PROPERTY

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REAL ESTATE
Beyond Indian Horizons
THINK INDIA, THINK TIMES
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Introduction
On a bitterly divided planet, there is still one
subject that gets everyone talking in unison.
From Seattle to Sydney, Dublin to Dubai, people
are obsessed with housing booms that threaten to
burst in bubbles. Londoners still buzz about
Lakshmi Mittal, the Indian steel tycoon who in
April bought a mansion in Kensington Palace
Gardens for 128 million, making it the most
expensive house ever sold. European football
stars bid up the prices on an artificial island
in Dubai before the first building is complete.
Middle-class Thais trade tips on securing space
in one of 50 new Bangkok condo projects.
Americans gossip that in the most glamorous
neighborhoods of southern California, panicked
status-seekers are bidding sight unseen before
the good times end. Rising house prices were
fueled worldwide by the reckless prosperity of
the late '90s, but also by the caution that
followed. Stock prices started to collapse in
2000, and bonds began to slump in 2002, but that
only accelerated the flow of money into real
estate. Families burned by the markets came to
see a house not only as a place to live but as a
way to invest pension moneyeven to shield the
nest egg from the risks of terror attacks. This
idea of real estate as a safe haven is now firmly
embedded in the global culture, says Yale
economist Robert Shiller.
Source Newsweek
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The India Advantage

• Fourth largest economy in the world with GDP of
  US 3.2 trillion by 2005..Goldman Sachs
• National Income in 2003 US 40528
  mn..Statistical Outline of India 2003-04
• Literacy rate 65
• Most forecasts indicate that by 2020 India's
  gross national product will overtake or be on the
  threshold of overtaking European
  economies..According to the report prepared by
  CIA's National Intelligence Council, called
  'Mapping the Global Future ... PTI.com
• India has more companies listed on the stock
  exchange (over 7000) than the rest of the
  Asia-Pacific region.
• Indian economists have said that gains made from
  stock market speculation during periods of boom
  are known to find their way into real estate.
• The Real Estate Index has risen by 13 since the
  previous quarter and more than 27 since last
  year.
• Indians are the highest savers in the world. In
  fact India has higher on household savings as a
  percentage of personal disposable income
  vis-à-vis all Asian countries except the
  Philippines.

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Advantage India
Once an all time favourite of the Indian
investor, gold today is being shunned as prices
heat up and despite higher prices, buying
property is number two on the investors list.
SourceThe Economic Times Intelligence Group
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Reserve Bank Policy
   

• The latest policies of The Reserve Bank of India
  released in Feb 2004, made the Rupee almost
  freely convertible. The future looks good for
  those who want to invest abroad, be it shares or
  property.
• Highlights
• Individuals Resident Indians will be free to
  acquire and hold immovable property or shares or
  any other asset outside India without prior
  approval from the Reserve Bank of India.
• Resident Indians can also hold foreign currency
  accounts with a bank outside India.
• In a calendar year an Indian can send upto US
  3,70,000 abroad. The break up is shown below
• For private visits US 10,000
• Gifts US 5,000
• Donation US 5,000
• Maintenance of a close relative US 100,000
  (per recipient)
• Medical Expenses US 100,000
• Business Travel US 25,000
• Studies Abroad US 100,000 (per academic yr.)
• For any purpose US 25,000

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100 per cent FDI in Construction

• The government has allowed 100 foreign direct
  investment in the construction industry in India
  through the automatic route w.e.f. Feb 2005.
• Minimum area for development relaxed to 25 acres
  and 50,00sq metres for construction development
  projects (earlier limit was 100 acres and 2000
  dwelling units)
• Minimum US 10 mn capital for wholly owned arm
• Minimum US 5 mn capital for joint ventures
• FDI projects will be given national treatment on
  a par with local developers
• Sale of undeveloped land barred
• 100 FDI will now be allowed in development of
• townships
• housing
• built-up infrastructure
• commercial premises
• hotels resorts
• hospitals
• educational institutions
• recreational facilities
• city and regional level infrastructure

Source Deccan Herald/The Hindu Feb 25, 2005
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FOREIGN BUILDERS

• According to estimates, India will
  need an investment of US (2500mn) Rs 110,000
  crore in urban housing over the next five years.
  Overseas firms need to bring a minimum investment
  of US 5 million.
• Canada based Royal Indian Raj International has
  plans to invest US 3bn(Rs 13,200 crore) in
  townships in Bangalore.
• Ivanhoe Cambridge is a shopping centre developer
  and manager.
• Globe Holdings ltd. - New Zealand.
• Crescendo Corporation Bhd Malaysia.
• Gewoba, Brebau Germany.
• The foll.US based groups are keen on the
  property market in India-
• Calpers California based
• Chelsea Property Group
• Eamonn Ryan Group
• Hawkins Companies Inc
• HRO International
• Home Properties Inc.
• National Realty Development Corporation

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Changing Lifestyles - Value migration

• In the past,
• there was acceptance of a low standard of living,
  and that savings were the key to improving these
  standards
• Therefore, a frugal lifestyle was understood and
  accepted
• Plus, everyone else lived that way too.
• Plus, the government controlled everything,
  therefore a person could not just pole-vault into
  a better lifestyle (except maybe by migration
  abroad)
• The present,
• Is about abundant opportunity to live a better
  life
• Comprising entertainment, connectivity, comfort
  and style
• As evident through TV channels,
  telecommunication, cars, FMCG, and retail
• And the money to enjoy these with
• Through improved earning and through easy loans
• The future
• Improvement in middle class lifestyles
• Through acquisition of consumer durables and new
  FMGC items
• Investments will be made in education, technology
  and housing as a passport to a better life

Source The Henley Centre
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Changing lifestyles - Value analysis

• Where is value shifting and how
• Value is shifting from the future to the present
• From the frugal to the comfortable, aspiring
  towards lavish
• From the collective family progress to nuclear
  family concerns
• Impact on lifestyles, behaviour, attitudes
• Consumerism is in with excitement and
  enthusiasm
• There is some concern about not being able to
  save, but that is quickly explained away, even if
  it is only to oneself
• Yet, a person is not able to accept the idea of
  complete hedonism and older, more conservative
  thoughts surface when pushed
• Attitude and behaviour are in sync with this
  lifestyle
• Borrowing is okay, especially for property,
  education and a better standard of living
• Gets worrisome when loans fund just consumption
• Each nuclear family has to look out for itself
• Technology is working in tandem with the
  individual to make his life more exciting and
  faster than ever before

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Who can Invest
Regional diversity results in three
socio-economic India's - the affluent/well-off,
the middle classes and the poor. Majority of
its population is trapped with low education, low
value add employment and low income. 114 mn
Indians have managed to break this vicious cycle
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114 million Indians have made it to the high
income group
Estimates in No of people
99-00 Latest data available
114 Million
With HH earning of Rs. 118,000 per year or more
Source Indian Market Demographic Report, 2002
and THC Analysis. The Henley Centre.
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There are 4 mn highly affluent people and 2.1 mn
reside in these top cities (estimated.) The Times
of India Group is well represented.
Cities Share of
4mn 654500 Mumbai 253000 Kolkata 418000 Hyd
erabad 148500 Ahmedabad 99000 Chennai
82500 Pune 77000 Bangalore
71500 Lucknow 44000 Jaipur
33000 Nagpur 33000 Surat
27500 Vadodara 27500 Patna
22000 Kanpur 16500 Vizag 16500 Bhopal
11000 Kochi 11000 Coimbatore
11000 Madurai 11000 Trivandrum
11000 Agra 5500 Indore
5500 Ludhiana 5500 Meerut
5500 Varanasi 5500
Source Indian Market Demographic Report, 2002
and THC Analysis - The Henley Centre.
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Estimated size of Overseas Indian Community 23 mn
The table only includes countries where the
number of Indians is over 50,000. Source
Ishani Duttagupta TOI Editorial (Indegenius)
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Demand for Property in Dubai

• The UAE, is already a financial hub attracting
  banking majors offering great services to big
  ticket clients. And if plans fall into place it
  will soon emerge as a key hub for media.
• Investors in India are looking at Dubai to park
  their funds.
• In the last few years, Dubai, Ras Al Khaimah and
  Ajman have opened their doors to allow expats to
  buy and own freehold property in the United Arab
  Emirates.
• Property rates in Dubai are comparable with those
  in Mumbai and Delhi.
• At the higher end, the cost of a 4 bedroom
  villa in Palm Islands Jumeirah is 567,954 or Rs
  2.50 crores.
• The cost of a more modest 3 bedroom apartment At
  Dubai Marina - 459,772 or
• Rs 2.02 crore.
• Sharjah is even more affordable. The cost of a
  two bedroom apartment -158,536 or Rs 69.75
  lakhs.
• Eminent Indians whove invested in Dubai include
• Shah Rukh Khan Top Bollywood star, M.F. Hussain
  Artist, Sunil Gavaskar Cricketer
• Source TheTimes of India / Prices will vary
  according to location or the real estate
  promoter.

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Thank You