ABB Real Estate Sector May2009 (1)
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Transcript of ABB Real Estate Sector May2009 (1)
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ASSOCHAM
BUSINESS
BAROMETER
Survey on:
Flowing Sentiments in the Real Estate Sector
May 2009
Prepared by:
GAURAV SHARMA
ASSOCHAM RESEARCH BUREAU
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Affordable housing topped with improved cash flows would recover the real
estate sector in coming three months: Assocham Survey
Anticipating strong policy measures for the real estate sector in the upcoming budget, embattled
realty majors see positive signs of recovery taking place within next three months as affordable
housing rev up demand and improved cash flows address their liquidity concerns, according to an
ABB Survey.
The Assocham Business Barometer (ABB) Survey titled Flowing Sentiments in the Real
Estate Sector, based on an expert (focus) group of 25 real estate firms, found 88 per cent of the
respondent CEOs sensing a quick revival in the sectoral activity within next three months as
developers strategic shift towards affordable housing and a significant price correction in the
housing projects has pepped up the sale of residential property.
As per the Survey (conducted between May 15 25, 2009), a whopping 92 per cent of the
respondent developers considered affordable housing as the most dominating segment to shore up
the demand in real estate sector. The policy actions supplementing the robust demand in the
housing sector is likely to hold the key for a speedy recovery phase in the sector.
With developers concentrated efforts to target the lower and middle income consumer group
during the downturn, 84 per cent of the surveyed CEOs signaled the least impact (in terms of
demand contraction) in the affordable housing segment.
According to the Survey, at a time when luxury housing (more than 50 per cent), SEZ (40 50
per cent), retail space (30 40 per cent) and commercial space (20 30 per cent) were witnessing
steep contraction in demand, affordable housing was the single most resilient segment with a
minimal contraction of zero to ten per cent.
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On the policy front, the surveyed CEOs sought single window clearances for all schemes under
affordable housing in the line of SEZ clearances to enable fast development of units and achieve
the short fall of about 26 million houses at the earliest.
A majority of 76 per cent of the ABB respondents viewed the stimuli given to the sector through
fiscal and monetary measures as inadequate to help boost the demand-supply scenario. However,
of all the measures taken by the RBI and the commercial banks, 64 per cent of the respondent
CEOs were of the view that RBIs allowance to banks to restructure loans to developers has been
the most successful in improving the liquidity for real estate sector.
In the present market scenario, 60 per cent of the surveyed CEOs perceived resurgent stockmarket as the most prominent source of finance to fund the sectors cash requirement, followed
by 28 per cent viewing bank credit as the best viable option.
Hefty funds raised through QIPs in the stock market (exceeding Rs 8,000 crore) along with debt
restructuring would allow the developers to manage their cash flows even more efficiently to
address their liquidity concerns.
Almost 92 per cent of the respondent CEOs strongly agreed to the need to unify stamp duty on
property across all the Indian States. The surveyed developers also sought reduced stamp duty
charges to increase revenue and avoid duty evasion.
Among other policy issues, respondents asked for a central regulation body, recognition of real
estate sector as industry, further relaxed norms for ECB and FDI along with a need for speedier
and hassle free statutory approvals.
The Survey also found that metropolitan cities has been the worst affected market segment
whereas tier II cities have been seen as the most promising one to boost up the sector as
commercial activity moving to these cities and their greater yield has given a tremendous impetus
to investment in the these market segments.
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Among the six metropolitan cities, the financial capital of India, Mumbai, has been ranked first as
the most saturated in terms of real estate assets (both commercial and residential) followed by
Delhi NCR (second) and Bangalore (third) whereas Chennai, Kolkata and Hyderabad were ranked
fourth, fifth and sixth respectively.
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ENCLOSURE:
Assocham Business Barometer (ABB) Survey on Real Estate Sector
The Indian real estate sector plays a significant role in the country's economy. The sector
contributes heavily towards the gross domestic product (GDP). Almost five per cent of the
country's GDP is contributed by the housing sector. The real estate sector is also responsible for
the development of over 250 ancillary industries such as cement, steel, paints etc.
Feeling the pain of global recession and downturn in the Indian economy, real estate has been
among the worst affected sectors to witness significant upheavals amid serious policy changes inthe recent past.
Taking stock of the market dynamics flowing into the real economy, Assocham Research Bureau
is undertaking an expert (focus group) survey on the prevailing sentiments pertaining to the real
estate sector regarding the inherent industry led demand-supply factors, market segmented
scenario according to tier/income classification and the policy measures announced by the RBI
and government.
The questionnaire consists of 15 questions divided into three sections as under:
S.No. Section No. of Questions
1 General Market-Led Factors 5
2 Segmented Market Scenario 5
3 Policy Measures 5
Total 15
You are kindly requested to spare your precious time to be a part of the Survey and revert back
with your responses before May 25, 2009. The results of the survey would be used for an
Assocham Business Barometer Study on Indian real estate market indicating the sentiments
flowing in the sector.
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RESPONDENTs DETAILS
Name: ____________________________________________________
Designation: ____________________________________________________
Organization: ____________________________________________________
Contact Details: ____________________________________________________
Please Note: As your response would form a part of the recommendations to be made to the
government, we assure you high degree of confidentiality about respondents identity would be
maintained.
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SECTION- I: GENERAL MARKET-LED FACTORS
Q1. You expect the real estate market revival to take place within __________?
A. 0-3 monthsB. 3-6 monthsC. 6-12 monthsD. More than 12 months
Q2. The price correction of real estate properties has led to a __________ rise in demand
A. HealthyB. Moderate - HealthyC. ModerateD. Weak ModerateE. Weak
Q3. i) How much demand contraction was visible during downturn of the real estate sector in the
following market segments? (Kindly tick your response)
Market Segment Reduction in demand (in %)
0-10 10-20 20-30 30-40 40-50 More than 50
Affordable Housing
Luxury Housing
Commercial Space
Retail
SEZ
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ii) Which of the following would be the most dominating segment to revive the demand
scenario in the real estate sector?
A.
Affordable housingB. Luxury HousingC. Commercial property spaceD. RetailE. SEZF. Any Other __________________________
Q4. Which among the following is the most dominating factor which has led to an
improvement in the absorption rate?
A. Price correction (drop in the per sq ft rate)B. Reduction in unit sizesC. Promotional packages offeredD. Any Other ___________________________
Q5. In the present market scenario which is the most prominent source of finance to raise
capital to fund the sectors cash requirement?
A. Bank CreditB. Private EquityC. Stock MarketD. Any Other ___________________________
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SECTION-II: CATEGORIZATION OF MARKET SEGMENTS
Q6. Which of the following market segment witnessed the maximum impact of the slowdown
in the sector?
A. Metropolitan citiesB. Tier II citiesC. Tier III cities
Q7. Which of the following market segment you see as the most promising one to boost up the
real estate sector?
A. Metropolitan citiesB. Tier II citiesC. Tier III cities
Q8. Which among the following factors has given the maximum impetus to investment in the
Tier II and Tier III cities?
A. Commercial activity moving to the tier II and tier-III citiesB. Higher property prices in tier IC. Greater yield of tier II and tier-III citiesD. Any Other ________________________
Q9. Which among the following targeted consumer group would contribute the maximum
share (in volume terms) in your real-estate portfolio for the next 2-3 years?
A. Low Income Group (LIG)B. Middle Income Group (MIG)C. High Income Group (HIG)
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Q10. i) How saturated do you find the real estate assets in metropolitan cities? (Kindly tick your
response)
Degree of SaturationCity
Low Low-Medium Medium Medium-High High
Delhi NCR
Bangalore
Mumbai
Chennai
Kolkata
Hyderabad
ii) Which Metropolitan city you think would witness the highest growth in its real estate
market for FY 2009-10?
A. Delhi NCRB. BangaloreC. MumbaiD. ChennaiE. KolkataF. Hyderabad
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SECTION-III: POLICY MEASURES
Q11. Stimuli given to the sector through fiscal and monetary measures has been adequate to
help boost the demand-supply scenario?
A. YesB. No
Q12. Do you think there is still some scope for monetary easing by RBI before its monetary
policy review for Q1 FY 2009-10?
A. AgreeB. Strongly AgreeC. Neither agree nor disagreeD. DisagreeE. Strongly Disagree
Q13. Which of the following measures taken by RBI and commercial banks has been the most
successful in improving the liquidity for real estate sector?
A. RBIs allowance to banks to restructure loans to developersB. Reduced risk weightage on real estate loans to 100 % from 150 %C. Reduction in Repo rate/PLRD. Higher growth in Housing creditE. Any Other _______________________
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Q14. In which of the following, investment norms needs to be further relaxed to improve on
sectors liquidity requirement?
A.
Foreign Direct InvestmentB. Real Estate Mutual Funds / Real Estate Investment TrustsC. External Commercial BorrowingsD. Any Other _______________________
Q15. There is a need to unify stamp duty on property across all the Indian States?
A. AgreeB. Strongly AgreeC. Neither agree nor disagreeD. DisagreeE. Strongly Disagree
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What further steps you think the policy makers need to take to revive the real estate sector?
We greatly appreciate and value your time for filling up the questionnaire.
Thanks and Regards
Gaurav Sharma
Assocham Research Bureau