FDI Inflows into the Real Estate Sector: 18

2 4.2 Indians living in urban areas 18

3 4.3 The real estate market potential 19

4 4.2 Real Estate Market size in India 23

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 Chapter I

Introduction

The real estate sector is one of the most globally recognised sectors. In India,
real estate is the second largest employer after agriculture and is slated to grow
at 30 per cent over the next decade. The real estate sector comprises four sub
sectors - housing, retail, hospitality, and commercial. The growth of this sector is
well complemented by the growth of the corporate environment and the demand
for office space as well as urban and semi-urban accommodations. The
construction industry ranks third among fourteen major sectors in terms of direct,
indirect and induced effects in all sectors of the economy (https://www.ibef.org). It
is also expected that this sector will incur more non-resident Indian (NRI)
investments in both the short term and the long term. Bengaluru is expected to
be the most favoured property investment destination for non resident Indians.
After Bengaluru, the next favored destinations are expected to be Ahmedabad,
Pune, Chennai, Goa, Delhi and Dehradun.

Market Size

The Indian real estate market is expected to touch US$ 180 billion by 2020. The
housing sector alone contributes 5-6 per cent to the country's Gross Domestic
Product (GDP). In the period FY2008-2020, the market size of this sector is
expected to increase at a Compound Annual Growth Rate (CAGR) of 11.2 per
cent. Retail, hospitality and commercial real estate are also growing significantly,
providing the much-needed infrastructure for India's growing needs. The private
equity investments in real estate increased 26 per cent to a nine-year high of
nearly Rs 40,000 crore (US$ 6.01 billion) in 2016 (https://www.ibef.org). Sectors
such as IT and ITeS, retail, consulting and e-commerce have registered high
demand for office space in recent times. The office space absorption in 2016
across the top eight cities amounted to 34 million square feet (msf) with
Bengaluru recording the highest net absorption during the year. Information
Technology and Business Process Management sector led the total leasing table

8
with 52 per cent of total space uptake in 2016. Mumbai is the best city in India for
commercial real estate investment, with returns of 12-19 per cent likely in the
next five years, followed by Bengaluru and Delhi-National Capital Region (NCR).

Investments

The Indian real estate sector has witnessed high growth in recent times with the
rise in demand for office as well as residential spaces. The real estate sector in
India is expected to attract investments worth US$ 7 billion in 2017, which will
rise further to US$ 10 billion by 2020. India has been ranked fourth in developing
Asia for FDI inflows as per the World Investment Report 2016 by the United
Nations Conference for Trade and Development. According to data released by
Department of Industrial Policy and Promotion (DIPP), the construction
development sector in India has received Foreign Direct Investment (FDI) equity
inflows to the tune of US$ 24.29 billion in the period April 2000-March 2017.

Some of the major investments in this sector are from International Finance
Corporation (IFC) which is likely to invest US$ 200 million in Housing
Development Finance Corporation Ltd (HDFC) through five-year non-convertible
debentures (NCDs) or masala bonds which will be used by HDFC to provide
loans for affordable housing projects across India. The next company is
Ascendas-Singbridge Group. It is a property development company based in
Singapore, which has purchased six warehouses from Arshiya Limited for a
consideration of INR 534 crore (US$ 83 million), of which INR 434 crore (US$ 67
million) would be paid on signing the definitive agreement, and the balance over
four years on the attainment of certain targets. Godrej Properties Ltd has tied up
with Taj Palaces Resorts Safaris for developing its mixed-use project called 'The
Trees', spread across 9.2 acres, that will include a 150-room Taj Hotel, a luxury
residential property called 'Godrej Origins' as well as a high-street retail court.
Motilal Oswal Real Estate, a real estate-focused investment subsidiary of Motilal
Oswal Private Equity Advisors Pvt Ltd, is planning to invest Rs 800 crore (US$
124 million) in FY 2017-18 in mid-income residential projects as well as
commercial office projects. Xander, a Private Equity Group, has signed two major

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property deals, which includes a special economic zone worth Rs 2,290 crore
(US$ 354.95 million) in Chennai and a 2 million sq ft mall in Chandigarh for Rs
700 crore (US$ 108.5 million). Canada Pension Plan Investment Board (CPPIB),
the Canadian pension asset manager, has entered into a non-binding agreement
with Island Star Mall Developers (ISML), a subsidiary of Phoenix Mills, to acquire
up to 49 per cent in ISML in the next three years. Altico Capital, a non-banking
finance company (NBFC), has teamed up with American private equity firm KKR
& Co LP to invest Rs 435 crore (US$ 65.25 million) in a 66-acre residential
township, being developed by SARE Homes in Gurgaon. Gurgaon-based
property search aggregator Square Yards Consulting Pvt Ltd has raised US$ 12
million from the private equity arm of Reliance Group for strengthening its team
and expanding its presence to more than 25 countries. Rising Straits Capital
plans to raise US$ 100 million to capitalise its real estate-focused non-banking
financial company (NBFC), Rising Straits Finance Co. Pvt. Ltd. A joint venture
between Dutch asset manager APG Asset Management and real estate asset
platform Virtuous Retail, has acquired a portfolio of three shopping malls for US$
300 million, and has committed an additional US$ 150 million as equity capital to
expand the portfolio. Macquarie Infrastructure and Real Assets (MIRA) and Tata
Housing Development Co. Ltd have entered into a 70:30 partnership to invest Rs
1,400 crore (US$ 210 million) and Rs 600 crore (US$ 90 million) respectively in
high-end residential property projects, starting with four major cities of Mumbai,
NCR, Bengaluru and Pune. Qatar Holdings LLC, a subsidiary of Qatar
Investment Authority, has committed to invest US$ 250 million in the affordable
housing fund of Arthveda Fund Management Pvt Ltd. Piramal Realty, the real
estate division of Piramal Group, plans to invest Rs 1,800 crore (US$ 270.14
million) in an eight-acre project named Piramal Revanta in Mulund, Mumbai.
Ivanhoe Cambridge, the real estate arm of Canadas second largest pension
fund manager Caisse de dpt et placement du Qubec (CDPQ), plans to enter
into a Joint Venture (JV) agreement with Piramal Fund Management to set up a
US$ 250 million venture, which will provide equity capital to developers of
residential projects in the country. Some of the initiatives undertaken by the

10
Indian Government are very important for the sector. The Government of India
along with the governments of the respective states has taken several initiatives
to encourage the development in the sector. The Smart City Project, where there
is a plan to build 100 smart cities, is a prime opportunity for the real estate
companies. The Delhi Government has declared 89 out of 95 villages in Delhi as
urban areas which will ease the operationalising of the land pooling policy,
thereby giving a boost to affordable housing in Delhi. The Reserve Bank of India
(RBI) has proposed to allow banks to invest in real estate investment trusts
(REITs) and infrastructure investment trusts (InvITs) which is expected to benefit
both real estate and banking sector in diversifying investor base and investment
avenues respectively. The Ministry of Housing and Urban Poverty Alleviation has
sanctioned the construction of 84,460 more affordable houses for urban poor in
five states, namely West Bengal, Jharkhand, Punjab, Kerala and Manipur under
the Pradhan Mantri Awas Yojana (Urban) scheme with a total investment of Rs
3,073 crore (US$ 460 million). The Securities and Exchange Board of India
(SEBI) has given its approval for the Real Estate Investment Trust (REIT)
platform which will help in allowing all kinds of investors to invest in the Indian
real estate market. It would create an opportunity worth Rs 1.25 trillion (US$ ) in
the Indian market over the years. Responding to an increasingly well-informed
consumer base and, bearing in mind the aspect of globalisation, Indian real
estate developers have shifted gears and accepted fresh challenges. The most
marked change has been the shift from family owned businesses to that of
professionally managed ones. Real estate developers, in meeting the growing
need for managing multiple projects across cities, are also investing in
centralised processes to source material and organise manpower and hiring
qualified professionals in areas like project management, architecture and
engineering. The growing flow of FDI into Indian real estate is encouraging
increased transparency. Developers, in order to attract funding, have revamped
their accounting and management systems to meet due diligence standards.

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Objectives of the Study.

The main objective of the study is to find out about the different trends in the real
estate sector that will help SKS Land Developers. Some of the objectives of the
study are :

To outline the trends of the real estate sector.

To highlight the strategies adopted by different companies in the sector.

To identify the different growth drivers of the sector.

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 Chapter II

Company Profile

SKS Land Developers is committed to offering gated communities with state-of-

the-art amenities in an eco-friendly environment that would satisfy & exceed all of
its client's needs. Our mission is to serve the society by quality and service.
Having vision of elevating the Company to compete with its International
counterparts. SKS has a well-trained team in each sphere of its business
operations, be it engineering, architecture, layout development, construction,
marketing, sales, accounts, front office and back office operations. In the process
of growth and change, the company has created a brand name that stands for
reliability, high professional standards and long-lasting customer relationships.
We at SKS intently believe that living in SKS gives our customers the complete
satisfaction of living life king size and to its fullest. SKS is the other name for
ultimate comfort, luxury, lifestyle and true value for money and we are proud of
this unique identity we have carved for ourselves. The company is located in No
#323, 1st floor, service road, 7th block, 2nd stage, Near vasan eye care hospital

Nagarbhavi, Bangalore 560072. The mission of the company is To serve the

society by quality and service. The Vision of the company is about Elevating the
company to compete with international counterparts. The Founder is Sri Kumar
and Managing Director is Sri Kumar. Some of the Main projects of the company
are Standard Paradise in Kengeri; SK farms in Doddaballapur; SKS Residency in
Bangalore and Standard residential flats in Bangalore.

Nature of Business: service provider.

Land developers

Construction service

Architecture consulting

The Quest for a home, the dream treasured in ones mind is in all respect mans

13
Ultimate goal. A space of his very own, to share his joys as well as sorrows, build
his dreams and rejoice in his achievements. Spaces for his children to grow and
nurture their dreams and in the process, cherish that special feeling of bonding.
Lending a helping hand in transforming this dream to reality is SKS LAND
DEVOLOPERS. SKS Land developers (formerly known as United Constructions
in the field of construction for the past two decades) a Company registered under
Companies Act,1956 The company is incorporated with the main objects of
property development, construction of apartments, commercial complexes &
residential housing projects in response to the growing need for quality housing
and commercial space in the metropolitan city of Bangalore. Since then the
Group has grown to be one of the leading Real Estate Developers of the country,
serving the needs of the discerning clientele. Karnataka. It is one of the fastest
growing metropolitan cities in India today. The population of the city at 4.8 million
in 1991 is expected to exceed 7 million by the year 2011. With less than 0.5%
area of the state, it is home to nearly 10.5% of its population. Bangalore is Indias
fifth largest and its population has almost doubled over past 10 years. The
growth is attributable to economic reforms in India. The citys growing popularity
as a software destination and its ability to attract individuals to live and work has
been commendable. Historically the Government of India has taken the initiative
to establish institution like MAC, HMT, ITC and ISRO etc., in Bangalore. This
thrust has helped the city develop to a hub of information technology, electronics,
precision engineering, aerospace readymade textiles and electrical machinery. In
fact, 33 of the top 200 software companies in the country are headquartered in
Bangalore. It remains the IT hub of India, with over 70% of the revenues of the
software industry being generated here.

Today the Indian and Multinational companies, who are in IT related business
occupy close to a million square feet of space and have paved the way for a lot
more peer groups to absorb several million square feet of space. On the whole,
the upswing in commercial (office and retail) and residential space transaction
continues. As predicted by many international real estate consultants like Brooke
International, CB Richard, Jones Lang LaSalle, Cushman Wakefield, most

14
facilities which are ready/nearing completion have been leased by end-users.
Bangalore has emerged as one of Asias fastest growing cities, with a growth
rate of 76% between 1981 to 1991. During 1995-96 the market values had risen
by more than100% in all segments. With increased urban development activity,
the city had achieved the distinction of the highest growth rate in the county at
more than 40%.

SKS Land Developers Corporate Branch contains 7 major departments. The

name of those departments & activities are given below:

A. Reception Desk

B. Marketing & Sales Department

C. Administration & Business Department

D. Documentation & Recovery

E. Finance & Accounts Department

F. Procurement Department

G. Human Resources Management (HRM)

A. Reception Desk:

The main task at the reception desk is maintaining the inward & outward register,
office management, & telephone receiving. They also maintain a daily recall file
which is known as the Central Recall System.

B. Marketing & Sales Department:

SKS Land Developers has a very big marketing department. A strong sales team
& aggressive marketing campaign have bought tremendous sales growth along
with a handsome market share. SKS Land Developers becomes a market leader
in the real estate industry.

C. Administration & Business Department:

15
The administrative department of SKS Land Developers always looks after the
whole organization. They always run the organization smoothly. If any employee
does any fault then the department takes action against the employee. The
company reward is given to the employee who has done well.

D. Finance & Accounts Department

a) Using SKS Land Developers software.

b) Final checking of Bank reconciliation.

c) Checking of Bank Debtor order voucher.

d) Checking the company financial accounts.

e) Give clearance for surrender.

f) Give clearance for registration.

E. Procurement Department

a) Buying Land.

b) Registration of the sold land.

F. Documentation

a) If any customer fails to pay the due in schedule time then this department
arranges time extension latter & gives the time extension approval.

b) For business the client is not able to take deed in this case the officers of this
department communicate with the client to take the dead by this time officers
make a rough copy of the deed.

c) If any change his/her payment schedule or change the plot then this
department arranges all procedure.

d) This department also makes note sheet for registration when a client pay all
the dues with registration fees.

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 Chapter III

Internship Methodology

Statement of the problem:

The aim of the study was to understand the important factors that were affecting
the developments across the real estate sector that could help the company to
develop suitable strategies for the future.

Scope of the study:

The study will access secondary data sources pertaining to the real estate sector
for preparing the report on the industry trends and to highlighting the market
overview, trends, growth drivers and the opportunities in the sector.

Objectives of the study:

The study aims is to find out about the different trends in the real estate sector
that will help SKS Land Developers. Some of the objectives of the study are:

To outline the contemporary trends of the real estate sector.

To highlight the strategies adopted by different companies in the real

estate sector.

To identify the different growth drivers of the real estate sector.

Methodology:
The study will be based on secondary data sources from the real estate sector
and the sources of the same will provided in the bibliography. Sectoral reports
will be accessed and trends and strategies will be analysed that will help SKS
Land Developers get a holistic view of the current trends of the real estate sector
and understand the road ahead and the opportunities that are available for the

17
company. The study will provide inputs to the company to develop their strategic
and tactical marketing plan for the future.

Data collection:
Secondary data will be collected and analysed for the purpose of the study.
Relevant real estate sector websites, news and industry industry reports will be
refrerred for preparing the report on the contemporary real estate sector trends,
the industry growth drivers and to outline the opportunities available for real
estate companies in the sector of the country.

Limitations of the study:

The study will be limited to the secondary data sources available and accessed
for preparing the report. Future research work may focus on collecting primary
data from key stakeholders and incorporating their perceptions and views about
the real estate sector developments. Data may also be collected to understand
the perceptions and preferences of owners and prospective owners of
commercial and residential properties across the country.

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 Chapter IV

Data Analysis

The real estate sector is reported to be the fourth largest sector in terms of FDI
inflows. FDI in the sector stood at US$ 24.54 billion from April 2000 to June
2017. The FDI in the sector is estimated to grow to US$ 25 billion by FY22 as
can be seen from Figure 4.1.

Figure 4.1: FDI Inflows into the Real Estate Sector:

Source: www.ibef.org

The number of Indians living in urban areas is expected to increase from 434
million in 2015 to about 600 million by 2031 as can be seen from Figure 4.2. By
2028, Indias real estate market size is expected to increase by around seven
times.

Figure 4.2: Indians living in urban areas.

Source: www.ibef.org

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Figure 4.3 indicates the expectation that by the year 2028, Indias real estate
market size is expected to be around US$ 853 billion. India is reportedly ranked
fourth among the developing Asian nations for FDI inflows as per the World
Investment Report 2016 by the United Nations Conference for Trade and
Development. India's Tier-I cities moved up to the thirty-sixth rank in JLL's 2016
bi-annual Global Real Estate Transparency Index. The catalyzing factors were
improvements in structural reforms and the more liberalized foreign direct
investment (FDI) regime. Increased transparency is likely to encourage higher
investments into real estate markets. Increased consolidation and transparency -
and the launch of REITs (Real Estate Investment Trusts) is also expected to
boost investments and developments in the sector (www.ibef.org).

Figure 4.3: The real estate market potential

Source: www.ibef.org

The Securities and Exchange Board of India (SEBI) approved the Real Estate
Investment Trust (REIT) platform that is expected to encourage all kinds of
investors to invest in the Indian real estate market. REIT is expected to develop
an opportunity worth INR 1.25 trillion (US$) in the Indian market over the next
couple of years. Most of the family owned businesses in the sector have
migrated to operate as professionally managed units. To meet the growing
demands for managing multiple projects across different cities, real estate
companies are realizing the importance of investing in centralised processes to
source material and organise manpower and hiring qualified professionals in

20
areas like project management, architecture and engineering (www.ibef.org). The
growing flow of FDI into Indian real estate is encouraging increased
transparency. Developers, in order to attract funding, have revamped their
accounting and management systems to meet due diligence standards.
Throughout 2016, the number of new residential project launches was lower than
units sold. The Real Estate Regulation & Development Act (RERA) is expected
to inculcate transparency and accountability requirements among real estate
developers which will help in increasing consumer confidence towards the sector.
Consumer activism, which has already been making news in recent times, will
increase in distressed ongoing projects. Along with RERA the Indian real estate
sector expects positive impact from the Goods and Services Tax (GST) and the
Benami Property Act to have a major impact on how developers operate their
businesses. Currently, the residential property market is dominated by end-users
- speculative investors are making a beeline out of real estate as an investment
category. Residential demand is expected to pick up only towards the end of
2017 (https://economictimes.indiatimes.com).The commercial office space sector
will get a strong shot in the arm with REITs. Real Estate Investment Trusts will
have an important and long-term impact on developers and present them with
the choice of either 'corporatising' or risking take-over by their bigger and better-
organised counterparts. The pressure from funding agencies will simply be too
strong to ignore. Corporate developers like Tata, Godrej, L&T, Bharti, Mahindra,
etc., will acquire more projects, and corporate houses like Birla are gearing up for
their maiden innings in real estate development. Institutional funding will
increase. RERA, GST and the Union budget have all altered the playing field and
raised plenty of questions in the minds of prospective homebuyers. The
Bangalore real estate market, however, seems to have experienced very little
impact from the legal and financial changes announced recently. There are
various reasons for the cushioning of the impact. The Bangalore real estate
market has been relatively stable compared to other cities in India because it is
largely driven by end users. The city attracts investments from large technology
companies and this, combined with the growing number of startups, translates to

21
a high number of white-collar workers migrating to the city in search of promising
careers. The good weather and lower vulnerability to earthquakes are additional
positives for individuals and families considering buying homes in Bangalore. In
terms of the realty spread, one can choose from, Bangalore offers the entire
range, from ultra-luxurious homes for high net worth individuals (HNIs) to
affordable homes with great connectivity. Affordable housing units, especially,
have been seeing a rise in demand and consumption. Office spaces vs. housing
demand. In Bangalore, the absorption of office space has also been driving
residential realty sales. The fact that the economy is doing well is contributing to
the equilibrium between volumes of office spaces and homes supplied. As per an
analysis by Track2Realty, office space absorption rate is at 50 sq ft per
household, which is the healthiest in India. It is reported that the professionalism
demonstrated by property developers in Bangalore is expected to bring more
investments into the city. Thus it is expected that commercial real estate seekers
and residential buyers may buy properties with lesser perceived risk. Launching
of Metro routes is almost always followed by an increase in the property value of
surrounding locations. The same is expected with the Green Line in Bangalore.
The line connects Peenya (industrial hub) to the Central Business District and
South Bangalore. The traffic congestion challenges in the city is expected to
encourage people to prefer investing in homes that are closer to the metro
stations (https://economictimes.indiatimes.com). The four leading property
developers in Bangalore are reported to be Puravankara, Brigade, Prestige and
Sobha. The companies reported an increase in their operational revenues in their
January,2017-March, 2017 vis-a-vis their January,2016-March 2016 (same
quarter of the previous year) as follows:
Brigade 11%

Prestige 5.5%

Sobha 6.2%

Puravankara 17.4%

22
The real estate sector of Bangalore is expected to provide positive returns.
The areas of the city like Kanakapura Road, Mysore Road, the Central
Business Districts and Thanisandra-Hennur road belt are expected to be
promising in their investment potential (http://www.thehindu.com). Co-
working spaces are popping up across Indian metros as well as Tier-II cities,
providing start-ups with flexible working options at affordable rents.
Affordable housing in India is is also expected to provide growth impetus to
the sector. Around one crore houses are expected to be built in rural India by
2019, and this vital segment will now see cheaper sources of finance -
including external commercial borrowings (ECBs). Re-financing of housing
loans by National Housing Banks (NHBs) can give a further boost to the
sector. The new Credit Linked Subsidy Scheme (CLSS) for the mid-income
group with a provision of Rs 1,000 crore in 2017-18 was announced even
before Budget 2017-18. The extension of tenure of loans under the CLSS of
Pradhan Mantri Awas Yojana (PMAY) was increased from 15 to 20 years,
and the Budget also increased allocation to PMAY from Rs 15,000 crore to
Rs 23,000 crore in the rural areas. The qualifying criteria for affordable
housing were also revised to 30 sq. m. and 60 sq. m. on carpet rather than
saleable area in the four main metros and non-metros respectively. This
effectively increases the size of affordable housing market across India.
Moreover, the demonetization of high-value currency notes will cause land
prices to ease in the next few years - especially in far-flung areas around
Indian metros and the Tier-II and Tier-III cities. The government's dream of
Housing for All by 2022 appears a lot more attainable now and can provide
suitable intervention by the real estate sector players along with the Indian
Government.

The first REIT listing is expected within the next few months, and prominent
private equity funds such as Blackstone will likely be the first movers. REITs will
attract institutional and smaller investors alike because of their inherent nature to
provide regular dividends at relatively low risk. Smaller investors are especially
excited at this new and easier investment opportunity. Indian REITs will prefer to

23
invest in commercial space developments - specifically the highest quality or
Grade-A properties -because of the higher rental yields. Around twenty per cent
of an Indian REIT's monies can be invested in development, which is the riskiest
aspect. The remaining 80% of a REIT's assets must be invested in income-
producing property. The REIT potential in India is huge, with around 229 million
sq. ft. of office space currently being REIT-compliant. India's stock of Grade A
commercial assets is reportedly increasing, with REITs enabling the growth. The
factors affecting consolidation are slowing sales and lack of financial prudence among
several developers. FDI in multi brand retail to boost demand. The supply of
retail space stood at 3.4 million sq ft in 2016. The retail segment in the real estate
sector attracted an investment of over $700 million in 2016. The country had 498
approved hotels with 38,462 rooms. As of September 2017, the government has
formally approved 424 SEZs, of which 222 are in operation. Majority of the SEZs
are in the IT/ ITeS sector. Figure 4.4 highlights the real estate market size as
reported by IBEF.

Figure 4.4: Real Estate Market size in India

Source: www.ibef.org

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The overcrowded real estate sector is expected to consolidate. More investors
and developers are expected to enter the sector and larger players are expected
to come in by 2021 and many smaller players likely to exit the sector. Residential
segment contributes ~80 per cent of the real estate sector. Total residential unit
launches in FY17 stood at around108,200 (www.ibef.org).

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 Chapter V

Findings

The real estate sector is expected to have large capital infusions from global and
domestic investors. Real estate contribution to Indias GDP is estimated to
increase to about 13 per cent by 2028. The market size of real estate in India is
expected to increase at a CAGR of 15.2 per cent during FY2008 2028E and is
estimated to be worth US$ 853 billion by 2028. Increasing share of real estate in
the GDP would be supported by increasing industrial activity, improving income
level and urbanization. Mumbai and Bengaluru have been rated as the top real
investment destinations in Asia The government has launched around ten key
policies for real estate sector in 2016, which are the Real Estate Regulatory Act
(RERA), the Benami Transactions Act, efforts to boost affordable housing
construction, interest subsidy to home buyers and modifications in arbitration
norms, service tax exemption, Dividend Distribution Tax (DDT) exemption, the
Goods and Services Tax, Demonetisation and PR for foreign investors.

The urban housing shortage was estimated at 18.78 million in 2015 and is
expected to reach 34.1 million by 2022. Total rural housing shortage in India
stood at 14.8 million as of 2015 and is expected to grow to 48.8 million during XII
plan period (2012-2017). Significant increase in real estate activity in cities like
Indore, Raipur, Ahmedabad, Jaipur and other 2-tier cities; this has opened new
avenues of growth for the sector. Relaxation in the FDI norms for real estate
sector has been done to boost the real estate sector. Governments plan to build
100 smart cities would reduce the migration of people to metro and other
developed cities. In 2017, nearly US$4.2 billion worth of investments are
expected to be invested in Indias real estate sector, as the country is emerging
as the preferred investment destination owing to favourable government
initiatives. In March 2017, the State Bank of India (SBI) and the Confederation of
Real Estate Developers Association of India (CREDAI) signed an MoU for three
years to work towards the development of real estate sector. In April 2017, under

26
the Swachh Bharat Mission, a total investment of US$378.4 million has been
approved to develop 20 towns and cities in Haryana.

The office space absorption in 2016 across the top eight cities amounted to 34
million square feet (msf). Investments in Indias office space sector are expected
to hit peak in 2017. As of September 2017, Indias commercial real estate has
received more than US$ 2 billion in foreign investment. The first real estate
investment trust (REIT) in India is expected to be launched by 2017 end. Office
market has been driven mostly by growth in ITeS/IT,BFSI, consulting and
manufacturing. Moreover, many new companies are planning a foray into Indian
markets due to huge potential and recently relaxed FDI norms. Supply for prime
office space was recorded at 11.9 million sq. ft. for the period 2016. Rental rates
likely to see a gradual upward trend in Bengaluru. Supply will exceed demand
and hence increase vacancies In Hyderabad.

NCR is expected to have the highest incremental demand from the education
sector amidst the period of 2015-19. The rising young population of India is
expected to drive this space. The healthcare market reached US$ 100 billion in
2015. India requires additional 1.1 million beds. India needs to add 2 million
hospital beds to meet the global average of 2.6 for every 1,000 people.
Emergence of nuclear families and growing urbanisation have given rise to
several townships that are developed to take care of the elderly. 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. In 2016, number of foreign tourist arrivals in
India was recorded at 8.8 million. This demand is likely to be on uptrend and
presents opportunities for the unorganised sector. FTAs in India is expected to
reach 15.3 million by 2025, which is expected to lead to an increase in demand
for hotels (www.ibef.org).

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 Chapter VI

Conclusions & Recommendations

Having a diverse portfolio of residential, commercial and township developments.

Companies have projects in various strategic geographic locations in order to
diversify risks. Focus on the growth of lease business. Housing finance
companies and private equity companies have started focusing on affordable
housing. Diversified portfolio. Mergers and acquisition activities would help the
real estate players to serve the market in a better manner. Risk management in
land sourcing remains one priority areas for the real estate sector players.
Superior execution is required for outsourced support functions, focusing on
delivery capability, development of world class infrastructure and rationalising of
costs. The Indian economy experienced robust growth in the past decade and is
expected to be one of the fastest growing economies in the coming years. The
demand for commercial property is being driven by the countrys economic
growth. The Indian economy is forecasted to grow at 7.2 per cent in FY18 and by
2022 the real estate and construction sector in India is expected to generate 75
million jobs and emerge as the largest employer in the country. Thus SKS Land
developers may diversify into commercial and domestic real estate requirements
space and cater to the customized requirements for the sector suitably
depending on the specific requirements. Quality control and execution of projects
on a timely basis will be an important determinant factor for the superior success
of the company.

Since NCR is expected to have the highest incremental demand from the
education sector amidst the period of 2015-19, SKS Land Developers may
initiate market expansion in NCR. The company may also venture into catering to
the companies in the healthcare market as the country is expected to increase
capacity for about a million beds in the healthcare institutions. Expansion of real
estate projects for the senior citizens may also be explored by SKS Land
Developers as the number of nuclear families have increased along with focus of

28
increased urbanisation efforts that have led to the emergence of many townships
that need care for the elderly population. Since a number of senior citizen
housing projects have been planned that is expected to grow significantly in the
future, so the company may strategically plan for tactical execution of real estate
projects for the elderly. SKS Land Developers may also diversify into the
development of service apartments especially for the foreign tourist
requirements. As the number of foreign tourist arrivals in India was more than
eight million and expected to increase so there is immense potential for
participation by real estate sector players as the foreign tourist arrivals are
expected to cross fifteen million by the year 2025 leading to an increased
demand for hotel projects.

Thus SKS Land Developers may diversify into different sectors of the economy
and provide customized real estate developments projects.

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 Bibliography
https://www.ibef.org/industry/real-estate-india.aspx
https://www.indiamart.com/sks-land-developers/aboutus
http://www.thehindu.com/real-estate/the-resurgence-of-the-bengaluru-real-
estate-market/article19336744.ece
http://www.thehindu.com/real-estate/the-resurgence-of-the-bengaluru-real-
estate-market/article19336744.ece
https://economictimes.indiatimes.com/wealth/real-estate/6-major-trends-
in-indian-real-estate-in-2017/articleshow/57406717.cms

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