Summer Internship Report(A0101909235)

Summer Internship Report ON

Diversification “Diversification

of “TheBricks” from Real Estate Company to Publications sector”

By

Pardeep Kapil A0101909235 MBA Class of 2011 Under the Supervision of  Dr. Shalini Trivedi Senior Lecturer Economics Department

In Partial Fulfillment of Award of Master of Business Administration

AMITY BUSINESS SCHOOL 1

AMITY UNIVERSITY UTTAR PRADESH SECTOR 125, NOIDA - 201303, UTTAR PRADESH, INDIA 2010 AMITY UNIVERSITY UTTAR PRADESH AMITY BUSINESS SCHOOL

DECLARATION

I, Pardeep Kapil student of Masters of Business Administration from Amity Business School, Amity University Uttar Pradesh hereby declare that I have completed Summer  Internship on “Diversification of TheBricks from Real Estate to Publication”

as part of the course requirement. I further declare that the information presented in this project is true and original to the  best of my knowledge.

Date:

Pardeep Kapil Enrol. No: A0101909235

Place: Noida

2

MBA Class of 2011

AMITY UNIVERSITY UTTAR PRADESH SECTOR 125, NOIDA - 201303, UTTAR PRADESH, INDIA 2010 AMITY UNIVERSITY UTTAR PRADESH AMITY BUSINESS SCHOOL

DECLARATION

I, Pardeep Kapil student of Masters of Business Administration from Amity Business School, Amity University Uttar Pradesh hereby declare that I have completed Summer  Internship on “Diversification of TheBricks from Real Estate to Publication”

as part of the course requirement. I further declare that the information presented in this project is true and original to the  best of my knowledge.

Date:

Pardeep Kapil Enrol. No: A0101909235

Place: Noida

2

MBA Class of 2011

3

4

5

ACKNOWLEDGEMENT

I express my sincerest gratitude and thanks to hon’ble, Mr. Amit Singh, for whose kindness I had the precious opportunity of attaining training at ‘TheBricks’. Under his  brilliant guidance I could complete the project being undertaken on the “Diversification of TheBricks from real estate firm to publications” successfully in time. His meticulous attention and invaluable suggestions have helped me in satisfying the problems involved in the work. I would also like to thank the overwhelming support of all the people who gave me the opportunity to learn and gain the knowledge about the various aspects of the industry. I would like to thanks Dr. Shalini Trivedi (Faculty Guide) for their constant enthusiastic encouragement and valuable suggestions without which this project would not been successfully completed.

Pardeep Kapil A0101909235

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Table of Contents CHAPTERS

1.

PAGE NO

Executive summary

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Introduction

8-23

1.1 Company Profile 1.2 An overview of real estate industry 1.3 Diversification Strategy 2. 3.

Literature Review

24-29

Research Methodology

30-36

3.1 Objective of Study 3.2 Research Problems 3.3 Factors and Parameters 3.4 Data Collection 3.5 Research Technique 3.6 Sampling Technique

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4.

Data Analysis

37-52

5.

Conclusion

53

6

Recommendations

54

7.

Limitation s

55

8.

References

56

9.

Annexure-I

57-58

10.

Annexure-II

59-60

Executive Summary The main objective of the project is to study the diversification of “THE BRICKS”, a real estate company to publications with respect to the difficulties and the problems faced by them during the diversification and also to study how they are tackling with all such situations. The report consists of the brief summary of the company and apart from this it clearly mentions the objective of the study and the research methodology used i.e. both the primary as well as the secondary data. The data collection method used is structured non disguised questionnaire in which the types of questions used are open ended, multiple choice and close ended. The report consists of a detailed view of the tasks, which we have been undertaken to analyze the scenario of the real estate market and the buying behavior of the people while purchasing the property. For the accomplishment of the task we had prepared various set of the questionnaire so as to know the consumer buying behavior and also how a real estate firm is diversifying itself to the publications. Besides this, the report consists of the finding that Delhi an NCR region is the major attraction for the real estate investors and has more scope to grow in terms of property market. The project helped me to know more about the realty sector and also about the current scenario of the property market in India. With the help of questionnaire I was able to carry out the detailed analysis of my  project. The details of the methodology used by me for the accomplishment of the project is stated as below:•

AREAS COVERED: - Delhi, Noida, Greater Noida, Ghaziabad and Gurgaon.

•

RESEARCH DESIGN: - Descriptive.

•

SOURCE OF INFORMATION: - Primary and Secondary Data.

•

DATA COLLECTION METHOD: - Structured and non disguised questionnaire.

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•

SAMPLING METHOD: - Convenience sampling.

Chapter 1 Introduction

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1.1 Company Profile 'Bricks' has developed more than 300 properties within Delhi and the NCR region alone and as a leader in the real estate development and consultation domain has set standards in the industry with its Services Since 1983. It is widely recognized as an authority in this niche segment and is seen as a first choice partner in success by most clients. With a presence in Delhi, the NCR, across India and abroad, Bricks leverages its wide network and resource to maximize client benefit. As a company Bricks urges Active Participation, it is a place that nurtures and encourages innovation and maintains an environment of easy approachability. This is a way of ensuring the best practices that have made Bricks what it is today, percolate down to every level right from the top management to staff at the site. Our Phenomenal Success is often attributed to the absolutely transparent way in which we do our business and the stress we lay on clear and open deals with our clients. Every property developed by Bricks is marked by its Distinct Sense of Design Superiority and Maximum Utility-They stand apart from the rest. The drive to excel that underlines every Bricks effort today continues to propel the company towards new and unexplored areas creating greater value for our clients. The company is into

Constructions As a builder Bricks in its long engineering history has undertaken some of the biggest constructions projects in India and abroad. With ample acquired skills and hands on experience in construction of hotels, residential and commercial complexes, hospitality

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environments and work spaces, it is ideally equipped to rise up to any challenge in this domain.

Renovations Renovating an existing property can be a tricky task because it is not merely complex but also involves a certain human element. Understanding the client’s final picture of the  property and the significance from the existing property both from the engineering stance and the aesthetic stance is where the sky lies. And people at Bricks know just how to rule earth. We carefully understand the client’s renovation need and then suggest realistic options before setting about executing it. Supported by seasoned engineers and technicians, most renovations we do end up exactly the way the client had dreamed of.

Architectural As market leaders, Bricks is home to some of the most creative architectural brains in the industry who have proved there mettle in projects that stand out for there architectural excellence and safety. The evolved design sense, advanced architectural soft wares we use and the passion of the people behind it all come together to make the distinct Bricks difference.

Interior Designing As value additions to the already sterling services that we provide, Bricks offers interior  design solutions that convert empty spaces into functional, stylish and dynamic living or  working environment. The spaces are designed in keeping with your taste and the functionality. Safe, sturdy, stylish and maximized utility is how what we want our interiors to be and we work diligently towards it. We provide comprehensive design solutions so that

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you don’t have to look elsewhere from your plumbing to color co-ordination to electrification-we take care of every aspect of your dream design.

1.2 An Overview on Real Estate Industry Introduction All immovable properties including land, structures on it and other natural resources can   be classified as real estate. It is also referred as realty. All types of residential, commercial and industrial properties fall under this domain. Real estate involves the  purchase, sale and development of land, residential and non-residential buildings. The major players in this sector are the realtors, builders, brokers, buyers and sellers. The activities of the real estate sector encompass the h ousing and construction sectors also. With its huge growth potential in the market, real estate sector has emerged as a major field of business in recent time. The real estate sector in India has assumed growing importance with the liberalization of the economy. The consequent increase in the business growth opportunities and migration of the labor force has, in turn, increased the demand for commercial and housing space, especially rental housing. The development and expansion in the real estate sector is influenced by the developments in the retail, hospitality and entertainment (e.g., hotels, resorts, cinema theaters ) industries, economic services (e.g. hospitals, schools ) and information technology (IT) enabled services (like call centers ) etc. and vice versa. The real estate sector is a major employment driver. It is the second largest employer next only to agriculture. All this is due to the chain of backward and forward linkages that the sector has with the other sectors of the economy, especially with the housing and construction sector. About 250 ancillary industries such as cement, steel,  brick, timber, building materials, etc. are totally dependent upon the real estate industry. The real estate sector in India is flourishing rapidly and widely with a growth rate of  about 30 percent each year. The division is like - about 80 percent of the real estate 12

development in India has been in the field of residential housing and the remaining 20  percent includes office, shopping malls, entertainment centers, hotels, multiplexes and hospitals. India’s booming outsourcing business industry and consumption-led growth are contributing significantly to its real estate growth. The outsourcing business houses including call centers, technical consultancy services, and medical transcription units and  programming houses constituted around 10 million square feet of real estate growth in India till 2003. In last couple of years the share of commercial sector in the overall real estate growth has been more prominent. Considering the advantages of significantly lower cost of operations in India, several multinational companies across the globe are expressing their willingness and desire to shift their operations to India. According to a 2003 estimated records, the demand for  office space by the over expanding IT and IT- enabled service sectors in India would be around 66 million square feet, in the next five years. These multinational companies have realized the fact that in order to expand and flourish their business, the skilled Indian work force can be of great use to them. So they need to provide the Indian professionals with all the facilities of modern life starting from housing to entertainment, so that they can give their best in the work place and at the same time be happy with their standard of  living. This trend has set off the development of world class entertainment centers and  business centers, across the country, thereby bringing a radical change in the lives of  urban population in India. The growing demand of sky scrapers in all the metropolitan cities across the country has changed the image Indian skyline. There is an estimated requirement of 80 million housing units over the next 15 years and 2000 sq. ft. of office space over the next five years. For the purpose of increasing the investment required to  plug the aforementioned supply deficits, the government, has allowed the Foreign Direct Investment (FDI) up to 100% in the specified real estate projects including townships,  built-up infrastructure and construction development projects. In December 2007, The Security and Exchange Board of India (SEBI), which is the domestic stock market regulator has issued the draft regulations clearing the way for introduction of Real Estate Investment Trusts in India. This beneficiary step taken by the government is expected to favorably serve the booming real estate market, by functioning as an alternative source for satisfying the capital needs of the sector. 13

The relatively crucial development potential of real estate industry, coupled by the encouraging and favorable FDI regulations and increasing focus from the private equity sector has created substantial investment and significant growth opportunities for the real estate companies. As this springing up realty sector is getting on into a stable and sustainable economic sector, three key trends, which are likely to shape its future, are emerging: a) Increased focus on execution risks  b) Increased investments in mixed-use development projects with a view to extract the maximum synergic benefit c) Syndication among real estate developers on execution of “big- ticket” development  projects, i.e., shift from competition to partnership.

The sustainability of growth in the real estate sector is due to its strong and intensive demand by various other sectors like: i) Rapid expansion of IT and IT-enabled services and also the business outsourcing industry including both the knowledge process outsourcing and the clinical testing outsourcing. ii) Extensive development and acceptance of shopping malls as “one stop destination” for the consumers. iii) Growing popularity of the special economic zones as preferred destinations for both the manufacturing as well as service industries.

Government Initiatives The introduction of many progressive reform measures by the government to unlock the  potential of the sector and also to meet increasing demand level has provided a better  exposure and also helped this sector to emerge as a full fledged grown up player among all the other sectors in the market. The government has announced a stimulus package 14

coupled with the Reserve Bank of India’s move has allowed banks to provide special treatment to the real estate sector, which is likely to impact the real estate in a more   positive way. RBI has decided to extend exceptional concessional treatment to the commercial real estate which was restructured on 30th June 2009. •

100% FDI is allowed in the realty projects through automatic routes.

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In case of integrated townships, the minimum area which could be developed has  brought down to 25 acres from 100 acres.

•

Urban land (Ceiling and Regulation) Act, 1976 (ULCRA) repealed by increasingly large number of states.

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For the wholly- owned subsidiaries and joint ventures, the minimum capital investment stands at US $10 million and US $5 million, respectively.

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Minimum lock-in period of three year is there for the full repatriation of the original investment.

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For the single brand retail outlets and for the cash-and-carry through the automatic route, 51% and 100% of the FDI is allowed respectively.

For the better development of the realty sector, government has provided sops to the real estate sector as stated in the 2009-10 budgets. The developers of housing  projects (units of 1000-1500 sq. ft.) have been granted a tax holiday on profits from projects initiated in the financial year 2007-08. Such project must be completed before March 1, 2012.

Along with this, the Finance minister allocated US $ 207 million to grant a 1% interest subsidy on home loans up to US $ 20,691, provided, the cost of the home should not be more than US $ 41,382. This subsidy is expected to provide a  better and a further boost and hike to the housing sector. 15

With the boom in the property market spreading in all directions, the real estate sector is touching new heights of success. However, this growth in the realty sector is also due to the various policies adopted by the government to facilitate investments mainly in the economic and industrial sectors. Also the new stand adopted by the Indian government regarding the foreign direct investment (FDI) policies has been encouraged and appreciated by increasingly large amount of countries to invest in Indian Real Estate and in Indian Properties.

India preempted USA as the second-most favored destination for FDI in the world. With the changing trends in the current Indian investment scenario, India is able to attract 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 2004-05, making India one of the most prominent player among the dominant host countries for the FDI in Asia and the Pacific (APAC).

FDI in Real Estate on The High Growth Path

Foreign direct investments (FDI) in Indian real estate market are currently on the high growth path. Study on future of real estate investments in India is brought out by The Associated Chambers Of Commerce and Industry of India (ASSOCHAM) says real estate market is growing at the rate of 30 %p.a. According to the industry expert’s view, FDI’s share in domestic real estate market is up to 10% by March 2007 and has touched about 26% level from 16% of fiscal 2005-06. This is of great importance for the global real estate players in the Indian real estate market and increasing demand of the office space  particularly in the IT and BPO sectors. 16

The forecast of ASSOCHAM’s Study on the Future of the Real Estate Investment in India was estimated to be about US $ 60 billion future market size of real estate  business in India, the share of foreign investments will be within the range of US $25-28 billion for the year 2010 .The overseas investment is also having larger  space in Indian SEZs and the widely increasing numbers of the shopping malls is naturally fatting their share in the real estate market. In 2003-04, India received a total amount of about US $ 2.70 billion FDI inflow, out of this about 4.5% was committed to the real estate sector. In 2004-05, this data had increased up to US $ 3.75 billion FDI inflow, of which the real estate share was about US $ 10.6%. However, for the year 2005-06, the estimated FDI inflow was found to be US $ 5.46 billion, out of which around 16% was contributed to the real estate sector. The study further projects that in 2006-07, the FDI inflow had touched US $ 8 billion in which the real estate contribution was about 26.5%. And for the upcoming years the prediction for the FDI inflow is estimated to be increasing and the real estate market share will also fatten by this.

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. Everybody is eyeing on the Indian property market for a wide variety of reasons: •

Real estate sector in India is witnessing tremendous boom. It’s ever growing economy is on a continuous rise with 8.1% increase witnessed in the last financial year. The smashing growth in the economy has increased the purchasing power of  the people and creates demand for the real estate sector.

•

Every year approximately 2 million or more new graduates are produced from the various Indian Universities, thereby creating demand for about 100 million sq. ft. of the office and industrial space.

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Presence of large number of reputed companies will attract more companies to initiate their operational bases in India thus creating more demand for corporate space.

•

Huge amount of dividend is yielded by the real estate investments in India. Around 70% of the foreign investors are making profits and other 12% are  breaking even.

•

Apart from IT, ITES and Business Process Outsourcing (BPO), India has shown its expertise in other sectors also, like, auto-components, chemicals, apparels,  pharmaceuticals and jewellery where it can match the best in the world. This kind of positive attitude of India is surely going to attract more and more foreign investors in the nearby future.

The concession provided by the Indian government in the FDI rules has invited more foreign investors and real estate in India seems to be one of the most lucrative grounds at  present. The revised investor’s friendly policies have proved to be quite economic and  productive for the investors, apart from this have allowed foreigners to own properties, and dropped the minimum size for housing estates built with foreign capital to 25 acres (10 hectares) from 100 acres (40 hectares). With these relaxing and changed policies of  the investment, the overseas firms can now put up the commercial buildings as long as the projects surpass 50, 000 sq. mt. (538,200 sq. ft.) of floor space.

Opportunities for Investors in Indian Real Estate In the recent time, India has become a potential goldmine for investors all over the world. With the flourishing and expanding economy and liberalized government policies, investors from all over the globe are choosing India as their business destination. As Indian real estate rules the economic vibes of the country, the most important beneficiary of the recent boom in this sector is the investors. Driven by the positive growth in the real estate scenario and the Government of India’s decision to allow 100% foreign direct investment (FDI) under the ‘automatic rule’ in the construction and development there 18

has been a significant rise in the number of Indian as well as foreign investors in the realty sector. Developers like DLF, Ansal, Omaxe, Ambuja, Unitech, Vatika and Sahara Infrastructure are among a few that have initiated large scale real estate developments in the residential sector catering to all segments of the society. Real estate sector is much more professionally managed with a number of big players including both developers and corporate, entering into the business. The real estate market is not the monopolistic market, as there are more and more players entering into this development game. In the residential sector, with the increase of disposable incomes and easy availability of  home loans, most builders tries to woo the investors with the lucrative features and the latest inclusions of premium luxury apartments and condominiums fitted with the most modern accessories in home luxury. Apart from the residential segment, the commercial venture includes office spaces, sprawling malls, multiplexes and retail outlets. As per the past reports, around 200 or  more new malls with a combined retail space of about Rs.2.5crore/ sq. ft. and an estimated investment of around Rs. 12.5 crore are expected for the upcoming year.

Future of Real Estate Market in India One question that arises in everybody’s mind is that whether the property prices in India will fall or not in the nearby future? The answer to such question will eventually decide whether to invest in the real estate of India now or rather wait for the property prices to fall. According to the real estate experts and the investment Gurus, “the Indian real estate sector will definitely going to have a smashing rise in the nearby future.” Thus people are more interested in investing in the real estate of India. According to the market experts, the Indian real estate sector has a tremendous potential and have a bright future in the upcoming years.

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With the relaxed FDI norms for the Indian real estate market and a tremendous boom in this sector, has made the property investment in India to be at a safer side. This is also supported by the fact that the Indian Government has liberalized its foreign direct policies to attract higher foreign investment. It’s not at all true that there is a sudden rise in the property prices. It could be witnessed for the last couple of years that the prices of the property in India whether it is residential or commercial has continued to rise. For example, some of the better developed cities like  Noida and Gurgaon, property prices have increased up to five times within a few years. It’s not the case that only these cities are experiencing an appreciation in the real estate  prices, property prices have been continuously raising across all parts and sectors of the country. It may be the case that the appreciation in the price hikes in other parts of the country would not be that much. According to a recent survey, India stands fourth among the top four Asian destinations for the foreign direct investment. India being the largest democracy with excellent democratic governance and transparent property laws attracts more and more  people to invest in the Indian realty market. Looking to the above facts, it can be concluded that as far as the Indian realty sector is concerned, it is going only in one direction, that is, upward. And this current scenario will lead more and more investors to invest in the Indian real estate market.

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1.3 Diversification Strategy Diversification may be defined as the process in which a company or a firm tries to get into different lines of business from its current business operation. Basically diversification strategies are opted for expanding firm’s operations by adding markets,  products, services, or stages of production to the existing business. The main purpose of  diversification is to allow a company or a firm to get into a new line of business which is totally different from the current or existing business operation. Basically diversification may be defined as a form of growth strategy. The main aim of these growth strategies are to have a significant increase in the performance objectives usually sales or market shares, which are compared beyond the past levels of   performance. Different organizations follow different kinds of growth strategies to attain their goals. Many organizations go for more than one type of growth strategy. One of the  primary reasons for such is that many of the investors and executives are of the view that, “bigger is better”. Growth in the sales is often used as a primary measure to calculate the 21

 performance level. Even the profit level increases or decreases but if the growth curves of  sales is going upward, this satisfies many people. This assumption has often led to  believe that if sales increases, profit will eventually follow it. If a firm is following a well planned and well designed strategy according to their  goals and aims, it is beneficial for everyone associated with it. Rewards are there if the firm is pursuing the growth strategy. Based on the sales, managers are provided with commission. Higher the growth level of sales, higher the amount of commission received.

Basically there are two types of diversification. These are:i) Concentric Diversification ii) Conglomerate Diversification

i) Concentric Diversification: - This type of diversification occurs when the new

venture of the firm is strategically related to the existing business operations. In such type of diversification the firm adds somehow related products or markets to the current line of business. The main aim of such type of diversification is to achieve a strategic fit. Through the strategic fit, an organization is able to achieve synergy. In essence, synergy is defined as the ability of two or more parts of the organization to achieve greater total effectiveness together than that achieved by the effort of the independent parts. Synergy can be attained by combining the firms with complementary marketing, financial, operating and management efforts. For e.g.,

Financial synergy can be achieved by

combining the firm having the stronger financial resources but limited growth opportunity with that of the firm having lesser financial resources but maximum growth opportunity.

ii) Conglomerate Diversification: - In such kind of diversification, there is no

linkage between the old and the new businesses, i.e., both are unrelated to each other. 22

When a firm tries to get into a new venture which is completely different from the current one, it is defined as a conglomerate diversification. In this type of diversification, synergy can be achieved through the application of management expertise or financial resources,  but the main function of this diversification is the improved profitability of the acquiring firm. One of the foremost reasons for pursuing the conglomerate diversification is that opportunities in a firm’s current line of business are limited. So as to find an attractive investment opportunity, the firm is required to consider the other types of business alternatives. The other reason for following a conglomerate diversification is to increase firm’s growth rate. Growth in sales attracts more and more people to invest in the company. Apart from this growth may also increase the power and prestige of the firm’s executive. This type of diversification is effective if the new area has growth opportunities greater  than those available in the existing business line. The biggest disadvantage of the conglomerate diversification is the increase in the administrative problems associated with operating unrelated business. Managers having different background face many problems in operating the task and unable to work  together effectively and efficiently. Competition between the strategic business units for  resources may entail shifting resources from one division to another. Such a move may create rivalry and administrative problems between the units.

•

On the basis of direction, diversification may be classified as:i) Vertical Integration ii) Horizontal Integration

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i) Vertical Integration: - Vertical integration occurs when firms undertake

operations at different stages of production. This type of diversification can be divided asa) Backward Diversification  b) Forward Diversification The steps that the product goes through in being transformed from raw material to the finished good in the possession of the customer constitute various stages of   production. Suppose the firm decides to diversify at the steps closer to the sources of raw materials in the process of production, and then such a diversification can be called as  backward vertical diversification. E.g. AVON ‘S primary line of business has been the selling of cosmetics from door-todoor. AVON followed the backward form of vertical diversification by entering into the  production of some of its products. Similarly, if the firm decided to diversify when the product is about to manufacture or  when the firm moves closer to its customers in terms of the production stage, then the diversification is known as forward vertical diversification. E.g. LEVI STRAUSS & CO., traditionally deals in the manufacturing of clothes, has diversified forward by opening up new retail stores to market its own products rather than  producing them and then selling to the other firms to retail.

ii) Horizontal Integration: - It occurs when the firm enters into the new business

either related or unrelated. It may be at the same stage of production as its current operations. E.g. AVON’S move to market jewel through its door-to –door sales force involved marketing new products through existing channels of distribution. An alternative source of marketing opted by AVON for its products are selling them through mail order and through retail shops. 24

Chapter 2 Review of literature

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Article 1: ASSOCHAM’s report: reality check on real estates

The forecast of ASSOCHAM’s Study on the Future of the Real Estate Investment in India was estimated to be about US $ 60 billion future market size of real estate business in India, the share of foreign investments will be within the range of US $25-28 billion for the year 2010 Source:, http://www.assocham.org/arb/real_estates_reality_check.php

Article 2: India for Property Investment

It is not without reason that more and more domestic as well as international investors are considering India for property investment. Real estate studies India shows that India has the right environment that offers maximum benefits to the investors. India is the largest democracy with exemplary democratic governance and institutions, has strong and transparent legal and accounting system and most of all has legal protection for  intellectual property rights. Fundamentals of the Indian economy also have become 26

strong and sustainable. All these factors together make India the hotspot for investment in every sector. According to an UNCTAD (United Nations Conference on Trade and Development) report, India is among the top four Asian destinations for foreign direct investment.

Invest in a profitable business in any sector - raw materials, power supply, fuel, tourism or commercial ventures. Property investments in India include everything from lands, land services, commercial real estate to residential property. Invest in commercial land, agricultural land, land for schools, hospitals or resorts, land for ho uses, shopping malls and more. Select your spot from the large geographical expanse that is India. Settle for  India’s commercial capital Mumbai, or other metros such as Chennai, Kolkata or  Bangalore or smaller cities such as Indore, Jaipur, A hmedabad or Coimbatore. Make revenue from tourism by investing in hotels, guesthouses or resorts in Kochi or Goa. The  possibilities are many!

It makes sense to consider India for property investment, if you want to make your   business or any other venture profitable. No other country offers you all the ingredients in the right measure to make any venture profitable and successful. With a growing middle class, India offers the ideal market for making great profits, in any venture. The higher   buying power of the average Indian translates to the success of shopping malls, tourism and product sales, be it the smaller consumer goods or bigger items such as cars.

As an investor, however, you need to have all the facts straight before investing. And Realty Plus may be the knowledge powerhouse you may be looking for. Read Realty Plus to know the best spots in India for property investment. Realty Plus is India's first real estate monthly magazine packed with hundred pages of in-depth reports, surveys, analyses and expert views on a variety of real estate issues. Learn everything about  properties in India for sale, buying, selling, renting and leasing out. Find also latest hot  property in India, which you can buy at amazing prices.

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Property investments in India attract investors from every corner of the globe. But when it comes to investing, knowledge is power. And, only Realty Plus gives you the knowledge and confidence to make the right investment decisions in India. Source:

http://www.realtyplusmag.com/content1.html

Article 3 Real Estate Studies in India

Indian real estate companies have picked up really fast in the last few years. As per  recent Indian Real Estate research, the average growth rate returns is 30%, which tells the tale of this booming industry. Latest Real estate research India has estimated a revenue increase to $102 billion from $14 billion in the next decade. As per real estate studies India, there has been an increase in the mass consumption, the trends are changing the consumption pattern of luxury goods and corporate houses with great  purchasing power are also entering into the retail field of real estate. The RPG Spencer has the largest presence with Music World, Food World, Health & Glow in south India. Other major players such as Tatas, Birlas and Reliance are also following the same line, explaining the rapidly increasing shopping malls and other  retail projects. The need for fun, entertainment and leisure has given rise to various Indian real estate sites like hotels and multiplexes. As per Real Estate Research India, the country has not only intellectual workforce, but also cost-effective labour, the factor which has welcomed hundreds of telecomm, IT and ITES offices to build up in the country. According to Real estate studies in India, the country is extremely experienced when it comes to raising and lending capital as compared to other countries. Foreign investors,  brands and realtors have been attracted to invest in the country, keeping in mind its liberalization policies, free market and open policies of the FDI. The Bombay Stock  Exchange has recently experienced a rising boom, encouraging global players such as Morgan Stanley to invest $68 million in Indian real estate market. As a conclusion of  28

real estate studies in India, we can see that as far as real estate is concerned, the bar of  investment has significantly raised. India has immense scope for building infrastructure, in addition to increase investment returns by 50%. The commercial real estate yield in India is larger than any other country, thus making it one of the most  popular destinations for real estate investment.

As per real estate studies in India, the lucrative market of real estate in the country are also attracting interest of the NRI’s to buy properties for themselves or for their family members or to just make an investment and reap benefits. The great demand has convinced builders to come up with apartments and townships especially designed for   NRI’s, endowed with five star luxuries and all the modern amenities. For more information on real estate studies in India, log on to www.realtyplusmag.com. Source:

http://www.realtyplusmag.com/content6.html

International Research Journal of Finance and Economics ISSN 1450-2887 Issue 24 (2009) © EuroJournals Publishing, Inc. 2009 http://www.eurojournals.com/finance.htm

Prospects & Problems of Real Estate in India Vandna Singh

 Head-MBA Department  Seth Jai Prakash Mukand Lal Institute of Engineering &Technology (JMIT)  Radaur, Yamunanagar  Komal

 Lecturer, Institute of Technology & Management (ITM), Gurgaon

E-mail: [email protected]

Abstract

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The present paper entitled as “Prospects and Problems of Real Estate in India” is an attempt to reveal the issues concerned with the real estate investment sector in India. This paper is concerned with the real estate investment and the emerging trends in the real estate market. The paper has been divided into three sections. First section talks about the real estate sector, its type and the features of the real estate market. Apart from this it deals with the fundamental factors affecting the real value like demand, supply, property, restrictions to use and site characteristics. Second part explains the causes for the present real estate boom. It includes the foreign direct investment in the realty sector and the exposure of the banks to this sector. It also deals with the price variations in the realty sector with reference to per capita income and the GDP. Lastly, third part deals in the constraints in real estate investment which includes various laws to be considered, inflation rate and the barriers in the GDP growth.

ANALYSIS OF THE RECENT TRENDS AND THE EFFECT OF THE FINANCIAL CRUNCH ON CONSTRUCTION INDUSTRY Raveesh Agarwal Faculty, Institute of Management Education, Ghaziabad

Ajay Pandey Management Trainee, Institute of Management Education, Ghaziabad Article No: 178 ISSN 0974 – 9497 Year: August 2009 Volume 3, Issue ¾

Abstract This paper deals with the challenges faced by the present generation due to the current crises in the world’s financial system. The current global economic recession is neither  the first nor the last to rear its head in the economy. An economic and the financial crises  provide a golden opportunity to the country and its private sectors to review its policies and programme that are aimed at improving the productivity and the competitiveness. In this fast and changing global scenario, each and every company is required to constantly improve and renew their programmes and policies so as they are well prepared to face any financial and economic crisis. This paper pays more emphasis towards the recent 30

trends and effects of financial crunches on the real estate sector. Besides this, it also indicates how the ongoing financial crisis is affecting the construction industry by reducing its growth, trade and investment flow, employment, remittances. Apart from all these, the findings reveals that although the financial crunches has a deep impact on the real estate sector but still it has a great opportunity to overcome all such kind of issues by analyzing and reviewing its reforms and issues and by providing its best service to its customers at a lower price than its competitors. Finally, the paper also suggested various issues that a private sector can follow in order to cope up with such situations and conditions and by which they can take advantage in their nearby future.

Chapter 3 Research Methodology

31

3.1 Objectives The broad objective of the project is to study the diversification of a real estate company to the publications. i) To study how a real estate company is diversifying itself to the publications. - potential advertisers ii) To study general buying behavior of people’s while purchasing a property and  perception of peoples about Delhi and cities of NCR.

Research is a growing need in any organization of the present world. It is helpful in identifying the consumer needs and wants so as to launch a product or to bring about improvements in the existing products. This is done to gain competitive edge over others. Success of the research depends upon the methodology adopted. The study was based on descriptive research.

•

The research methodology deals with the 1. Research problem

32

2. Data collection 3. Research technique 4. Sampling methods 5.

Analysis and Interpretation of research work.

3.2 Research Problem: •

•

TheBricks is diversifying its business from Real Estate to Publication and the company wants to know about the current status of the business of advertisements in real Estate sector. The company wants to know about the general buying behavior of people’s while  purchasing a property.

3.3 Factors and Parameters The questionnaires as shown in annexure 1 and annexure 2 were prepared in order to get all the information needed by the company to diversify its business as well as to know the general buying behavior of the people and perception of the people about various cities while buying a property In questionnaire designed to know general buying behavior of people and their perception about Delhi and cities of NCR parameters taken were

33

1.

Location - This parameter includes all the location factors such as proximity to central business district, to schools, to hospitals, existence of huge shopp ing malls, etc.

2.

Business Opportunities  – These parameters helps in analyzing the perception that people have about the job opportunities and business prospects available in different cities included in NCR.

3.

Quality of Living  – This parameter helps in analyzing what people think about the style of living prevalent in the 5 cities included in NCR.

4.

Law and Order  – This parameter helps in analyzing what people about the safety and security situation prevalent in the 5 cities chosen for the survey.

5.

Infrastructural Development  – This parameter helps in analyzing how respondents rate 5 different cities chosen for the survey, on the basis of conditions of road and highways, availability of public transport, etc.

External Factors 1. Price Range 2. Connectivity to Public transport 3. Proximity to workplace 4. Availability of loan 5. Easy Payment Plans 6. Rate of Interest 7. Resale Value 8. Clear title of property 9. Proximity to School 10. Proximity to Hospitals 11. Proximity to Entertainment Centers

3.4 DATA COLLECTION:

Data is collected from two sources: 1. Primary Data 2. Secondary Data

PRIMARY METHOD

1) Face to Face interview 2) Questionnaires 3) Telephonic Survey SECONDARY METHOD

1) Magazines on Property 2) Internet sites on Property 3) Internet websites of popular property developers of India 1. Primary Data :

34

a.

Primary Data is collected by using Depth Interviews with the property dealers, Builders and peoples living in societies in D elhi and NCR region.

 b. This helped in finding out the factors for the Research problem. c. Structured Questionnaire is used as the major tool for primary data collection.

2. Secondary Data:

o

The Secondary data consists of information that already exists somewhere having been collected for another purpose and researcher begins the research work by first going through the secondary data.

o

Here Secondary data is collected from various property journals and  property sites like www.makaan.com and www.9acres.com.

3.5 Research Technique

Basically techniques for marketing research can be broadly classified into two  parts: •

Qualitative techniques – comprise of providing insights & understanding of   problem setting.

•

Quantitative techniques – seeks to quantify the data & typically applies some form of statistical analysis.

Also research can be divided as: 1. Exploratory Research 2. Conclusive Research

35

o

Descriptive

o

Causal

The research design used here are: Descriptive research (quantitative research) – 

The major objective of this research is to describe various market characteristics & consumer behaviour. It is conducted for following reasons: •

To estimate the percentage of units in a specified population exhibiting a certain  behaviour.

•

To determine the perception of product category.

The instrument used for descriptive research was questionnaires & technique used was door to door survey.

3.6 Sampling Technique Population: i) Property dealers and builders in Delhi and NCR region ii) Peoples living in Delhi and NCR region. Sample Size i) 213(For Property Dealers and Builders) Area Covered

Deepali Peetampura Rohini Dwarika Kohat eclave

ii) 70(For Customers)

36

Area Covered

Kalindi Apartments(Delhi) Anand Apartments(Ghaziabad) Sai Apartments(Noida)

The Sampling Technique that is used in the project: •

Convenience Sampling

Convenience Sampling:

o

Convenience sampling attempts to obtain a sample of convenient elements.

o

It is a non probability sampling technique.

Chapter 4

37

Data Analysis

4.1 Analysis of dealer’s data:-

How do you maintain your sales?

Frequency Valid

Valid Percent

Depends upon walk-in

35

16.4

16.4

16.4

Advertisements

75

35.2

35.2

51.6

Contact Based

103

48.4

48.4

100.0

213 Table 1

100.0

100.0

Total

38

Percent

Cumulative Percent

Fig. 1 Inference : Answering the question “How do you maintain you sales?” about 48.36  percent of the respondents answered that they maintain their sales on contact bases whereas about 35.21 percent of the respondents said that they advertise about their  company and the properties available with them for sale. Now the company can target these 35.21 percent of the respondents for advertisement in their magazine. Which medium will you prefer for advertisement?

Frequency Valid

Valid Percent

Cumulative Percent

Magazine

58

27.2

27.2

27.2

Newspaper

93

43.7

43.7

70.9

Internet

47

22.1

22.1

93.0

TV/Radio

15

7.0

7.0

100.0

100.0

100.0

Total

39

Percent

213 Table 2

Fig.2 Inference: The Company is diversifying itself into magazine publication whereas the advertisements in magazine will also be available on company’s website so in this way a real estate agent or builder can advertise his property through magazine as well as through internet.

The answer to the question “which medium do you prefer for advertisement?” 27.23  percent of the total respondent said that they prefer magazine whereas 22.07 percent of  the people said that they prefer internet for advertisement. So about 50 percent of the total respondents said that they will go for magazine or internet for the advertisement of their   property.  Now ‘The Bricks’ is going to advertise through magazine as well as through internet so the company can target these 50 percent of the respondents for advertisements.

Table 3 40

Do you want to expand your business from current state?

Frequency Valid

Percent

Valid Percent

Cumulative Percent

yes

189

88.7

88.7

88.7

no

24

11.3

11.3

100.0

213

100.0

100.0

Total

Fig. 3

Inference: On asking the question weather the property dealers and builders wants to expand their business from current level, 88.73 percent of the people responded that they want to expand their business from current level whereas only 11.27 percent of the  people said that they are satisfied with their current level of business and they don’t want to further expand their business.

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Table 4

Do you want to expand your business from current state * which medium will you prefer for expansion of  your business? Cross tabulation

which medium will you prefer for  expansion of your business Relation Openin ship g new Advertise Collaborat  building offices ments ions do

Yes

you

% within do you want to expand your business from current state

want to

% within which medium will you prefer for  expansion of your business

expa nd

% of Total

your   busi

Count

No

ness from curre nt state

Total

Total

16

55

107

11

189

8.5%

29.1%

56.6%

5.8%

100.0%

100.0% 100.0%

99.1%

100.0%

99.5%

8.4%

28.9%

56.3%

5.8%

99.5%

0

0

1

0

1

% within do you want to expand your business from current state

.0%

.0%

100.0%

.0%

100.0%

% within which medium will you prefer for  expansion of your business

.0%

.0%

.9%

.0%

.5%

% of Total

.0%

.0%

.5%

.0%

.5%

16

55

108

11

190

8.4%

28.9%

56.8%

5.8%

100.0%

100.0% 100.0%

100.0%

100.0%

100.0%

56.8%

5.8%

100.0%

Count

Count % within do you want to expand your business from current state % within which medium will you prefer for  expansion of your business % of Total 42

8.4%

28.9%

Inference: The result for the crosstab between “Do you want to expand you business?”

and “which medium will you prefer for expansion of your business?” shows that out of  88.73 percent people who wants to expand their business from current level 56.3 percent of the respondents wants to go for advertisement for the expansion of their business. It shows that there is a good number of property dealers and builders who wants to advertise their business through advertisements. Table 5 How do you see real estate sector in terms of opportunities?

Frequency Valid

43

very good

Percent

Valid Percent

Cumulative Percent

115

54.0

54.0

54.0

good

64

30.0

30.0

84.0

average

26

12.2

12.2

96.2

Poor

8

3.8

3.8

100.0

Total

213

100.0

100.0

Fig. 4

Inference: Asking the question “How do you see current status of Real Estate Sector in terms of opportunities?” 53.99 percent of the total respondents said that the sector is really good and there are lots of opportunities of growth in this sector. 30.05 percent of  the people responded the sector as good, 12.21 percent of the respondents said that its is average whereas only 3.76 percent of the respondents considers it as poor in terms of  opportunities, which shows that the sector is on a boom in terms of opportunities

44

Table 6

On given a chance will you go for collaboration with other firms

Frequency Valid

Percent

Cumulative Percent

yes

44

20.7

20.7

20.7

no

169

79.3

79.3

100.0

Total

213

100.0

100.0

Fig. 5

45

Valid Percent

Inference: The response to the question “on given chance will you go for collaboration with other firms” nearly80 percent of the total respondents answered as NO where as only 19.72 percent of the total respondents answered that YES that can work in collaboration with other firms. The Bar charts above shows the result shows that the Real Estate sector is a highly unorganized sector where different property dealers and builders do not want to work in collaboration with each other.

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4.2 Analysis of Consumer feedback 

Table 7 What was the factor that affects the most on purchasing decision i n this complex?

Frequency Valid

Brand name of developer

Percent

Valid Percent

Cumulative Percent

3

4.3

4.3

4.3

Location

27

38.6

38.6

42.9

Affordability

40

57.1

57.1

100.0

Total

70

100.0

100.0

Fig. 6

Inference : While purchasing a property the factor that effects buying decision of a customer the most is “Affordability” 56.34 percent of the total respondent said that they look for affordability firs while purchasing a property. After affordability the second most prominent factor is location of the property, about 38.03 percent of total respondents responded in favor of Location.

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Table 8 Descriptive Statistics

N

Mean Std. Deviation

Upto What extent price Range affects your  choice of society(Rate on a scale of 1-7)

70 6.1000

.68419

Upto What extent connectivity to public transport affects your choice of society(Rate on a scale of 1-7)

70 2.2000

.80937

Upto What extent proximity to workplace affects your choice of society(Rate on a scale of 1-7)

70 2.9429

.84931

Upto What extent Availability of loan affects your choice of society(Rate on a scale of 1-7)

70 5.1857

.70798

Upto What extent Resale value affects your  choice of society(Rate on a scale of 1-7)

70 2.3286

.63065

Upto What extent Clear title of property Affects your choice of society(Rate on a scale of 1-7)

70 4.1429

.85611

Upto What extent infrastructure Affects your choice of society(Rate on a scale of 17)

70 5.6714

.92817

Valid N (list wise)

70

Inference: On asking to rate the factors affecting the choice of a society to purchase the  property Price Range were the first and foremost factor that effects the decision. On a scale of 1-7 the mean for this factor comes out to be 6.1 which is very high. This shows that how price range effects the decision while purchasing a property in a society. The second factor that affects the most is Infrastructure of the property and the ambience of the society. Very close to Infrastructure factor is Availability of loan for the purchase of that   property. This shows that people to a large extent believes in availing loan for the  purchase of their property and hence the factor “Availability of loan affects the buying decision of a person to large extent.

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Perception of people about Delhi and cities of NCR.

Fig. 7 Inference: Here opinion of the people about Delhi and various cities of NCR were taken on various attributes like Location, Business Opportunities, Law and Order, Quality of  Living, Infrastructural Development and the following inference can be drawn.

Location: Delhi was considered to be the best place to live as far as location is considered. Whereas giving it a competition next to Delhi is Noida. It is chosen as the  best location to live in entire NCR. Noida is located close to the Capital of India and is also very closely located to Indirapuram, another upcoming city. Business Opportunities: As far as Business opportunities are concern Delhi is again at number but according to the opinion of the respondents all the NCR cities including Ghaziabad is giving it a good competition. So in terms of Business Opportunities both Delhi as well as the cities of NCR has scored well. Quality of living: Delhi is again the first choice of the people on the parameter of Quality of Living following it is Noida. Law and Order: considering law and order as the parameter Delhi and all the taken cities in NCR region lies almost at the same level with Delhi leading again and Noda just following the lead. Infrastructural Development: Delhi is again top in the list as far as Infrastructural development is concerned whereas on second place in the list is greater Noida.

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Conclusion 

There is a good portion of property dealers and builders who wants to advertise themselves or property available with them either through magazine or through internet, company can target these property dealers and builders as their potential advertisers.



The small companies in major don’t want to work in collaboration.



The major external factors which people consider while purchasing the property are price, availability of loan and proximity to workplace.



In Peoples perception Delhi is considered to be the best place on all the  parameters and Noida is the second choice.

50

Recommendations 

Apart from the real estate agents and dealers, the company should approach architects and interior designers also.



The company has limited its research to the Delhi and NCR region only, it should go for other regions also.



A follow up should be there for the dealers to whom the contact in first meeting is not successful.

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Limitations 

Study was restricted to some parts of Delhi and NCR region only.



Study was restricted to property dealers and builders only whereas we c ould consider architects and Interior designers also.



Analyzing the perception of people about different cities of NCR was little difficult as some respondents didn’t have much knowledge about the other cities in NCR 



Denial of many Property Dealers and Builders to provide the information about the properties they deal in.

52

References    www.makaan.com



  www.magicbricks.com



  www.ansalspropertiesltd.com



  www.eros-group.com



  www.eldecogroup.com



  www.omaxe.com



  www.parsvnath.com



  www.ashianahousing.com



  www.gurgaonproperties.net



  www.realestatencr.com



  www.gurgaonrealestate.com



  www.estatedeveloper.com



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Annexure 1 Questionnaire AMITY BUSINESS SCHOOL

Respondent’s Name______________________________________    Name of Apartment______________________________________________  Self owned property

Rental

If rental, have you invested in any other housing complex Yes

No

What is the most important factor that affect your buying decision while purchasing  property in this apartment? Brand name of developer

Location

Attractive and frequent ads

Affordability

To what extent do the following factors influence your choice of a housing complex(Rate on a scale of 1-7)? Not at all

very large extent

Price range

_____/_____/_____/_____/______/_____/______ 

Connectivity to Public transport

_____/_____/_____/_____/______/_____/______ 

Proximity to Workplace

_____/_____/_____/_____/______/_____/______ 

Availability of loan

_____/_____/_____/_____/______/_____/______ 

54

Resale value

_____/_____/_____/_____/______/_____/______ 

Clear title of Property

_____/_____/_____/_____/______/_____/______  1 2 3 4 5 6 7

Give preference among the cities on the bases of given parameters

Gurgaon Location

Business Hub

Quality of Living

Law and Order 

Infrastructural Development

55

Noida

Greater Noida

Ghaziabad

Delhi

Annexure 2 Questionnaire AMITY BUSINESS SCHOOL Q. 1. Which category you best fit in: 1 Financer

2 Agent / dealer 

3 Registered company

4 Builder /constructor  Civil contractor 

Are you in Construction? Yes

No

If Yes, Then site details  _______________________________________________________  _______________________________________________________  _______________________________________________________  Q.2 How do you manage your business/projects? 1 Category of personnel employed Based

2 Contact

3 Advertisement

4 Area specific Contacts

Q.3 Do you want to expand your Coverage area of business? Yes

No

If yes, how:1 Relationship building 3 Advertisements 56

2

2 Opening new Offices 4 Channel Partners