Present Scenario Of Real Estate Economics Essay

Chapter 1

India is one of the fastest turning economic systems, this gait of growing is improbable to prolong unless it is supported by an every bit robust development of its substructure. Cardinal demands in order to accomplish a GDP growing rate transcending 8-9 % include roads, power, ports every bit good as urban substructure. The last twosome of budgets have taken stairss in the right way for growing of the sector. An allotment of Rs. 200 billion towards substructure undertakings under the 2011 budget is an effort to accomplish the Governments mark for growing of substructure.

It is estimated that India will hold about 27 to 30 million deficit of lodging units by 2013 and for this immense sum of development is required to be carried out. Slowdown in the planetary economic system along with consistent addition in policy rates by the Reserve Bank of India ( RBI ) eventually seems to be impacting the domestic economic system with the GDP growing chilling down since past few quarters. The GDP growing recorded during first one-fourth of fiscal twelvemonth 2012 has slowed down to 7.7 % as against 9.3 % during first one-fourth of fiscal twelvemonth 2011. Even the projected GDP growing for fiscal twelvemonth 2012 has been revised downward to 7.9 % from 8.2 % by the RBI.

The existent estate sector in India is being recognized as an substructure service that is driving the economic growing engine of the state. In fact, Foreign Direct Investment ( FDI ) in the sector is expected to increase to US $ 25 billion in the following 10 old ages, from present US $ 4 billion.

The state ‘s urban population will surge to 590 million by 2030, from 340 million in 2008. Appraisal shows that India ‘s metropoliss could bring forth 70 % of the net new occupations by 2030, produce more than 70 % of the state ‘s Gross Domestic Product ( GDP ) , and excite a close quadruple addition in per capita income. It besides says that India needs to put US $ 1.2 trillion over following 20 old ages to overhaul urban substructure and maintain gait with the turning urbanisation.

Non -resident Indians and foreign citizens who are Persons of Indian Origin ( PIO ) are allowed to buy immovable belongings in India. Residential belongings monetary values have stabilized now and are deemed attractive for the NRI place purchaser. Industry experts feel that with attractive pricing and invention in building engineering and assortment of designs, NRIs are taking a fresh expression at India as a alone market in which they can put.


Real Estate concern was one of the cardinal drivers of growing before we witnessed the present economic lag. Now, with companies seeking to consolidate their places and happening effectual agencies of prolonging growing, the direction of existent estate has emerged as one of the cardinal challenges for the corporate sector. The largest resident of office infinite in the state has been the Information Technology ( IT ) or Information Technology enabled Services ( ITeS ) section, which chiefly serves the US and European markets. The economic lag in these markets have resulted in increasing force per unit areas on the borders of companies runing out of India, which in bend has led to the companies looking to cut costs through cut downing outgo on the existent estate section.

The existent estate sector in India assumed greater prominence with the liberalisation of the economic system, as the attendant addition in concern chances and labour migration led to lifting demand for commercial and lodging infinite. At present, the existent estate and building sectors are playing a important function in the overall development of India ‘s nucleus substructure. The existent estate industry ‘s growing is linked with the developments in the retail, cordial reception and amusement ( hotels, resorts, film theaters ) industries, economic services ( infirmaries, schools ) and information engineering ( IT ) -enabled services ( like call Centres ) etc and frailty versa.

The Indian existent estate sector has traditionally been dominated by a figure of little regional participants with comparatively low degrees of expertness and/or fiscal resources. Historically, the sector has non benefited from institutional capital ; alternatively, it has traditionally tapped high net-worth persons and other informal beginnings of funding, which has led to low degrees of transparence. This scenario underwent a alteration with in line with the sector ‘s growing, and as of today, the existent estate industry ‘s kineticss reflect consumers ‘ outlooks of higher quality with India ‘s increasing integrating with the planetary economic system.


Presently, approximately 5 % of India ‘s GDP is contributed by the lodging sector. The GDP portion of the existent estate sector ( including ownership of homes ) along with concern services was 10.6 % in 2010-11. After turning at 10.4 % in 2008-09, the rate of growing of this sector has decelerated to 7.8 % in 2009-10 and farther to 6.9 % in 2010-11. Estimates show that for every rupee that is invested in lodging and building, 0.78 paisa gets added to GDP. Housing ranks 4th in footings of the multiplier consequence on the economic system and 3rd amongst 14 major industries in footings of entire linkage consequence harmonizing to Economic study 2011-12.

Demand for existent estate is expected to turn at a compound one-year growing rate ( CAGR ) of 19 % between 2010 and 2014 Tier 1 metropolitan metropoliss are projected to account for approximately 40 % of this. Turning demand of infinite from sectors such as instruction, health care and touristry provide chances in the existent estate sector. With institutional recognition for lodging investing turning at a CAGR of approximately 18 to 20 % per annum in the following three-five old ages, the lodging sector ‘s part to GDP is likely to increase to 6 % . While India is among the top states in footings of lodging and working infinite demands, it ranks 181st in building permission processes harmonizing to the World Bank ‘s Doing Business 2012 study.

Chapter 2

Real Estate Market


The Indian existent estate market size is expected to touch US $ 180 billion by 2020.Real sector are loosely classified into residential, commercial and the retail section and hotels. The size in footings of entire value of existent estate development activity of Indian existent estate market is presently 5-6 % of GDP of which residential signifiers the major ball with 90-95 % of the market, commercial section is distant 2nd with 4-5 % of the market and organized retail with 1 % if the market. Over following 5 old ages. Indian existent estate market is expected to turn at a CAGR of 20 % , driven by 18-19 % growing in residential estate, 55-60 % growing in retail existent estate and 20-22 % growing in commercial existent estate.

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Growth chances and monetary value stableness of smaller metropoliss are pulling big real-estate developers in such metropoliss in the recent yesteryear, harmonizing to a study titled ‘Real ( I ) ty Following: Beyond the Top 10 Cities of India ‘ , released by Crisil Research in June 2011. The study estimates that the sale of new residential flats in 10 such smaller metropoliss are at around US $ 4 billion in 2012.

It is estimated that India is traveling to bring forth an estimated 2 million new alumnuss from assorted Indian universities during this twelvemonth, making demand for 100 million square pess of office and industrial infinite. Presence of a big figure of Fortune 500 and other reputed companies and expertness in sectors such as auto-components, chemicals, dresss, pharmaceuticals and jewelry where India can fit the best in the universe will decidedly pull more foreign investors in the close hereafter.


The sector in India is being recognised as an substructure service that is driving the economic growing engine of the state, harmonizing to industry experts. In fact, foreign direct investing ( FDI ) in the sector is expected to increase to US $ 25 billion in the following 10 old ages, as per a latest industry organic structure study.

FDI influxs in existent estate in 2011-12 ( April-January ) stood at Rs 2,750 crore ( US $ 493.80 million ) . In May 2012, FDI inflows in existent estate were Rs419.87crore ( US $ 75.39 million ) as compared to Rs 321.35 crore ( US $ 57.70 million ) during the matching month in 2011.

Indian existent estate emerged as the popular sector for private equity ( PE ) financess puting around US $ 1,700 million in this sector during 2011. PE in existent estate undertakings will bring considerable returns by following year-end or early 2013, harmonizing to Vikram Hosangady, Partner, KPMG.

India needs to put US $ 1.2 trillion over following 20 old ages to modernize urban substructure and maintain gait with the turning urbanization, as per a study released by McKinsey Global Institute ( MGI ) -India ‘s urban waking up.

Major Investings:

Pune-based existent estate house Panchshil Realty has announced the launch of TrumpTowers Pune, a Trump branded residential belongings. This will be US-based Donald Trump ‘s first luxury places project in India

Gulf Oil Corporation Ltd has entered into a joint development understanding with Hinduja Estates for development of the 76 acre company land in Hyderabad.The undertaking, to be completed in five tosix old ages will be located at their campus near to the busy residential-cum-business hub in Kukatpally, Hyderabad

Berggruen Hotels, a mid-market concern hotel concatenation funded by US-based Berggruen Holdings, plans to put Rs 450 crore ( US $ 80.81 million ) in new undertakings across India. The company operates under the trade name Keys Hotels and aims to add 2,300 suites over the following 18-24 months

Dutch pension fund ( PF ) director, APG Group plans to put Rs 650 crore ( US $ 116.71 million ) to purchase 6 per cent interest in Delhi-based mid-market hotel Group, Lemon Tree Hotels. The Group would organize a joint venture ( JV ) with Lemon Tree to construct 35 hotels in the state in four old ages

Value & A ; Budget Housing Corporation ( VBHC ) plans to establish six budget lodging undertakings in the state by the terminal of this twelvemonth. VBHC is looking at two undertakings for Mumbai, two in the National Capital Region ( NCR ) and one each in Bengaluru and Chennai

Government Enterprises

The Government of India has decided to let FDI up to 100 per cent under the automatic path in townships, lodging, built-up substructure and building development undertakings to increase investing, bring forth economic activity, create new employment chances and add to the available lodging stock and built-up substructure.

The Union Budget 2012-13 gives major push on speed uping the gait of investing in substructure, as this is critical for prolonging and speed uping an overall growing. Attempts to pull private investing into substructure through the Public-Private Partnership ( PPP ) path have met with considerable success at both Central Government and State Government degrees. In the Union Budget 2012-13, Rs 10,000 crore ( US $ 1.80 billion ) is allocated for the development of National Highways. In the following five old ages, the entire investings in the existent estate will be US $ 1 trillion.

Government of Gujarat plans to construct a 600-hectare township near the proposed Maruti Suzuki India Ltd ‘s ( MSIL ) fabricating mill in Hansalpur near Mehsana. The cost of development is estimated to be about Rs 8,000,000 ( US $ 143,647.89 ) to Rs 1 crore ( US $ 179,551.44 ) per hectare.


The industry has evolved from a extremely disconnected and unorganised market into a semi-organized market.

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The sector is divided into residential, commercial, retail and hospitality plus categories.

Commercial sector

The commercial office infinite in India has evolved significantly in the past 10 old ages due to alter in concern environment. The growing of commercial existent estate has been driven mostly by the service sectors, particularly IT-ITeS.However, with the outgrowth if IT-ITeS, which has immense office infinite demand, commercial development started traveling towards metropolis suburbs. It resulted in multifold development of metropolis outskirts and suburbs like Gurgaon near New Delhi, Bandra and Malad in Mumbai, and the Electronic metropolis in Bangaluru. In add-on, over the last 10 old ages, location such as Bangaluru, Hyderabad, Chennai, Kolkata and Pune have established themselves as emerging finishs for commercial development, which are viing with traditional concern finish such as Mumbai and Delhi.

However, the demand for office infinite is straight linked to add-on in figure of employees, which in bend is dependent on economic growing. When economic system slows down companies hold their enlargement program taking to lower demand for office infinite. Downturn in the commercial existent estate market in India, which has commenced during the 2nd half of 2008, continued during the 2nd half of 2009. IT-ITeS, which had been a major demand driver for the sector in the last 2 old ages, increased utilization rates of bing commercial infinite by increasing the figure of displacements.

Residential sector

Residential demand is the pillar of the Indian existent estate sector. The major demand drivers for the residential market include increasing disposable income degrees, addition in the figure of atomic families/ families, revenue enhancement salvaging on hoe mortgage merchandises every bit good as existent estate being considered a “ necessary ” investing.

Demand for houses increased well whilst supply of houses could non gait with demand thereby taking to a steep rise in residential capital values particularly in urban countries.

Broadly, residential existent estate industry can be divided into four growing stages:

Phase 1 ( 2001-2005 ) was an initial growing stage with stabilising residential existent estate monetary values following the planetary recovery post the “ dot com ” but and 9/11 terrorist onslaught in New York. At the same clip, there was a steady growing in Indian economic activity, notable recovery in IT/ITES industry, turning urbanisation and a lifting tendency towards atomic households.

Phase 2 ( 2006-2008 ) was a high growing stage where high demand for residential existent estate led to duplicating of lodging monetary values. Demand quickly increased due to India ‘s turning population, accentuated urbanisation, lifting disposable incomes, quickly turning in-between category and young person population, low involvement rates, financial inducements on involvement and chief payments for lodging loans and heightened client outlooks.

Phase 3 ( 2009-2010 ) witnessed significant lag and portion recovery in demand because of the planetary economic downswing, which led to a diminution in affordability and tight liquidness. The retreat of assorted existent estate investors, accompanied by lag in the capital markets, has resulted in glut and falling monetary values.

Phase4 ( 2011-2014 ) is expected to stay a consolidation stage after lag. Demand is expected to stay strong with capital values witnessing modest rise. This period is expected to witness substaintial supply of lodging particularly in urban countries. Degree centigrade: UserspanoopDesktopCapture3.PNG

In malice of the colossal growing witnessed in the past 10 old ages, significant lodging deficit is still prevailing in India. The lodging deficit in India is estimated at 78.7 million units at the terminal of Phase 2. The overall lodging deficit in India is likely to worsen to 75.5 million units by the terminal of Phase 4.

However, lodging deficit in urban countries will go on to lift owing to migration towards urban countries and increasing tendency of atomic households. Housing deficit in urban countries is estimated at 19.3 million units at the terminal of 2008, up from 15.1 million units at the start of 2005. Housing deficit in urban countries is likely to touch a whacking 21.7 million units by the terminal of 2014.

Rural countries, on the other manus, will witness a decrease in lodging deficit due to migration and transition of kutcha houses into pucca houses. The authorities ‘s uninterrupted focal point on bettering the lodging state of affairs, particularly for population below poorness line, under strategies like Indira Awass Yojna, Rajeev Gandhi Awaas Yojna, Two Million Housing Programme, is expected to cut down lodging deficit in rural countries. Rural lodging deficit is expected to worsen to 53.8 million units by 2013-2014 from 59.4 million units at the terminal of 2008.


In 2010, India witnessed the add-on of more than 5 million sq foot of organized retail promenade infinite across assorted primary and secondary locations. This was concentrated mostly in NCR, Mumbai, Bangalore and Chennai and was a effects of the positive sentiments amongst retail merchants on spacial enlargement and heightening their footmarks across the state. The growing of promenades in India has increased to about 59 which comprises of the retail stock. The retail stock portion will increase to 36 % in the coming old ages. Resulta found out through a study province that the retail market is expected to turn in the coming old ages. There is an increased development of retail promenades which are chiefly dominated by the local developers. All the 59 promenades in the southern and northern provinces are either in the phases of building or are already established. Few of the active undertaking developers in the southern and northern part aren the Mantri developers, The Prestige Group, DLF, RMZ. Corp and so on.

Indian retail merchants are seeking to implement their enlargement programs in the premier metropoliss every bit good as choice Tier 2 and Tier 3 metropoliss. FDI in multi trade name existent estate, when eventually permitted, is expected to catalyse a batch of demand from international retail merchants. That said, international luxury trade names will curtail their programs to Mumbai, Delhi and Bangalore.

Hospitality existent estate

India ‘s cordial reception industry has enjoyed robust growing over the past few old ages buoyed by a benign economic and political environment. Increase in domestic, concern and leisure travel has benefited hotels in India. Rising incomes, higher weekend trips and increased entree to travel-related information over the cyberspace have propelled growing in cordial reception. Premium section hotels are more outstanding in major concern finish in India and are more dominant in popular tourer finish like Goa, which attracts a batch of foreign patronage. In 2010, the industry saw merely five private equity trades with a cumulative value of $ 156 million.

By 2011, the sum grew to $ 299 million and during the first five months of 2012, cordial reception industry has raised $ 121 million from private equity. A few old ages back the industry was polarized between big 5 star hotels and little Lodges. Now both domestic hotel ironss and Internationals trade names are line uping up with several classs of hotels to provide to different travellers in the value concatenation and that is why the demand for existent estate belongingss in India are increasing.

Particular economic zone ( SEZ )

The authorities of India introduced the SEZ Act, 2005, to bring forth extra economic activity, advance exports and make employment chances in the state. Developing an SEZ is about 15 to 20 per centum cheaper than developing non-SEZ commercial infinite ; given the assorted financial benefits available to SEZ developers have been attracted to these undertakings.

Under the new SEZ policy formal blessings have been granted to 574 SEZ proposal as of March, 2010. As of March 2010, there 350 notified SEZs and 146 have received in rule blessing. The SEZ Policy allows use of as a 50 per centum of the SEZ country as non-processing zone, offering important potency for residential and support substructure.

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Plague analysis


Coming up SEZ in the first 3 one-fourth of 2009 there was 12.7 % addition in SEZ so it offers a immense range for the existent estate and building industry.

Speculated rise in the cement monetary value harmonizing to the brotherhood budget 2010-2011 there is a addition in a coal Ce and strike axial rotation out of 2 % which will hold an consequence on the monetary value of cement and in bend influence existent estate monetary value.

Boost in the lodging yojana by the UPA govt. as allocated rupees 10,000 crore for Indra Awaaz yojana and rupees 1273 crores for Rajiv Awaaz yojana.

Huge amount of rupees 1273552crore is allocated by the finance curate in edifice substructure.

REITS and REMF introduced by the authorities are assisting vastly in new undertaking development.


As the substructure is the anchor and the foundation of economic system so to take the economic system to the following degree there should be an speckless growing of the substructure to supply the launching for the growing of the economic system.


There is a paradigm displacement in the manner households live now that is from joint households to atomic households so people are in hunt of new lodging that is supplying immense chance for the growing of existent estate sector.

Due to rapid urbanization and rise of grade 1 and tier 2 metropoliss this phenomenon is besides acquiring some push.

Future metropoliss for high category life are coming up like Lavasa, Nano metropolis, Ambi valley etc.


There is non much usage of high terminal engineering presently in existent estate sector but it is bit by bit traveling from labour intensive to engineering intensive.

Ready mix concrete and latest computing machine aided design are being used for the development of design which are bespeaking to the fact that the engineering is coming in easy.


Real estate and building industry comes under the horizon of following act and jurisprudence.

Indian transportation of belongings act 1882

Indian enrollment act 1908

Indian urban land { ceiling and ordinance } act 1976

Indian cast act 1899

Property revenue enhancement

Foreign exchange ordinance act, 1973

Rent control act

Porters FIVE FORCE Model

Dickering powers of purchasers: in this sector the purchasers possesses low to chair bargaining power. It is on the discretion of the developer to put the monetary values which are subjected to low flexibleness under dialogues.

Dickering power of providers: The provider possesses moderate to high bargaining power. the developers do non hold high stance on the input cost therefore the clauses of the cost escalation is mostly used in this sector.

Competitive competition: this sector is characterized by high competition. it has got range for assorted in investing options.

Menace of new entryway: there are really low barriers to entry as it is a capital intensive industry anybody holding good capacity with mention to capital investing can come in this industry with low route blocks.

The menace of utility merchandise: there is really low replacement possible. Every belongings is alone and has it ‘s ain pros and cons.


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We can see from the graph that DLF has immense disbursal towards advertisement as compared to other companies. And it has been on the incresing tendency every twelvemonth they incur a immense cost towards publicizing. All disbursals borne by the company for advertisement intents are captured in advertisement caput. Normally, such disbursals are big for publicity of gross revenues by consumer goods companies. Some companies incur immense advertisement outgo at the clip of establishing a new merchandise. In such instances, if the direction perceives the benefits of such outgo to accrue over a longer period, so it may amortize the outgo over the period of such sensed benefits. In such instances, merely the part of the outgo amortised during the twelvemonth is reported under the amortization field and no sum is posted in the advertisement informations field.


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The advertisement disbursal graph of unitech shows the company does non follows a individual attack where as it follows a up and down attack sometimes it increases its outgo and some times takes its determination speaking in position all the macro environment factor which affects income.


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Sobha developer are a large name in Bangalore and there attending disbursal are besides increasing every twelvemonth. For pulling more client and get more market portion the are passing a immense sum towads advertisement.

PARSVNATH Developer:

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Parsvnath developer were incurring a immense sum when they were at their growing phase we can see that at the clip of growing they are incurring a heavy cost like 20.09 so 34.78 and so on. But after making a bound and doing their name they have immensly cut down their advertisement outgo.


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Similar to Parsvnath developer HDIL is non incurring a immense disbursal now they besides incurred a immense advertisement disbursal at their growing and now after set uping at that place name they are playing mutely incurring merely 2.43 in 2012.


The current planetary fiscal crisis has severely hit the existent estate sector in India. All building activities have virtually come to a standstill even as the builders are confronting trouble in selling out the bing stock list. However its still remains one of the most of import sectors of the economic system. After agribusiness, the existent estate sector is the 2nd largest employer in India.

Furthermore, the existent estate industry has important linkages with other sectors of the economic system. The sector has more than 250 associated industries and therefore any investing in the sector has a cascading consequence on all associated industries. An investing of one rupee in this sector leads to 78 paise acquiring added to India ‘s GDP.

Even before the current economic crisis came to head, the existent estate sector was witnessing some major policy constrictions, most of them related to the investing chances and revenue enhancement. Harmonizing to industry experts, the sector is overburdened with revenue enhancements runing from service revenue enhancement, value added revenue enhancement, cardinal gross revenues revenue enhancement and strike responsibility on immoveable belongings.

Besides there is an pressing demand of suited amendments in the Foreign Direct Investment ( FDI ) guidelines in the sector. At present, FDI is allowed merely in Greenfield undertakings in India. There is a demand to let FDI in companies which are involved in existent estate development. This will open up new beginnings of support for the real-estate companies. The guidelines sing FDI in substructure sector must besides be more clearly defined

There are several steps that the authorities can take to assist the sector maximise its growing. Since lodging for all is one has been the purpose of many cardinal and province authorities strategies, the authorities should confabulate substructure position to the lodging sector. This move will assist the existent estate companies in acquiring entree to low cost institutional financess

The authorities should concentrate on germinating a rational construction of stamp responsibilities that have to be paid on the sale and purchase of land and lodging belongingss. In some provinces in India, the cast responsibility is every bit high as 14-15 per cent. The stamp responsibility on belongings should be reduced to a maximal bound of 3 per cent and all provinces in India should hold unvarying cast responsibility rates. This move will assist to cut down the belongings rates and convey more transparence in minutess

The Torahs covering with lodging undertakings besides need to be streamlined in order to give a push to the developmental activities, peculiarly in urban countries. Laws like Rent Control Act and Urban Land Ceiling and Regulation Act are extremely restrictive and must be repealed. All attempts must be made to curtail growing of slums in urban countries and develop them into hygienic settlements. There is besides a demand of suited amendments in the Agriculture Land Ceiling Act and besides the Land Acquisition Act of 1894

Another factor that hampers the growing of existent estate sector in India is the deficiency of basic comfortss like H2O supply, roads, power and sanitation. Government should do attempts to increase partnership with private sector companies in constructing these basic comfortss. The engagement of private participants in substructure sector will, apart from conveying latest engineering and direction patterns, guarantee timely completion of the undertakings.

One country where India has invariably lagged buttocks is guaranting individual window clearance for private companies. The state of affairs is peculiarly bad in the existent estate sector where clearance is required form about 10 different bureaus before the work on the undertaking can be started. The absence of individual window clearance non merely discourages investings but besides leads to holds and corruptness. Government must guarantee that the pattern of individual window clearance for the existent estate undertakings is implemented every bit shortly as possible

Thought the authorities is India is traveling frontward on some of the reform measures suggested above, the procedure of must be made quicker. If given proper environment, the existent estate sector can emerge as the driving force of the Indian economic system.

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Beginning Indian express, Tue 14th August 2012

Reality Major DLF has sold 17 estates of premier land in Mumbai to Lodha Developers for about 2700 crore about 4 times higher than what DLF bought in 2005. DLF bought this land from form National Textile Corporation for Rs703 crores. They Decided to sell this as a portion of scheme to go out from non-core concern activity.

‘ Lodha Developers agreed to get the entirely owned subordinate of DLF named Jwala Real Estate which is the proprietor of 17 acre Mumbai Textile factory belongings at Worli ” said by Mr. Lodha in a Statement.

The acquisition is for the consideration of 1200 crores in both euity and debentures.Apart from this Lodha will besides take Rs. 1500crores liability that Jwala has incurred for development since it purchased from NTC in 2005.This trade is lower in comparing to Indiabulls ‘ trade in 2010 for 8.39 acre of NTC land for Rs1580 crore.This gave Lodha group a competitory advantage to construct a mix used development over 5 million sqft at the premier location in Worli, Mumbai because it cost them merely Rs5000 per sq foot.

With is Curruent trade DLF has raised about Rs8000 crore from sale of non-core-assest ( Hotel secret plans and IT and SEZ Parkss ) This was chiefly done to cut down net debt of Rs22,860 crore on June 30.And now DLF is besides trusting to raise financess about Rs3000 crore from two major non core assets hotels concern Aman resorts and weave energy.

Among other major trades in state, Wave Infra has brought 151 estates of land in Noida for a whooping Rs6570 crore. This is the biggest dealing.

DLF has bagged 350-acre secret plan of Rs1750 crore in gurgaon in 2009 and acquired 38 estates in Delhi for Rs1675 crore in 2007.Unitech besides acquired 340 estates of land in Noida for Rs1582 crores in 2006.

Beginning: Hindu concern line 10th January 2012

M3M Developers has brought 28 estates of land In Gurgaon from DLF for Rs.440 crores.It is connected to National Highway 8 ( NH 8 ) .M3M is be aftering to construct a premium residential undertaking.

Beginning: Hindu concern line 10th January 2012

Sahara Group is coming in joint venture with U.S based Turner building and private equity from Acropolis capital of 25million USD dollars who will set about undertaking of Sahara Prime City over the following two decennaries. Sahara premier metropolis is a existent estate arm of 1.30 trillion in private held diversified Sahara group. “ It is planned that the building volume of Sahara Prime City will make USD 25 billion over the following 20 old ages of which USD 2.5 billion will be completed over the following five old ages. Sahara Turner Construction will be the preferable contractor for the executing of this full volume of work, and will besides play function as a undertaking direction company, ” Sahara Group president Subrata Roy told in the report.Turner who was the undertaking director of iconic Bhurj Khalifa in Dubai will give his expertness in building field to Sahara Group.

Subrato Rao besides said that, “ All our undertakings under the existent estate house will be undertaken by the new venture. The new company will non restrict itself to the Sahara undertakings but will besides prosecute third-party building-construction undertakings. We want to emerge as a multi-product and incorporate building services company which covers the life rhythm of edifice substructure and existent estate undertakings. ”

Turner on the other manus has spent around USD 1 million in puting up the partnership, its president and main executive Nicholas Billotti said, adding, “ we look frontward to doing a important part to the building market in one of the universe ‘s fastest turning economic systems. “ A

Beginning: Business standard 6th february 2012.

Shobha developers has obtained 8 estates of land in Dubai Meydan City.They are traveling to construct an assorted used undertaking sum has non been disclosed yet. The undertaking Shobha City will be located at Medyan City ‘s Goldphin parks country and will include a bunch of luxury signature Villa.

Saeed H Al Tayer, president of Meydan Group, said the trade reflects renewed investor involvement in Dubai ‘s existent estate sector. “ This is the biggest sale that we have concluded so far and it reflects a new epoch in the development of Meydan. ”

He besides added, “ This is a polar measure in the overall development of Meydan City and we are pleased to hammer this relationship with the Sobha Group. This investing and the committedness of [ Sobha Group president ] PNC Menon is an indicant of the international assurance in Dubai and its important substructure. ”

It is predicted by the company functionaries that the undertaking will be completed in 8-10 years.It will get down in 2013.Shobha metropolis will be located merely 4 kilometers off from Bhurj Khalifa and 15 proceedingss drive from Dubai Airport.Shobha metropolis will incorporate 280 Villas in its 9 towers and will besides hold retail installations.

Therefore this are the major Joint ventures and amalgamations and acquisition in Real estate Industry.

Technology In Real Estate Industry ( Source Business Today Dec 5,2011 )

It is a race among Real Estate developers to finish a floor quicker than other.Raheja developers who late tied up with Dubai based Arbatec buildings is traveling to utilize combinations of assorted engineerings for three highrise residential undertakings in Gurgaon and Delhi.It is traveling to be the highest tower in gurgaon.It will affect three major techniques ‘Slip Form building ‘ , Dry wall Technique, Pre Fabricated Construction.Super-Tech constructing an 80 floor assorted usage edifice, Super nova in Gurgaon, who claims to be the tallest edifice in the state will utilize a leap signifier or slip signifier of technology.Raheja Developers ‘ Director Nayan Raheja said Slip signifier would assist them to construct the floor in merely 3-4 compared to 15 yearss of traditional method of constructing It will take merely one fifth of the clip.

Concrete is poured continuously so that there is no joint or break in the building and there is a unflawed building with superior public presentation.

R K Arora, president and pull offing manager, Supertech, told Business Standard, the technique would assist them make a floor in merely seven yearss. Pre-fabricated building includes making electrical and plumbing work at the phase of projecting RCC ( reinforced cement concrete ) on land, which developers are get downing to utilize these yearss. It is expected to cut building clip by more than half, Arora said.

“ However, it has its disadvantage, ” said Raheja. “ As plumbing and electrical work ca n’t be changed at a ulterior phase, we have to be really careful. ” Yet, prefabricated building is deriving gait in India, with many developers traveling for it.

“ Developers are utilizing steel frames to construct a construction and so make the interiorswith prefabricated constructions, ” said Samarjit singh, Ceo of Agni belongingss.

The Dry- wall technique involves building interior walls, ceilings and floors through plastered or microfiber board, joined during installation.Apart from offering sound control, dry-wall building can besides do an interior infinite fire-resistant and moistness resistant. “ This technique is easier, faster and economical compared to the traditional technique of land daubing ” , Raheja said.

Arora, Calls this technique as an expensive 1 in India at this minute, as it involves sound proofing, which is non economical ” However is involves speedy completion of undertaking. It is said that the building technique in India is 20 old ages older in comparion to Western world.because as in India we still use clay bricks but it is non used in western universe but to convey this engineering in India will add upto 10 % of the building cost.Supertech has a section

which keeps a cheque on the invention and engineering in assorted parts of universe.


In 2008-09, Indian existent estate sector experienced a lag as consumer and concern assurance fell due to planetary economic downswing. One of the factors that impacted on-going undertakings is the deficiency of bank liquidness. Despite this, strong economic basicss and GDP growing of over 7 % in the hereafter is expected to take the sector on the recovery way. An estimation by the Singularity Advisors has put the Indian existent estate market size at $ 57 billion in 2007 and projected growing to $ 105 billion by 2013.

As per Cushman & A ; Wakefield, the pan-India commercial office infinite demand during 2009-13 bases at about 196 million square pess, retial infinite demand for the same period is estimated at 43 million square pess, for cordial reception section is expected to be more than 690,000 room darks, while that of residential section to be over 7.5 million units.

Growth drivers

Demographic trends back uping the demand: Nuclear households, lifting income degrees and addition in the disposable income.

Increasing urbanisation is increasing the gait for residential lodging demand. The outstanding gross bank recognition for personal lodging loans touched USD 59.3 billion on March 2009 turning at a CAGR of 20 % between 2005 and 2009, harmonizing to RBI.

As per Cushman & A ; Wakefield, pan-India residential demand is estimated at 7.5 million unis between 2009-13, of which 60 % is expected in the top seven metropoliss, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, NCR and Pune.

Organised retail: The industry estimates at about USD 240 billion in 2007-08 growth at over 6 % -7 % yearly. Organized retailing though is busying little portion in the entire industry, it a fast turning one. The portion of organised retail has doubled from 2 % in 2003 to 4.4 % in 2006.

Market estimations are runing the organized retail to turn about 25 % -30 % yearly.

New policy enterprises are assuring the growing of this sector. Demand from several national and internation retail shops to plunder into Indian market is apparent which is underscoring the growing of this section.

The cumulative retail demand across India is estimated to be 43 million square pess by 2013, out of which demand in the top seven metropoliss is expected to be about 34.6 million square pess.

aˆ? Growth in leisure and concern travel helps increase demand for hotel suites: As per the Ministry of Tourism statistic, domestic tourer visits increased at a CAGR of 12 % to 563 million and foreign tourer reachings rose at a CAGR of 9 % to 5.4 million between 2000 and 2008. With India ‘s GDP expected to increase over 7 % in the following few old ages, concern travel is likely to register strong growing. Harmonizing to Cushman & A ; Wakefield, perkiness in the travel section is expected to hike the pan-India accommodated demand for the cordial reception sector to more than 690,000 room darks by 2013.

Of the entire demand, NCR is expected to represent 15 % of demand owing to Commonwealth Games. Tier 2 and 3 metropoliss are besides likely to bring forth demand for 242,000 room darks by 2013 due to assorted enterprises taken by the Indian authorities to advance commercial and touristry activity in these locations.

aˆ? Growth in nucleus sectors like IT/ITES driving commercial existent estate: With the economic system estimated to turn over 7 % in the close hereafter, robust demand for office infinite is expected from companies, peculiarly in the IT/ITeS, BFSI, Telecom and Pharma sectors. Harmonizing to E & A ; Y estimations, in the twelvemonth 2006 entire supply of commercial office infinite ( rate A, non-captive ) in National Capital Region ( NCR ) , Mumbai, Hyderabad, Bengaluru, Pune and Chennai together was recorded in the scope of 40-45 million sq. foot. The soaking up was chiefly driven by the IT/ITES industry, which accounted for about 70-75 % of entire soaking up.

Harmonizing to Cushman & A ; Wakefield, cumulative office infinite demand between 2009 and 2011 is estimated at about 97 million sq.ft. However, Knight Frank expects cumulative supply of 183 million sq.ft. in the same period. We believe this will take to instability in leases during the period.

In add-on to this, as per the estimations, Indian Information Technology industry is estimated to acquire investings of $ 1 trillion by 2015. An industry with this promising investings in the coming old ages creates an exponential demand for Real estate infinite all over the state in add-on to the top seven metropoliss.

aˆ? FDI and other supportive authorities policies: The authorities presently allows 100 % FDI for townships, lodging and building development undertakings ( including commercial premises, hotels, resorts, infirmaries, educational establishments, etc. ) , capable to certain guidelines. This coupled with floaty demand for residential and commercial existent estate has facilitated strong FDI inflows into the existent estate sector. Between April 2000 and October 2009, FDI of $ 7.6bn flowed into the Indian existent estate sector.

The stimulus bundle unveiled by the authorities in the latter half of 2008-2009 benefited the existent estate sector as funding through ECBs in residential section was allowed. This brought more liquidness into the custodies of domestic existent estate developers.


aˆ? Archaic Torahs on land and rent control: The Urban Land Ceiling Act was enacted in 1976 chiefly with the aim of forestalling land billboard by developers. This statute law fixed a ceiling on the vacant urban land that a individual or an association in urban agglomerations can get and keep with the ceiling bound runing between 500 to 2,000 sq.m. This limited the supply of land with private developers and led to a spike in land cost. While this Act has been repealed in many provinces, Andhra Pradesh, Assam, Bihar, Orissa and West Bengal have non adopted the abrogation. The Rent Control Act governs the payment of just rent to landlords and protects renters against eviction, but sometimes efficaciously allows renters to retain rented belongings. Assorted provinces and Union Territories have formulated their ain rent control statute law with respects to modulating indictable rents, recovery and ownership of belongings, and occupancy rights. These Torahs act as deterrences towards investing in lodging substructure.

aˆ? High levies by the authorities: Stamp responsibility demands to be paid on all paperss that are registered and the rate varies from province to province. With stamp responsibility rates of 13 % in Delhi, 14.5 % in Uttar Pradesh and 12.5 % in Haryana, India has possibly one of the highest degrees of cast responsibility. Some provinces even have dual cast incidence, foremost on land and so on its development. In contrast, the maximal rate levied in most developed markets is in the scope of 1-2 % . The taskforce appointed by the 13th Finance Commission has recommended that the existent estate sector should be integrated into the GST model by subsuming the cast responsibility on immoveable belongings levied by the provinces. While it is presently ill-defined as to how this will impact the existent estate industry, it is widely expected to cut down the belongings levies.

aˆ? Transparency sing belongings rubrics: Another of import issue in existent estate development is that of rubric to belongings. In India, the State does non attest a rubric to lodging or land belongings. Gross records do non stand for paperss of rubric, and ownership is established merely by the sequence of earlier transportations. Therefore, the cardinal inquiry of rubric has frequently led to tremendous judicial proceeding. The system, as it exists, imposes a duty on the portion of the buyer with respect to the review of the rubric. The consequence is tenuous rubrics to set down and non-transparency in belongings minutess which shackles large-scale existent estate development.


Favorable demographic tendencies that include diminishing family size, and increasing income degrees and urbanization along with greater entree to place finance is expected to help the growing of residential existent estate section. With an estimated demand of 7.5 million units between 09E and 13E, 60 % of which is expected to come from the top seven metropoliss ( Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, NCR and Pune ) , this infinite is likely to see more action as both domestic and foreign participants ramp up their operations helped by lifting FDI influxs and involvement from private equity financess.

The commercial existent estate section is expected to retrieve from the slack experienced in 2008-09, led by floaty demand for infinite in cardinal sectors such as retail, cordial reception and IT/ ITES. Industry research indicates that supply would transcend demand in the office infinite market which can take to monetary value volatility in the sub-segment. While the challenges of antediluvian Torahs and high levies remain, progressive action can be expected from the Union Government in footings of GST and abrogation of regressive Torahs. In this overall context private estimation of industry growing from $ 57bn ( in 2007 ) to $ 105bn ( by 2012 ) at a CAGR of 13 % is accomplishable.

Real Estate The prognosis for sector growing is inexorable:

India ‘s residential and commercial existent estate market will stay cautious in early 2012 because of predominating uncertainness in the planetary market and the likeliness of farther interest-rate hikings by RBI, harmonizing to existent estate advisers Jones Lang LaSalle in their study, “ India Real Estate Forecast2012 Across Asset Classes. ” While the soaking up rate in the residential sector will probably be low with a diminution in new launches, demand for commercial existent estate is expected to stay stable in 2012.

Focus sharpens on the green-building sector:

India is a universe leader in the greenbuilding sector, and its place will beef up further in 2012. Adding to India ‘s bing 800 green edifices, the Indian Green Building Council will ease development of 200 green edifices by 2012. The council besides plans to use green patterns to a 1 billion square pess country ( up from the current half-a-billion square pess ) and train 5,000 accredited professionals in such patterns.

Challenges in the Indian Real Estate sector

Demographic displacement of population i.e. a batch of people switching to urban countries from rural countries in hunt of occupations is traveling to do a immense inflow into major metropoliss. Most of the metropoliss are already crowded and it is hard to spread out them at the same gait in which people are coming into it. This will take to degrading state of affairss in any big metropolis. Let us see the figure of the population growing that has been go oning in the Indian metropoliss in the past several old ages.

india population in largest metropolis weber informations

The Population in the largest metropolis of Delhi India was last reported at 22156810 in 2010, harmonizing to a World Bank study published in 2012.

india urban population weber informations

The Urban population in India was last reported at 368608912.43 in 2010, harmonizing to a World Bank study published in 2012

This clearly shows a steep addition that takes topographic point every twelvemonth. So to supply adjustment for everyone is a clear challenge. Now we will compare this with the one-year growing rate of rural population, this will break assist us to understand the land worlds confronting the existent estate sector.

india rural population growing one-year per centum weber informations

The Rural population growing ( one-year % ) in India was last reported at 0.99 in 2010, harmonizing to a World Bank study published in 2012

The Rural population growing ( one-year % ) in India was last reported at 0.99 in 2010, harmonizing to a World Bank study published in 2012. Rural population refers to people populating in rural countries as defined by national statistical offices. It is calculated as the difference between entire population and urban population.

This will take to a deficit of houses since supply of abodes wo n’t be able to run into the demand generated. It is estimated that there will be a deficit of around 10 million units in 2030.

The chief grounds for rise in deficit in low-cost lodging on the supply side is deficiency of handiness of urban land, lifting building costs and regulative issues while deficiency of entree to place finance for low income groups are restraints on the demand side.

Construction costs form about 50 % to 60 % of the entire merchandising monetary value in low-cost lodging undertakings while for luxury undertakings this figure is 18 % to 20 % . Furthermore, bulk of the loans disbursed by Bankss and lodging finance companies are above Rs 10 hundred thousand.

The cardinal issue that deprives people from acquiring a place loan in the Rs 3 to Rs 10 hundred thousand bracket is the sensed high hazard.

Liquidity crunch: There needs to be liquidness in the economic system for the existent estate sector to make good. Because merely so will the people be able to acquire loans to purchase belongings.

Future economic historiographers may retrieve the month that merely ended as Black September. Lehman Brothers collapsed ; the Bank of America acquired Merrill Lynch ; AIG was nationalized ; Bankss such as Washington Mutual and Wachovia were wiped out. As recognition and finance markets around the universe tumbled similar skittless, so did stock markets in India, with the Bombay Stock Exchange Sensitive Index ( Sensex ) falling 3.35 % or 469 points on September 15. The worst affected was the real property index which dropped 7.6 % on the same twenty-four hours. Since so, while stocks monetary values in India have seen monolithic swings, portions of existent estate houses have remained down, falling a sum of 20 % .

The job seems to hold affected residential belongings instead than commercial existent estate or substructure developers. Several factors have contributed to this. First, the Reserve Bank of India ( RBI ) has been raising involvement rates to undertake rising prices. As a consequence, lodging finance companies have had to raise rates on loans. In 2004, involvement rates on lodging loans were 7.75 % ; they have now gone up to 12.75 % . On a $ 50,000 loan borrowed for a period of 20 old ages in 2004, the involvement load was around $ 48,000. This has now gone up to more than $ 100,000

Economic downswing has a major impact on the lodging market. Reducing the ability of people to borrow money.

Most lodging loans in India are at variable instead than fixed involvement rates, which means that monthly mortgage payments — or EMIs ( equated monthly installments ) , as they are called in India — go up when involvement rates rise. As a first step, lodging finance companies increase the term of the loans. When that period extends beyond the on the job life of the place purchaser, the EMIs are increased. Housing finance companies typically consider EMIs up to 50 % of net income. If, in utmost instances, these payments double, place purchasers can be left with nil to populate on.

Intelligibly, defaults on loan refunds are increasing. While specific Numberss are difficult to come by, bankers say this could develop into a crisis. The fiscal meltdown in the U.S. — and the convulsion in the finance sector, which is a cardinal market for information engineering and IT-enabled services — has seen a big figure of finance professionals lose their occupations. These immature, upwardly-mobile executives were the new coevals of house purchasers. They are now salvaging for the proverbial showery twenty-four hours — which has arrived. Assurance degrees are down and house purchase programs have been put on the backburner.

Finance companies and Bankss are besides being careful about loans. Their vetting procedure is taking more clip. Even people who want loans and have the capacity to serve their EMIs are being put through greater examination

Student debt burdens.A When college pupils are graduating with immense debt, their disbursement is greatly restricted-and they ‘re less likely to organize families of their ain. Already, a turning figure of alumnuss have been traveling back in with Mom and Dad, and that ‘s holding an consequence on the residential lodging market.

Student loans are traveling to be yet another hurdle for the lodging market to get the better of. Faced with mounting pupil loan debt, hapless occupation chances and dead rewards, an increasing sum of 25 to 34 twelvemonth olds ( a prized demographic for the lodging sector ) have moved back in with their parents. Almost 6 million 25 to 34 twelvemonth olds now live with ma and pa, up 26 % from when the recession started in 2007. Today ‘s 36.8 % homeownership rate for 25 to 29 twelvemonth olds is at its lowest degree since 1999, and homeownership for 30 to 34 twelvemonth olds is at its lowest rate in 17 old ages.

The good intelligence is that this repressed demand will finally supply a much needed encouragement to the lodging sector. The bad intelligence is that the encouragement will be to a great extent skewed to the rental market as it will take longer than of all time for immature people to measure up for a mortgage, particularly if more and more alumnuss are hit with recognition defects from unpaid pupil debt

Changing demand for office space.A More employees are working remotely, halting in at the office merely sporadically, and that is cut downing the overall demand for office infinite. “ Companies like Cisco have gone from 200 square pess per employee to 50 and 60 square pess. And that ‘s merely traveling to go more common as the work force gets younger and more comfy with the engineering of working remotely. When major renters mark rentals in the following 10 to 15 old ages, they ‘re likely to cut down infinites by 30 % to 40 % , he said. Less edifice of office infinite will be required, so investors need realistic outlooks about the hereafter, he added.

There is a increased demand to be environmentally friendly and sustainable in the building concern. This is taking to newer designs and techniques in the existent estate sector taking to the demand of skilled labor.

Labour Cost are besides lifting and are being hard to beginning due to other better chances available to the labour category people.

Reforms are needed to excite the growing in the existent estate sector. Due to unneeded over ordinance a batch of international participants are loath in come ining our market. The regulative organic structures and there procedures should be made more crystalline.

Rising stuff costs are besides a major concern in the existent estate industry. This leads to increased overall costs and affordability reduces for the general populace.

Restrictions Of The Study

Every research has certain drawbacks. It is hence necessary to integrate them in the thesis to obtain a true position of the research subject. The following are a few drawbacks I faced during my research survey.

The survey makes usage of qualitative analysis, which is interview and questionnaire based in order to happen out the investing chances present in the Indian existent estate market. However quantitative attack has non been used as it would hold prolonged the survey. Hence fiscal statements such as Balance Sheet and Profit and Loss of Real estate listed companies have non been analysed to get at the growing chances of the sector in quantitative footings.

Due to clip restraints, industries associated with the existent estate sector such as building and substructure have non been studied to set up the relentless demand for the real property section in the extroverted old ages. Besides due to difference in rating methods adopted by different states and limited relevant informations ; comparing of Indian to any other state ‘s existent estate market has non been possible.

Another drawback was acquiring through to companies for the intent of an interview. Limited figure of interviewees induced me to roll up farther information through a questionnaire study. Further, there could be a possibility of a colored research being carried out due to all interviewees being Mumbai-based. Therefore I feel that for any farther research on the Indian existent estate market to be effectual, the sample size must be increased to adequately include companies from all parts of India to acquire a clear national position of the existent estate market.

However, the research aims at supplying a wide overview and gives valuable chances to the participants of this industry every bit good as to investors seeking to put in the Indian real property markets. A few valuable suggestions for sector betterment are provided in the undermentioned subdivision.


The largest enlistments to the development of the existent estate section of India are substructure, pricing and authorities Torahs as suggested by most of the respondents in the interviews. Changes brought in these sections can guarantee a better rate of growing for the market and a comparatively more attractive chance for the consumers and investors. As we have discussed in the paper above, Real Estate in India has a powerful demand backed growing. Demand due to population addition, higher allotment to nest eggs in existent estate, realization of mortgaging by consumers and bridging the spread of the current 22 million lodging shortage will be a trigger for sustained growing.

The attempts by the authorities to guarantee faster clearances for active existent estate development would enable developers in a great manner. I recommend that the authorities should put up a separate existent estate division with the aim of individual window clearance of all needed paper work and clearances. Single window basically means that the developers will necessitate to near merely one section for the clearances required in look intoing the rubric of the land, the H2O intervention works, electricity and H2O public-service corporation connexions, permission for building and labour related issues such as installations and rewards. The builders should be given support in guaranting that the land they own and hold is free of invasion from slums. Besides, free clasp land should be released to developers with proper rubric clearances to the land rapidly. Some judicial proceeding procedures take old ages for clearances, which should be put onto a fast path.

Government has rigorous norms in allotment of Floor Space Index ( F.S.I ) . This basically means that the authorities sets a relative relation to the country under building and land owned. In developed economic systems like the United States of America, tubes such as New York bid a FSI in downtown countries of stopping point to 50x, advocates Mr. Kedia. In Indian tubes such as Mumbai, the FSI at an norm is close to 2x. To recite the significance, for every 1 square pes of land owned, a developer can build 50 square pess in New York compared to 2

square pess in Mumbai. Relaxation on F.S.I can let builders to look into costs and maintain monetary values under control doing it low-cost for the in-between category consumers of the economic system.

As discussed in the paper above, a concern in pricing was witnessed in the interviews with the consumers. There is a norm for the builders and developers to bear down the consumers of built up and super built up countries which on an norm are 20 % and 33 % more than rug country severally. However, this norm is non a criterion policy. Of personal experience in buying existent estate, I am cognizant that certain builders are known to bear down in the part of 50 % as super built up besides while some builders remain at the lower set of pricing. If there was standardisation by the authorities for this monetary value opacity, consumers could witness monetary value stabilisation and increase their affordability in lodging. This would be a important encouragement to the sector.

If most of these recommendations were implemented, the germinating existent estate section would witness active engagement from foreign direct investings and domestic consumers and investors.