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8/12/2019 Realestate August2013 130926012612 Phpapp02

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Source: Ministry of Tourism, Census 2011, Aranca Research

Policy support

Fourth largest sector in terms of FDIinflows

Rapid urbanisation bodes well for thesector

Indias construction market is expected to

be the worlds third largest by 2020

FDI in the sector is estimated to grow toUSD25 billion in 10 years

The number of Indians living in urbanareas will increase from the current 377

million to about 600 million by 2031

India construction market is expected tomore than double to USD649.5 billion by

2020 from USD360 billion in 2010

4

25

FY2012 FY2022

FDI Inflows (USD billion)

CAGR: 20.1%

377

600

2011 2031

Urbanisation (in millions)

CAGR: 2.4%

360.0

649.5

2010 2020

Construction Market

CAGR: 6.1%


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The engineering sector is delicensed;100 per cent FDI is allowed in thesector

Due to policy support, there wascumulative FDI of USD14.0 billion intothe sector over April 2000 February2012, making up 8.6 per cent of totalFDI into the country in that period

Growing demand

Source: BMI (Business Monitor International), Department of Industrial Policy and Promotion, Aranca Research

Notes: FDI - Foreign Direct Investment; 2020E - Estimate for 2020

Growing demand

Demand for residential propertieshas surged due to increasedurbanisation and rising householdincome

Growing economy driving demand

for commercial and retail space

Attractive opportunities

Growing requirements ofspace from sectors such aseducation and healthcare

Growth in tourism providing

opportunities in the hospitalitysector

Policy support

Allocation of USD2.8 billion for ruralhousing for FY14 budget

The government has allowed FDI ofup to 100 per cent in developmentprojects for townships andsettlements

Increasing Investments

FDI in real estate of more thanUSD21.8 billion between April

2000 and November 2012

During April 2012January 2013,the real estate sector accountedfor 8.8 per cent of total FDI inflowsinto India

201011

Marketsize:

USD55.6billion

2020E

Marketsize:

USD180billion

AdvantageIndia


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Fragmented market with few large players

Absorption rate of new residential units across six key cities toincrease at a CAGR of 7 per cent to 251 million sq ft in the nexttwo years

Real estate sector

Commercial space

Retail space

Hospitality space

SEZs

Few players with presence across India

Of a total supply of 607 million sq ft of office space planned in 10

major cities, around 229 million sq ft would come up during 201214

FDI in multi- brand retail to boost demand

Fragmented market with few national players

Of a total planned supply of 81 million sq ft across major cities,around 44 million sq ft would come up during 201214

A competitive market with many players

Over 121,000 hotel rooms in the country as of 2011 The hotel industry grew 13 per cent during 201112

The government has formally approved 577 SEZs*

Majority of the SEZs are in the IT/ ITeS sector

Residential space

Source: Cushman and Wakefield, Knight Frank, CRISIL, Aranca Research

Notes: SEZ - Special Economic Zone. IT - Information Technology, ITeS - Information Technology Enabled Services, * - As of March 2013


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Market size of real estate in India (USD billion)Real estate contributes about 5 per cent to IndiasGDP

The total revenue generated in FY11 stood at USD66.8billion

Source:BMI, Aranca ResearchNote: CAGR - Compounded Annual Growth Rate

50.153.3

55.6

66.8

FY08 FY09 FY10 FY11

CAGR: 10.0%


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Source: Ministry of Housing and Urban Poverty Alleviation,

RBI, CRISIL, Aranca ResearchNote: E - Estimates

Urban-rural housing shortage (million)The urban housing shortage is estimated at 18.8 million in2012

The housing shortage in rural India stood at 47.4 million asof 2012

The housing shortage in urban and rural India will bearound 21.7 and 19.7 million units respectively in 2014

Significant increase in real estate activity in cities likeIndore, Raipur, Ahmadabad, Jaipur and other two-tier cities;this has opened new avenues of growth for the sector

15 18

2519 21 19 22

3430

27 2726

47

20

2001 2005 2007 2008 2010 2012 2014E

Urban Rural


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Scenario

Key drivers

Notable Trends

A localised, fragmented market presentsopportunities for consolidationFew large, pan-India players such as DLF andUnitech

Rapid urbanisationRise in the number of nuclear familiesEasy availability of financeRepatriation of NRIs and HNIs

Demand to grow at a CAGR of 19 per centbetween 2010 and 2014 - 40 per cent of this fromTier 1 citiesAt 3x to 4x, demand-supply gap is highest in thelow and mid income segments

Increase in real estate projects in two-tier andthree-tier cities

Scenario

Key drivers

NotableTrends

Demand projections across top 7 cities (000 units)

350 410

500

600

710

2010 2011 2012 2013 2014

Demand analysis of top 7 cities (000 units) 2010-14

830 800

300

220 180 160 160

Mumbai

NCR

Pune

Bengaluru

Chennai

Kolkata

Hyderabad

Source: Cushman & Wakefield, Aranca ResearchNotes: NRI - Non-resident Indian; HNI - High Net-worth Individual


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Demand projections across top 7 cities (million sq ft)

Source: Cushman & Wakefield, Aranca ResearchNotes: MNC - Multinational Corporation, BFSI - Banking, Financial and Insurance Services;

CBD - Central Business District, SBD - Special Business District, NCR - National Capital Region

Scenario

Key drivers

Notable Trends

Few large developers with a pan-India presencedominate the marketOperating model has shifted from sales to a lease-and-maintenance

Rapid growth in services sectors: IT/ITeS, BFSIand TelecomRising demand from MNCsDemand for office space in Tier 2 cities

Mumbai, NCR and Bengaluru account for 46 percent of total office space demand in IndiaDemand growth projected to be the highest in Tier2 cities such as Kolkata and Chennai during 2010-14Business activity shifting from CBDs to SBDs, Tier1 to Tier 2 cities

Scenario

Key drivers

NotableTrends

3336 39

42 44

2010 2011 2012 2013 2014

Demand analysis of top 7 cities (million sq ft) 2010-14

39 38 36

30 2522

10

Bengaluru

Mumbai

NCR

Chennai

Hyderabad

Pune

Kolkata


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Demand projections across top 7 cities (million sq ft)

Source: Cushman & Wakefield, Aranca Research

Notable Trends

Currently, retail accounts for a small portion of theIndian real estate marketOrganised retailers are few, and the organisedretail space is mostly developed byresidential/office space developers

Booming consumerism in IndiaOrganised retail sector growing 25-30 per centannuallyEntry of MNC retailers

NCR accounts for about 30 per cent of the totalmall supplyAbout 53 per cent of demand for total mall space inIndia expected to come from top seven citiesDemand for retail space on high streets is quitehigh, as well Increase in FDI limit for multi-brandretail will lead to significantly higher demand forretail space

Scenario

Key drivers

Notable Trends

Scenario

Key drivers

NotableTrends

3

4 5

7

10

2010 2011 2012 2013 2014

Demand analysis of top 7 cities (million sq ft) 2010-14

87

6

32 2 2

Bengaluru

Mumbai

NCR

Kolkata

Pune

Hyderabad

Chennai


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Source: Knight Frank India, Aranca ResearchNotes: FSI - Floor Space Index

NCR and Mumbai are by far the biggest hospitalitymarkets in India, followed by Bengaluru,Hyderabad and ChennaiBesides hotels, the hospitality market comprisesserviced apartments and convention centres

A robust domestic tourism industryThe increasingly global nature of Indianbusinesses boosting business travelTax incentives for hotels and higher FSI

Serviced apartments appear particularly attractivewithin the hospitality spaceGovernment initiatives to promote tourism in Tier 2and Tier 3 cities is generating significant demandfor hotels in such cities, especially for budgethotels

Scenario

Key drivers

Notable Trends

Scenario

Key drivers

NotableTrends

Demand projections (no of rooms)

Demand analysis of top 7 cities (no of rooms) 2010-14

32,660 35,50338,789

43,828

2010 2011 2012 2013

10,519 10,519

4,821 3,945 3,506 2,630

1,315

NCR

Mumbai

Hyderabad

Bengaluru

Chennai

Pune

Kolkata


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Growth drivers

Growth in tourism

Epidemologicalchanges

Policy supportEasier financing

Growing economy

Urbanisation


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Real GDP growth rates of major economiesThe Indian economy experienced robust growth in the pastdecade and is expected to be one of the fastest growingeconomies in the coming years

Demand for commercial property is being driven by thecountryseconomic growth

Source: IMF, Aranca Research

0%

2%

4%

6%

8%

10%

12%

2010 2011 2012F 2013F 2014F 2015F 2016F 2017F

China

India

Advanced economies

Emerging and developing economies


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Population breakup of India (million)The increasing urban population is expected to cross 600million by 2031

Urbanisation and growing household income is drivingdemand for residential real estate and growth in the retailsector

Source: Indian Census, Knight Frank,

Mckinsey estimates, Aranca ResearchNote: E - Estimate

220 290

377

600

856 1,040

1,210

1,470

1991 2001 2011 2030E

Urban Population Total Population


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Foreign tourists arriving in India (million)In 2012, 6.6 million foreign tourists are estimated to havearrived in India

The number of foreign tourists arriving in India expanded ata CAGR of 5.3 per cent during 200712

Source: Ministry of Tourism, Aranca Research

4.4 5.15.3 5.2

5.86.3

6.6

2006 2007 2008 2009 2010 2011 2012

CAGR: 5.3%


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Foreign exchange earnings from tourism in India(USD billion)

India is estimated to have earned about USD17.7 billionfrom the tourism sector in 2012

The growing inflows from tourists is expected to provide afillip to the hospitality sector

Source: Ministry of Tourism, Aranca ResearchNote: H1 2012 - Figures up to 2012 (Jan-June )

8.6

10.7 11.7 11.4

14.2

16.6

17.7

2006 2007 2008 2009 2010 2011 2012

CAGR: 10.6%


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FDI in real estate as a per cent of total FDI in IndiaTotal FDI in the real estate sector during April 2000January 2013 stood at around USD22 billion

Currently, real estate and construction accounts for over 22per cent of total FDI, up from less than 4 per cent in 2006

Source: Dept of Industrial Policy & Promotion, Aranca Research

2.7 %

6.3 % 7.1 %

7.4 %

11.1 %

0.7 %

3.0 %

8.9 %

10.3 %11.0 %

2006 2007 2008 2009 2010

Construction activities Real estate


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Source: Cushman & Wakefield, Venture Intelligence, Aranca Research

Major acquisitions in real sector in IndiaThere have been 110 deals in the real estate spacebetween 2001 and the first half of 2011

The biggest disclosed deal was the acquisition of DLFAssetsshares by Caraf Builders for USD696 million

Target AcquirerValue(USD

million)Year

Caraf Builders DLF Assets ltd 696.5 2009

Cowtown LandDvlp Pvt Ltd

Lodha Group 513.6 2011

Compact Disc filmcity

Jeff Morgan 320 2011

Oceanus RealEstate

Warburg Pincus 318 2011

IndiabullsProperties Pvt Ltd

Indiabulls PropertyInvest Trust

223.1 2012

Embassy Property Blackstone 200 2012


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Source: Grant Thornton, Venture Intelligence, Aranca Research

Top 5 PE deals in Indian real estate sector in 2012Of the 43 private equity (PE) investments witnessed in thesector during 2012, 35 had an announced value of USD1.14billion

In terms of volume, residential projects accounted for 65 percent of overall investments in the sector during 2012, whilecommercial projects accounted for 16 per cent

Foreign funds constituted almost 80 per cent of totalinvestments in the sector compared with 50 per cent in 2011

Mumbai continued to remain the hotspot for PEinvestments, followed by Bengaluru and NCR

A shift in trend is evident from the fact that the maximumnumber of PE deals in the year were executed throughSpecial Purpose Vehicles (SPV) as against via both entityand SPV modes in the previous year

Another major trend evident in recent times is the increasingfocus of private PE players on high-end and luxury projects

Investor InvesteeInvestment(USD million)

BlackstoneManyataEmbassy

Business Park

160.0

APG and Group ofinvestors

GodrejProperties

140.8

Government of SingaporeInvestment Corporation(GIC)

GodrejProperties

98.2

Morgan Stanley Real

Estate Investment

Supertech 91.4

Baring Private EquityPartners India

Bangalore-based RMZ Corp

91.4


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For updated information, please visit www.ibef.org

Share of SEZ exports in total exports of India100 per cent FDI permitted in real estate projects withinSpecial Economic Zone (SEZ)

100 per cent FDI permitted for developing townships withinSEZs with residential areas, markets, playgrounds, clubs,recreation centers, etc.

Exports from SEZs registered a yoy growth of 15.39 percent in 201112 and accounted for 30.6 per cent of totalexports during AprilDecember 2012

Industry players, including realtors and property analysts,are rooting for the creation of "special residential zones"(SRZs), along the lines of SEZs

Minimum land requirement has been brought down from1000 hectares to 500 hectares for multi-product SEZ and forsector-specific SEZs to 50 hectares Source: Ministry of Commerce and Industry, Aranca Research

* - April 2012 to December 2012

10% 12%26% 28% 25% 31%

90% 88%74% 72% 75% 69%

FY08 FY09 FY10 FY11 FY12 FY13*

SEZ Exports Other


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For updated information, please visit www.ibef.org

Ease in housingfinances

Additional deduction of up to USD1,841 on interests payable on home loans of up toUSD46,032 announced in the Union Budget 201314

To liberalise scheme of interest subversion of 1 per cent on home loan by including loansof up to USD31,250 for houses that cost up to USD52,080

Housing for

economically weakersections

Allocation of USD1.1 billion for Rural Housing Fund in FY14 budget

Allocation of USD0.37 billion for Urban Housing Fund in FY14 budget to bridge the hugeshortage of housing in certain urban areas

FDI

The government has allowed FDI of up to 100 per cent in development projects fortownships and settlements

FDI of up to 100 per cent is allowed in the hotel and tourism sector through the automaticroute


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Source: Company website, Aranca Research,

Notes: sq. ft. - Square Feet

1940 1950 1980 1990 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Development of 22 Urban

colonies

Developed 3000 acre

DLF City in Gurgaon

Focuses on IT Parks and

next generation malls

Building Indias largest mall

in Gurgaon

Market capitalisation of

USD7.2 billion

Largest real estate companywith revenues of

USD1.4 billion (FY13)

Ventures intograde A office

spaces

Alliance with

HiltonInternational

Commenceddevelopment ofDLF Cyber City,

Gurgaon

FY13USD1.4billion

turnover

Net land bank of348 million sq. feet

FY06USD238million

turnover

Founded byChaudhary

RaghavendraSingh


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Distribution of ongoing projects by area(as of December 2012)

Key Facts

Started its first project in Mumbai in 1991

National real estate developer with presence across12 cities

Differentiated joint development business modelresulted in a debt-equity ratio of less than one

The current potential developable area stands at82.2* million sq ft

Ranked one of Indias top 10 builders byConstruction World Architect & Builder Awards,2011

Consolidated total income of USD173.1 million inFY13

Five new projects with 4.3 mn sqft of saleable areaadded to portfolio in FY13 YTD

Source: Company website, Aranca Research* As on December 31, 2012

81.6%

18.4%

Residential

Commercial


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Profit before taxes (USD million)Revenues (USD million)

56.5

40.3 44.6

99.1

160.6173.1

FY08 FY09 FY10 FY11 FY12 FY13

Source: Company website, Aranca Research

CAGR: 32.8%

28.626.0

18.122.2

32.1

51.8

FY08 FY09 FY10 FY11 FY12 FY13

CAGR: 19.6%


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Real estate demand in education sector(seven top cities)

The entry of major private players in the education sectorhas created vast opportunities for the real estate sector

The top seven cities i.e. Hyderabad, Bengaluru, Mumbai,Delhi, Pune, Chennai and Kolkata are likely to account for70 per cent of total demand for real estate in the educationsector

Source: Cushman and Wakefiled, Aranca Research

14

14.5

15

15.5

16

2010

2011F

2012F

2013F

2014F

Area (million square feet)


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Incremental demand across seven major cities(million sq ft)

NCR is expected to have the highest incremental demandfrom the education sector

The rising young population of India is expected to drive thisspace

Source: Cushman and Wakefiled, Aranca ResearchNotes: NCR - National Capital Region

01

2

3

4NCR

Mumbai

Pune

ChennaiKolkata

Bengaluru

Hyderabad


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Healthcare

The healthcare sector is estimated to grow at an annual rate of 15 per cent to USD100billion by 2015

India is expected to need additional 937,000 beds by 2015 India still needs to add 3 million hospital beds to meet the global average of three for every

1,000 people

Senior citizen housing Emergence of nuclear families and growing urbanisation has given rise to severaltownships 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

Service apartments

Growth in the number of tourists has resulted in demand for service apartments This demand is likely to be on uptrend and presents opportunities for the unorganised

sector

Source: Fitch Ratings, Aranca Research


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Source: Ministry of Tourism, BMI, Aranca Research

Forecasts of foreign tourists arriving in India(million)

Foreign tourist arrivals are expected to increase at a CAGRof 11.7 per cent during 201215

The number of foreign tourists arriving in India by 2015 isanticipated to be over 9.2 million

6.6

7.9

8.5 9.2

2012 2013F 2014F 2015F

CAGR: 11.7%


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Source: BMI, Aranca ResearchNote: F stands for Forecasts

Forecasts of foreign exchange earnings fromtourism in India (USD billion)

Foreign exchange earnings from tourism is expected to riseat a CAGR of 4.1 per cent during 201215

Foreign exchange earned is forecast to cross USD19 billionin 2015

17.7

18.1

19.0

19.9

2012 2013F 2014F 2015F

CAGR: 4.1%


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Source: BMI, Cushman & Wakefield, Aranca Research

Note: F - Forecast

Capacity of hotels in India (000)The number of hotel rooms in India as of 2011 stood at121,000

50,000 new hotel rooms are expected to be added over thenext 45 years across Indiastop six cities

The number of hotel beds in the country is expected toincrease to 443,000 by 2015

98109 121 135

154

176 197210 241

262 295

339

392

443

2009 2010 2011 2012F 2013F 2014F 2015F

Number of hotel rooms Number of hotel beds


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Source: Jones Lang LaSalle, Aranca Research

Office market in Southern India (in million sq ft)The Southern Indian StatesAndhra Pradesh, Tamil Naduand Karnataka have been the major drivers of economicgrowth in India over the last decade. The three statestogether account for about 22 per cent of IndiasGDP

Nearly 45 per cent of Indiasoffice stock is represented bythese states; over 64 per cent of the countrysIT SEZs arehoused in this region

Office stock in the Southern cities is projected* to grow at aCAGR of 8 per cent between 2012 and 2016

0%

4%

8%

12%

16%

20%

0

5

10

15

20

25

2002 2004 2006 2008 2010 2012E 2014F 2016F

Supply Net absorption Vacancy Rate - RHS

Note: * - Projections by Jones Lang LaSalle


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Source: Jones Lang LaSalle, Aranca Research

Net absorption rate in Southern Indiasresidential market isonce again climbing up to pre-crisis peaks; during 1Q12, netabsorption rate stood at 15.1 per cent, compared to 17.8 percent in 1Q08

A growing migrant population due to increasing jobopportunities, together with healthy infrastructuredevelopment, is underpinning demand in the regions

residential real estate market

Residential market in Southern India(number of units)

0%

5%

10%

15%

20%

25%

0

5,000

10,000

15,000

20,000

25,000

1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12

New launches Net absorption Absorption rate - RHS


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BFSI: Banking, Financial Services and Insurance

CAGR: Compound Annual Growth Rate

CBD: Central Business District

FDI: Foreign Direct Investment

FSI: Floor Space Index

HNI: High Net-worth Individual

GOI: Government of India

INR: Indian Rupee

IT/ITeS: Information Technology/Information Technology enabled Services

MNC: Multinational Corporation

NRI: Non Resident Indian


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SBD: Special Business District

SEZ: Special Economic Zone

USD: US Dollar

Wherever applicable, numbers have been rounded off to the nearest whole number


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Year INR equivalent of one US$

2004-05 44.95

2005-06 44.28

2006-07 45.28

2007-08 40.24

2008-09 45.91

2009-10 47.41

2010-11 45.57

2011-12 47.94

2012-13 54.31

Exchange Rates (Fiscal Year)

Year INR equivalent of one US$

2005 45.55

2006 44.34

2007 39.45

2008 49.21

2009 46.76

2010 45.32

2011 45.64

2012 54.69

2013 54.45

Exchange Rates (Calendar Year)

Average for the year


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