Indian Institute of Tourism and Travel Management

(An organization of Ministry of Tourism, Govt. of India)

ASSIGNMENT
ON
BUSINESS PLAN (REAL ESTATE)

Submitted to: Submitted by:

Mr. Yashwant ATUL KUMAR TIWARI (Roll no : 17)
AMIT KR. SINGHANIA ( Roll no : 05)
IITTM, GWALIOR
rd
Services –III (A)
Real Estate & Construction
OVERVIEW

SIZE

 Real Estate and Construction is a US$16-billion (2006) industry in India

 There has been a rapid growth in the industry in the past few years
 Real estate share in total FDI increased from 10% in 2004-05 to over 25% in 2006-07
(estimated at over US$5 billion)
 High-demand growth has led to prices doubling over 3 years in many cities

STRUCTURE

 Fragmented sector with relatively few organised players of scale

o Large corporations beginning to show active interest
o Margins are higher in India (>20%) as compared to the developed markets (5-6%)
 Active participation of institutional finance in real estate
o Real estate venture funds permitted: Prominent Indian corporates like Tata Group,
ICICI Bank, SBI and HDFC have promoted real estate venture funds
o Real estate Investment Trusts (REITs) expected to be set up shortly.
o Several Private Equity firms have specific funds for real estate investments. Real
estate fast displacing IT/ITeS as the top private equity investment sector in India
 Various foreign real estate and finance companies such as GE Commercial Finance,
Tishman Speyer, Ascendas and Farallon Capital, Goldman Sachs, Lehman Brothers etc.
have entered the Indian market

POLICY

 100% FDI is allowed in real estate development subject to minimum scale norms of
either:
o 25 acres in case of serviced plots or integrated townships; or
o 50,000 sq. mtrs. of built-up area for construction development projects
 Initial investment is locked-in for a 3 year period
Top Players in the Real Estate & Construction industry
Company Sales
Turnover
(2007, US$
million)
Unitech 784
DLF Ltd. 590
HDIL 286
Ansal
190
Properties
Source: Capitaline, Business Press

OPPORTUNITY

Commercial and office complexes Over 25 million new housing units

mushrooming in major Indian metros required in 7 years
 

OUTLOOK

 The real estate market is projected to grow to US$60 billion by 2010 at a CAGR of 40%
 Real estate companies have been successfully tapping the country’s booming capital
markets for funds
o Companies have also raised equity internationally at the AIM in London
 Tier 2 cities (non-metros) likely to experience faster growth in the future
POTENTIAL

 Several factors are expected to contribute to the rapid growth in real estate
o Large demand-supply gap in affordable housing, with demand being fuelled by
tax incentives and a growing middle class with higher savings
o Increasing demand for commercial and office space especially from the rapidly
growing Retail, IT/ITeS and Hospitality sectors
o The recently announced JNNURM expected to provide further impetus
 Investment opportunities exist in almost every segment of the business
o Housing: about 25 million new units expected to be built in 7 years
o Office space for IT/ITES: 150 million sq. ft. across urban India by 2010
o Commercial space for organised retailing: 220 million sq. ft. by 2010
o Hotels and Hospitality: Over 100,000 new rooms in the next 5 years
 Investment opportunity of over US$75 billion in the next 5 years
 Major foreign institutional investors including Morgan Stanley, Goldman Sachs, Merrill
Lynch, AIG, Blackstone and Calpers have invested or are in the process of investing in
Indian real estate

Growth Engine of Economy

Real estate plays a crucial role in the Indian economy. It is the second largest employer after
agriculture and is slated to grow at 30% over the next decade. The Indian real estate market size
is expected to touch $180 billion by 2020.

The housing sector alone contributes to 5-6% of the country’s GDP. Retail, hospitality and
commercial real estate are also growing significantly, providing the much-needed infrastructure
for India’s growing needs. 

According to a study by ICRA, the construction industry ranks 3rd among the 14 major sectors
in terms of direct, indirect and induced effects in all sectors of the economy. A unit increase in
construction expenditure generates five times the income, having a multiplier effect across the
board. With backward and forward linkages to over 250 ancillary industries, the positive effects
of real estate growth spread far and wide. Truly, real estate is a growth engine for India’s
economy.

Role of developers
Real estate developers play a leading role in the industry, bridging the gap between construction
ability and the customer’s need. Developers offer value in terms of design, cost, functionality
and location. They work hard to absorb international trends, analyse the customers’ expectations
and deliver quality realty products based on their experience.

In India, real estate developers fulfill a critical need for infrastructure to serve a growing
economy in areas like housing, office space, retail and entertainment, among others.

Changing face of the developer

Responding to an increasingly well-informed consumer and keeping in mind the globalization of

the Indian business outlook, real estate developers have also shifted gears and accepted fresh
challenges.

The most marked change has been the shift from family owned businesses to professionally
managed ones. Developers, in meeting the growing need for managing multiple projects across
cities, are investing in centralized processes to source material and organize manpower and
hiring qualified professionals in areas like project management, architecture and engineering.

The growing flow of foreign direct investment (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. Customers have also benefited from a
hassle-free accounting system.

The modern real estate developer is keenly informed about market trends, basing his information
on market research and rich experience. Young business leaders, armed with management
degrees and international exposure, have also added value to this positive trend.
Its all about real estate developers.
Filling up the gap between the customers and
builder.
Services will be as good as other competitor.
Individual working as agent without any restriction
Product will be regarding flat, land, resale, office
space and all other properties .
Services will be given to the customer through banks
and builder side by full filling the documentation
part till closing the deals.

Competitors:
Business executives of the bank
Agents, brokers
Real estate agency
To tap the Builders and Banking sector.
Find out the customers and come up with their requirement.
To get in touch with corporates by doing all types of activities.(Promotion,
personal selling)
Expending the contacts from all the four corners.

Strategy:-
Services (Documentation, Presentation, Satisfaction)
Pricing

Set up the Office in a prime location.

Hire people for our business.
Develop a web site for agency.
Documentation part will be access in the
office.
Individual & Management team:-
Executives and management team will be under the
induction and training period for the specific days ,so
that they can come up with the work of the office and
the targets of each and group can be given.
Every one will be evaluted time to time so that every
one can be benefited and be satisfied with culture of
the office.
Every one will be motivated so that they all can feel
comfortable to their process.

Funds will be gain through our work with the

customers, builders & banking.

Funds will be rotate by keeping the view of future

planning and by having good management(leadership,
innovation, office etc)

Fund will reallocate in different ways to each and every

member of the office .like incentives, prizes, gifts will
motivate the ground level executives.
Small office will be driven to a big company in
the future by looking prospective
Many more subsidiary will be open to help
each and every company one to one.
To get a brand image in the name of everyone
and to focus in real estate with full flazed way.
Finally come up with hard work to make a
grand profit maximization.
 CREDAI : The voice of industry The Confederation of Real Estate Developers’
Associations of India (CREDAI) is the apex body for private Real Estate developers in
India. CREDAI represents over 5,000 developers through 20 member associations
across the country.

CREDAI links private real estate developers to the government and customers through
numerous initiatives and activities. CREDAI’s success in bringing the majority of
organised private real estate developers under a single umbrella is a potent force that
promises the rapid development of the realty sector—one that knows itself as a major
driver of India’s economic growth. This is the future growth plan for us.
Bu s in e s s mo d e l & s t r a t e g y
Strength Weakness
Less investment Unrecognised
Low risk. Less contact

Opportunity Threats
Open market Big brokers and agents
Maximum gain Bank executives