project - insight
Post on 22-Mar-2017
24 Views
Preview:
TRANSCRIPT
Project - INSIGHT
PHYSICAL SPACE PORTAL
NEED, OBJECTIVES, PROCESS, & DYNAMICS
US$ Potential estate sector in India.
contribute to about 10% of the country’s
Source: Emerging trends in real estate in Asia Pacific
Department of Industrial policy & Promotion India
Issues projects and transparency in RE sales.
Buyers -Lack of information about different
• Artificial hiking of prices by developer.
Developers -Limited institutional and non- institutional Debt and Equity Funding despite of a massive housing shortage.
• Low Sales Velocity
•Extremely low liquidity for both end users and investors. •Extremely slow price Discovery
$271 billion- Estimated size of the real
The real estate sector will alone
GDP.
2011published by PriceWaterhouseCoopers
CRISIL Research
Housing shortage = 26.53million houses (2007-12), 33 million houses (2012-17) Source: 11th & 12th Five Year Plan
Funding need =US$ 2.5 Trillion (2007-12)
Funding need =US$ 3.2 Trillion (2012-17)
Funding gap =US$ 70 Bn
Source: CREDAI(Confederation of Real Estate Developers Association of India )
US$ 15.8 billion -Foreign Direct Investment (2006-present) ,the Indian real estate & housing sectors. Source - Jones Lang LaSalle (JLL)
4
3
2 2007-2012
1 2012-2017
0 Housing need (units Funding need
crores) (Trillion USD)
Indian Physical Space requirement
uyer
B
Clearing and Settlement
S
ts
Buyer N
Group Buying
(Primary Market)
Resale Trading (Secondary Market)
Property Transfer Sold – GB buyer Bought – Buyer 1 List to sell
Builder OR
Rating Agency
Property Transfer Sold – Buyer 2 Bought – Buyer 3
Buyer 2 Lis GB Buying
Bilateral Bidding HFCs Lawyer
Property Transfer Sold – Buyer 3 Bought – Buyer N
Buyer 3 Lists
Broker
Broker Individuals Institutions
Individuals Institutions BUYERS
Buyer3 Discounted Home
Loans
Broker
sell at Discount
Buyer2
Broker
Primary market GB Buyer
Logic of Price Discovery
Clearing & Settlement
Group Buying Bilateral Bidding
Mechanism
SELLER BUYER GROUP
No. of units discount % discount % Bid Ask Spread
4 8%
8.8%
9.6%
10.4%
11.2%
12.0%
12.8%
13.6%
8.6%
9.2%
9.9%
10.9%
12.0%
12.6%
13.0%
14.2%
0.60%
0.40%
0.33%
0.54%
0.77%
0.64%
0.22%
0.59%
6
8
10
12
14
16
18
SELLER BUYER GROUP
units
discount price
Rs. / sq.ft
discount price
Rs. / sq.ft
Bid Ask Spread 4 4416
4378
4339
4301
4262
4224
4186
4147
4387
4358
4323
4275
4225
4193
4175
4119
29
19
16
26
37
31
11
28
6
8
10
12
14
16
18
Buyer
units
discount%
discount price Rs. /
sq.ft
1 3 8.0 4416
2 1 10.0 4320
3
3
13.0
4176 4 1 13.0 4176
5 3 11.0 4272
6 3 8.0 4416
7 2 13.0 4176
8 1 13.0 4176
9 3 9.0 4368
10 2 9.0 4368
11 1 12.0 4224
12 1 11.0 4272
13 1 12.0 4224
14 1 13.0 4176
15 1 11.0 4272
16 1 10.0 4320
17 2 8.0 4416
18 2 11.0 4272
19 3 10.0 4320
20 1 13.0 4176
20 36 10.5 4297
Selection of units is based on time preference and
the lowest discount bids.
Weighted Average of the individual buyer discounts for corresponding units eg.- 9.9% discount demanded for 14 units.
Logic of Price Discovery (…contd.)
Resale Trading Trading
Mechanism
The lowest bid
There will be multiple buyers bidding for single property.
Sell price = Base price + Floor Rise
Logic of Price Discovery (…contd.)
Individuals and Institutions are able to form groups which is not possible OTC.
Thus they can avail Discounts from 10 to 30% on property buying and also avail cheaper loans. Higher transparency and liquidity which are major barriers in current RE market. A win -win situation for buyer - NO CHARGES to the buyer in fresh sales plus substantial savings.
•
Buyer •
•
• Unlike OTC they will be able to indirectly group with other brokers, enabling them to generate volumes that can be leveraged for discounts (presently a stand-alone broker is unable to generate such volumes). These Discounts will enable him to make bigger and faster transactions, which will make it financially feasible for him to transfer the charge from the buyer to seller. Thus charging the buyer ZERO brokerage. Accelerated sales velocity – enabling faster capital recycling
Bridge the funding gap by generating larger cash inflows via bulk selling
Volumes help bridge the housing shortage and transparency improves revenue generation
Broker •
• •
•
Developer
Government
• Excellent channel for faster and bulk selling of home loans. Banks/HFC’s
Multiplier Benefits
Broker driven volume generation
Dynamic Price Discovery Process
Resale Platform
capture the value chain
flat sales by a
handover of the
developer
quick succession of
transaction across
where each buyer
profit margin
Logical extension to
that extends after fresh
developer until the
physical flat by the Developer
Involves a relatively
multiple sale
three to four buyers
makes a speculative
Get Real Estate Brokers to play an integral role in driving Group Buying volume on a pan-India basis
Enable brokers to group with other brokers and buyers across geographies to form a powerful buying group
Why does this make sense for the broker – Brokers are able to achieve significantly attractive bulk buying prices that they were unable to achieve on a stand-alone basis – this means higher broking volumes that will drive brokerage commissions downwards.
Entire offline process of price negotiation is taken completely online
Negotiation / Price discovery process is clean, efficient, swift and highly streamlined
Process is identical to
the bid-ask spread
seen on stock
exchanges
Participants – both
buyer and seller – are
allowed to set price
limits like in share
trading1
Unique Selling Proposition
THANK YOU!
Manoj Motta
manoj@banyanresources.in +91 98200 25046 +91 98676 06663
www.banyanresources.in
Project - INSIGHT
top related