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Real Estate
Last Updated: November 2011

The real estate sector in India is on a growth path. The development in the real estate market encompasses growth in
both commercial and residential spheres. Further, it has been estimated that there would be shortage of 26.53 million
houses during the Eleventh Five Year Plan (2007-12), which provides a big investment opportunity, according to a
report by the Technical Group on Estimation of Housing Shortage. The popularity of the Indian real estate sector is
also highlighted by a report ‘Emerging trends in Real Estate in Asia Pacific 2011’ published by
PriceWaterhouseCoopers and Urban Land Institute. The report focuses on various places where developers such as
Ansal Properties and Omaxe are building commercial and residential developments. These places include Jodhpur,
Agra, Punjab, Uttar Pradesh, Haryana, Madhya Pradesh, and Rajasthan among others.

Indian Real Estate: Investments

During April-September 2011-12, the Indian real estate and housing sectors received US$ 453 million in foreign direct
investment (FDI), according to the Department of Industrial Policy and Promotion India (DIPP).

Further, the industry also witnessed growth in private equity (PE) investments as well. In the current calendar year so
far (November 13, 2011), total investment from PEs was around US$ 741 million.

According to a report by Jones Lang LaSalle (JLL), about US$ 15.8 billion has been invested from 2006 till date on
various types of assets in the real estate sector in the country. Of which, US$ 2.7 billion went to residential projects
and US$ 2.4 billion to township projects. A sum of US$ 2.3 billion went to commercial projects, US$ 2.1 billion to
mixed use and US$ 961.4 million to special economic zones (SEZs). During the current year, PEs invested US$ 320
million in commercial, US$ 65 million in mixed use, US$ 44 million in residential, US$ 190 million in SEZs and US$
122 million in township projects.

During 2011, Hyderabad attracted the highest investment of US$ 190 million followed by Chennai US$ 143 million,
NCR (national capital region) US$ 66 million and Bangalore US$ 22 million, as per the JLL report.

Indian Real Estate: Major Developments

        Piramal Group plans to lend Rs 750-1,000 crore (US$ 145 million to US$ 193 million) to real estate projects
         in this fiscal to March 2012 through its newly set up non-banking financial company, according to Ajay
         Piramal, the Group’s Chairman.
        Real estate developer Isha Group of Companies has entered the concrete block manufacturing business by
         launching Isha Concrete Blocks unit in Chennai. The company has set up a manufacturing unit for concrete
         blocks at Medavakkam Post with an investment of Rs 12 crore (US$ 2.3 million), including land and
         machinery, with a capacity to manufacture 10,000 eight inch blocks per shift a day, according to Suresh
         Krishn, Managing Director, Isha Homes.
        Chennai-based real estate developer Vijay Shanthi Builders Ltd is planning to develop projects worth of Rs
         2,100 crore (US$ 399.1 million) in next four years. The company has announced a residential project worth
         Rs 120 crore (US$ 22.8 million) in the city.
        NCC Urban Infrastructure Limited, a subsidiary of Hyderabad-based construction major NCC Limited, is
         lining up over 10 residential and commercial projects, together with a built-up area of 2.5 million sft, in
         Bangalore, Chennai, Hyderabad and Kochi.
        Real estate developer Lodha Group today announced over Rs 10,000 crore (US$ 1.9 billion) investment in a
         new project in the island city. The project, titled New Cuffe Parade, will come up at Wadala and is spread
         across 23 acres over the next five to seven years. The 23-acre plot is part of the 250-acre land bank that the
         company had bought from the Mumbai Metropolitan Region Development Authority (MMRDA) for Rs 4,053
         crore (US$ 770.4 million).
        Malabar Builders, the real estate development arm of jewelery retail chain Malabar Gold, is planning to
         launch its first township project in Mangalore with an investment of Rs 500 crore (US$ 95 million).
        Diversified conglomerate Larsen and Toubro (L&T) is set to build India's first residential high-rise building on
         a pre-cast basis, a move that may introduce a structural change in the real estate market.
        DLF Ltd will invest up to Rs 3,000 crore (US$ 570.2 million) over the next five years to develop shopping
         malls across India as it looks to cash in on opportunities following the further opening up of FDI in retail

Indian Real Estate: Government Initiatives

The Government has undertaken various initiatives to help the sector grow in the recent past. Some of the major
government initiatives include:

        Allowing 100 per cent FDI in townships, housing, built-up infrastructure and construction development
         projects through the automatic route, subject to guidelines as prescribed by DIPP.
        Allowing 100 per cent FDI under the automatic route in development of Special Economic Zones (SEZ),
         subject to the provisions of Special Economic Zones Act 2005 and the SEZ Policy of the Department of

In the Union Budget 2011-12, Mr Pranab Mukherjee, Union Finance Minister presented various initiatives for the real
estate sector, especially focusing on affordable housing. Some of these initiatives include:

        Raising the limit on housing loans eligible for a 1 per cent subsidy in interest rates
        Widening the scope for housing under "priority-sector lending" for banks, making interest rates cheaper on
        Earmarking substantial amount to the Urban Development Ministry for spending on extension of Metro
         networks in Delhi, Bangalore and Chennai
        Allocating US$ 20.03 million for the urban infrastructure development project. The Urban Development
         Ministry received US$ 1.5 billion, an increase of US$ 68.53 million from the last fiscal 2010-11.
        Increasing allocation for Bharat Nirman to US$ 12.89 billion. Bharat Nirman consists of 6 flagship programs,
         the Pradhan Mantri Gram Sadak Yojana (PMGSY), Accelerated Irrigation Benefit Program, Rajiv Gandhi
         Grameen Vidyutikaran Yojana, Indira Awas Yojana, National Rural Drinking Water Program and Rural

Indian Real Estate: Road Ahead

The affordable housing segment is expected to play an important role in the growth of the real estate sector in India in
2011, on the back of increasing demand for such housing, according to the Confederation of Real Estate Developers'
Associations of India (CREDAI).

"Affordable housing will be a key factor in driving the sector and we have already started working on progressive
solutions in this area for effective and customised implementation of such projects," CREDAI Chairman Kumar Gera

Further, growth in the infrastructure sector is also expected to accelerate real estate activities, in commercial as well
as residential segments, during this year.

Exchange rate used: INR 1= US$ 0.01901 as on November 25, 2011

References: Department of Industrial Policy and Promotion India (DIPP), PriceWaterhouseCoopers, Urban Land
Institute and Media reports

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