real estate d.ppt logistcs

8/8/2019 Real Estate d.ppt Logistcs

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Presented By:

Yogin Vora

IMPACT OF RECESSION ON REAL ESTATE IN INDIA

www.managementfunda.com


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Major Growth Driver:

Residential Segment:

Increase in Income level combined with trends

of higher urbanisation and nuclear families.

Backed by easier availability of housing loan

Commercial Segment:

India emerging as global back office for services

like IT& IT based business, multinationalcompanies , SEZs.

Retail & Entertainment Segment:

Given growing disposable income & emergence of

organised retail, entertainment destinations.


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MORE CATASTOPHICTHANTHE

AMERICAN BANKING MELTDOWN

American Banking Collapse is more miniscule 1000 times bigger than the mortgage bubble

RBI examined books of 10 realtors to verify

solvency and assess risk of possible defaultson loans and deposits

Companies Identified DLF,Indiabulls,Unitech,HDIL,Mahindra

Lifespace,Ansal Properties, PhoenixMills,Akruti Citi,Phoenix Mills,PeninsularLand


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Effects ofMeltdown on economy

Fall in stock markets

Increase in interest rates

Slowdown in IT industry

Unemployment

Inflation

Retail & tourism has also suffered

As a result real estate space witnessed pressure from

demand side and become very difficult to sell

projects.


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Impact on Real Estate sector

Increase in prices of inputs due to inflation effecting

all areas of economy like cement, steel, etc.

Increase in home loan interest rates resulting into

additional EMI burden on the borrowers.

Reduction in salaries and layoffs resulting into

reduced demand for Real estate

Demand-supply imbalance

Forced correction in prices


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Impact on Real Estate sector (contd.)

Reduction in Commercial Rentals

Projects stagnancy

Slow down in infrastructure projects

Difficulties to raise fund (Failure of EmaarIPO)

Loss of Jobs

Shortage of skill workers


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Price Reduction in Major cities

Metro cities % change in High

End Area

% of change in

Low end area

Mumbai 12% 20%

Delhi 5% 15%

Banglore 10% 17%

Kolkota 5% 12%Pune 18% 21%


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Price Reductions

Overall price cuts of 10-12%

In Banglore, DLF group reduced prices by 25%

In Thane, Lodha group cut prices by 30%

In Mumbai(LowerParel) Orbit group cut prices by 20%


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EFFECTON FINANCIALS JUNE09

Overall 76 % dip in profits & 57 % fall in sales in FirstQuarter of FY 09-10 over First Quarter of FY 08-09

DLF - 79 % decline in profits & 57 % slide in sales

Unitech 63 % decline in profits & 50 % slide in sales

Parsvanath, India bulls, HDIL,Akruti, Shobha,Purvankara have reported decline in profits upto 95 %.


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Measures

Reduction of interest rates.

RBI policy for restructuring loans.

Reduction in excise duty on construction material

like cement.

Encourage property development in TierII and

TierIII cities


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Measures (Contd)

Under the Interest Subvention Scheme Loan upto

Rs. 10 Lakh, & property value is not above Rs. 20Lakh will get 1% lower interest.

Corporate like Tatas introduced Nano Housing

for Rs. 3.9 Lakhs- Rs. 6.7 Lakh called as Shubh

Griha project.

SBI introduced 8 % housing loan scheme for oneyear followed by the otherPSU & Private Sector

Bank as well.


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Tips to Individual Investors:

Determine a budget

Deal with reputed builders

Opt for developed properties

Check out the rates of next best options

Go for fixed interest rate loans

Dont bite freebies bait


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Question to theAudience

Meltdown in Real Estate a Boon or a Bane ?



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THANK YOU


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