A project on

An Overview of Real Estate Market

Name of Researcher: Sumit Kataruka

Room No: 24

Roll No: 611

Name of Research Guide: Prof. Vijay Anand Sah

Research Institution: St. Xavier’s College, Kolkata

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 Acknowledgement

With great pleasure I extend my gratitude towards Prof. Vijay Anand Sah under whose valuable
guidance, constant interest and encouragement I have been able to complete the Project
Successfully. This Cooperation is not only useful for this project but will also be a constant source
of inspiration for me in the future. I would also like to thank the Vice Principal Rev. Dr. Dominic
Savio S.J. the Dean of commerce Prof. Swapan Banerjee , the HOD Prof. T. Sengupta and all the
other Marketing Professors for giving me the opportunity to put into practice all that I have learnt
in college through this project.

Signature of the Researcher

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 Table of Content

CHAPTERS PAGE NUMBER

CHAPTER 1

INTRODUCTION 5 - 10

OBJECTIVE OF THE STUDY

REVIEW OF LITERATURE

RESEARCH METHODOLOGY

TIME SCALE

SCOPE OF STUDY

AREA OF WORK

DATA COLLECTION METHOD

LIMITATIONS OF STUDY

CHAPTER 2 11 - 21

COMPANY PROFILE

INDUSTRY PROFILE

CAUSES FOR REAL ESTATE BOOM

CONSTRAINTS IN REAL ESTATE

INVESTMENT

CHAPTER 3 22 - 52

FACTORS & PARAMETERS CHOSEN FOR

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SURVEY

DATA ANALYSIS

SWOT ANALYSIS 52

CHAPTER 4 53 – 54

FINDINGS

RECOMMENDATIONS

CHAPTER 5 55

CONCLUSION

APPENDICES 56- 60

QUESTIONNAIRE

BIBLIOGRAPHY

Chapter 1

Introduction

The high growth rate of the Indian economy and the rising aspirations among the average Indian
population has completely changed the Indian Real Estate Scenario. The sector is seeing
unprecedented amount of activities and will continue to do so in the foreseeable future. Each year

4
thousands of new players are entering the sector, from big players like Tata & Godrej to very
small & niche players. The customer today is clearly spoiled for choice. With so much of
construction activities happening, the customer does not really know which property to buy or
invest in. For many a customer it is a once in life choice that they need to make. There is a need
for professionals in the field of Property Marketing & Consulting, who can help the customers,
make an informed & correct choice and can also help the developers & builders take their quality
product to the right market segment.

OBJECTIVES OF THE STUDY:

This project has been prepared with the aim to achieve the following objectives:

 To know the degree of importance of various factors which people consider while
purchasing a house.

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  To examine the present factors of real estate boom.

 To present the future constraints of real estate investment in India.

REVIEW OF LITERATURE

 Kolkata is now more or less saturated and the high demand for residential properties has increased
rates beyond the reach of middle class. As a result, the sub urban towns have become destinations
for new residential projects that offer affordable quality housing to the middle class as well as
luxury housing for high end users. As these sub unbans are now increasingly generating
employment, they will decide the future growth pattern of the City.

6
 The business and trader class still largely dominate old residential areas in west and northwest
Kolkata. Similarly the large multi-storey societies in East Kolkata have found preference with the
service class. The elite class, in terms of social status, i.e. politicians, bureaucrats and celebrities,
restrict themselves to central and south Kolkata. Suburban area have developed as alternative
housing solutions and are inhabited mostly by professional and service class people, as well as an
increasing upper middle class segment.

 Delhi offers a good quality of living with many high-end residential projects by private
developers. These new developments offer uninterrupted power supply, community and health
care centers along with facilities like a swimming pool, clubhouse and other services. As per
industry estimates, projects with approximately 5000 dwelling units have been announced in
Delhi. Since it will be maturing as an independent city, occupancies will improve but in the
present context, it is an oversupply situation.

 Noida has experienced rising prices in its existing commercial, retail and residential real estate.
The new developing residential sectors are along the Greater Noida expressway. Occupancies in
Noida are good and prices are looking northward. It is a good destination for the middle class, as
far as accessibility, social and physical infrastructure and growth perspective are concerned.

RESEARCH METHODOLOGY:

What is research?

Research can be defined as a scientific and systematic search for pertaining information on a
specific topic. We define research as the systematic design, collection, analysis and reporting of

7
data and findings relevant to a specific situation facing the company. The main aim of research is
to find out the truth which has not been discovering yet.

My research shall focus on analyzing factors that have led to the growth of India’s emerging real
estate market and the relative importance of investing in this market. I shall follow a qualitative
approach for my research. This would comprise of a questionnaire survey and face to face
interactions with several well-versed people in this field including real estate analysts, consultants,
property brokers and listed real estate companies. I shall also examine relevant quantitative data
consisting of facts and figures from reputed sources for the Indian Real estate market in order to
reach a suitable conclusion for investing in the same.

Time Scale:

The Project work was carried out for a period of 34 days starting from 1st December to 4th January
2012.

Scope of the Study:

The project undertaken makes me able to improve my professional skills and expertise. It helps me
in getting an idea of Real Estate industry and its importance in our life. It increases my confidence
on professional ground by dealing with high profile corporate that are very hard to convince. As
for as company’s benefit is concerned, this project helps company to know its market condition
and behaviour and perception of customers.

Area of Work:

My Area of Work was Sales and Marketing.

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Data Collection Method -

Data was collected by using primary as well as secondary methods of data collection.

Primary Method

1) Face to Face interview

2) Questionnaire

3) Telephonic Survey

4) Survey through E-Mail

5) Survey through Reference

Secondary Method

1) Magazines on Property

2) Internet sites on Property

3) Internet websites of popular property developers of India.

Sample Size:

Out of the total companies working in India in the field of real estate 50 major players have been
selected for the purpose of the study.

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Limitations of the Study:

During the Study certain limitations were encountered:-

1) Travelling to far-off places from Kolkata every day.

2) Loss of time in sending out questionnaire.

3) Delayed responses from people.

4) Lack of certain data.

Chapter 2

COMPANY PROFILE-

4Walls is a venture started in 2010 by professionals with combined experience of more than 50
(fifty) years in the field of Real Estate & Financial Services. 4 Walls has the vision to become the

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most preferred property marketing & consulting company by maintaining service levels at par with
the best in the world.

COMPANY: - 4Walls

ADDRESS: - P -121, Block- B, Lake Town, Kolkata

PINCODE: - 700089

EMAIL: - www.4walls.co.in

TELEPHONE: - +91 33 40068060

Teams:

Navneet Baheti, the Lead Partner, is an MBA & Cost Accountant and has over thirteen years of
corporate experience, half of it in Real Estate and another half in Banking. Navneet was last the
Chief Manager (managed mortgages & unsecured loan business) with ICICI Bank, the largest
private sector bank in India. Prior to which he has worked for 6 years with Merlin Group, one of
the largest real estate developer in Eastern India.

Nitin Baheti, Co-Partner, is a commerce graduate with over 5 years of experience in Real Estate.
Nitin had been engaged as the Commercial Manager with one of the largest Real Estate
Development Company in the country.

They are being assisted in this venture by a team of extremely talented professionals, most of who
come from Real Estate/Banking background.
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Navneet & Team come not only with rich corporate exposure & experience, they enjoy
tremendous network with many HNIs, Businessmen and Top Corporate Executives.

The entire team is being guided and directed in this venture by Mr. Brajesh Kumar Baheti, who
has been engaged in the real estate marketing for over twenty five years. Mr. Baheti has rich
experience in this line of business and has great professional & personal contacts in Kolkata
market.

Operations, Infrastructure & Services:

4 Walls is currently operating in Kolkata operations with a team of 20 members. It is presently

active in the following fields:

 Project Marketing.
 Project Underwriting.
 Real Estate Investment Services.
 Mortgage Finance.

Current Associations:

4 Walls is presently associated with reputed Builders & Developers such as Rameswara Group,
Ambuja Realty, Merlin Group, Ideal Group, Space Group, MJ Group, Ruchi Group, Eden Group,
Larica Group, Purti Group, Unitech, among others.

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4 Walls is also a member of “Credai Bengal” and is a regular participant in all Credai Bengal
events including Home Front & Realty Expo.

Business:

During the 20 (twenty) months of its operations, 4 Walls have facilitated more than 300 Real
Estate Deals in Residential and Commercial Segments combined. 4 Walls have primarily been
active in localities such as Rajarhat, New Town, Sector V , E.M.Bypass and sub-urban areas of
Kolkata.

Contact:

For future details, visit us at www.4walls.co.in, contact us @9836165000 or mail to

info@4walls.co.in.

INDUSTRY PROFILE

REAL ESTATE MARKET

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 Construction sector has been the focus sector for some time as its impact on the
economy is big by virtue of its being a huge employment generator. The real
estate market is booming. It’s growing at around 12% per annum.

 Today its boom time in the real estate market and homebuyers couldn’t have
asked for a better opportunity to buy a home. Indian developers are now not
talking of anything less than world class. Infrastructure and economic
development of some cities as well as the housing shortages are driving the boom.
There is a fundamental change in the approach of the buyer, developer and the
government. They all are seeking quality development. The middle class demands
the best that money can buy. With the competition in the market, developers have
to deliver the best within specified time frames and the government, discharged
from the duty of construction has to keep everyone’s interest at heart.

The Major reasons for boom in the real estate market are:

Easy Availability of Loan and Lower Interest Rate

 There is easy access to loans. The housing finance has posted a growth of 29
percent in the last fiscal, touching 53,685 crores. Further, interest rates on
housing loans have come down and are much lower, between seven to eight
percent as compared to 13-14 percent five years ago.

Affordability

 Another major reason for boom is that housing in India has become more
affordable in recent times. A decade ago, a house cost nearly 15-20 times an
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 individual’s annual salary. Today the cost of a house has come down to just about
three to four times an individual’s annual pay package.

Increase in number of nuclear families

 In the past, owing a home was a dream realized only after retirement. Largely
because people looked at it as a means of providing for their children, having
themselves lived in a joint family setup. Joint families are progressively getting
included in the pages of history book even in a country like ours. Not surprisingly
the rise in the number of nuclear families is pushing demand for housing further
to cater to a generation that is not averse to taking risks. Nor are they hesitant
when it comes to paying a price to realize their dreams

Investment Option

 Competitive offers by home loan companies combined with good quality projects
developed by reputed builders having a number of amenities have made investing
in properties very attractive Wherever there is growth and opportunity, investors
are bound to be around and traditionally real estate has been a safe investment
option. Property is looked upon by many as an investment option that appreciates
substantially when compared to other traditional tools of investment.

Migration Of Industries

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Another major reason for boom in the real market is the migration of industries to
smaller towns leading to rural progress. With villages turning into towns and
towns becoming metros, the property market is growing steadily. This revolution
has directly resulted in greater demand for not just housing but also for the
overall real estate market with heightened demand for better infrastructure,
transportation facilities, entertainment zones, shopping malls, multiplexes and
more.

Causes for Present Real Estate Boom

 Foreign Funds

The Government has allowed FDI in the real estate sector with certain caveats. Recently the
Cabinet Committee on Economic affairs has decided to permit 100% FDI in forms of housing,
hotels, resorts, premises, educational institutions, recreational facilities, hospitals and city and
regional level infrastructure in order to attract higher investments. Earlier, restrictive norms were
imposed on foreign investments with their presence permitted only in the integrated townships.
They invest in urban infrastructure like hotels, shopping malls, large scale residential complexes in
new townships, InfoTech parks and special economic zones. Over a half a dozen domestic realty
funds have been setup so far with a corpus of over Rs. 3,500 crore.

 Real Estate Exposure of Banks

Commercial banks exposure to the real estate sector almost doubled in the first 10 months of
2009-10 over the March 31, 2009 level. In real estate, banks advances for 2009 were Rs.
26,600 crore against Rs. 17,355 crore the year before. The total outstanding loans to real
estate rose by 84.4% as on January20, 2010, according to RBI’s report on macroeconomic
16
and economic developments in 2009-2010 released. In the meantime, the housing finance
industry started to expand rapidly, making home loans easily available to everyone. The
supply increased enormously and the demand remained steady, as prices had gone beyond
the realistic levels.

 Shortage of Land for Special Economic Zone

In the great rush to developing special economic zones a schism have emerged between the
companies that posses land for the projects and those that don’t. As many as 125 projects for
over 2, 13,023 acres (86,208 hectares, which is more than half the area of the national capital)
were considered at a meeting to a massive 1,48,290 acres or 70% of the projected land size
these SEZs. For instance Mahindra Realty does not have the 2,500 acres land for it s
proposed SEZ as yet. Out of the 23 multi product SEZ projects for which the data is
available, only three were in possession of a total of 30,250 acres of land a month ago. Of
this, Reliance Industries accounted for 25,000 acres. Another seven projects had managed to
get a portion of the 27,510 acres of the total land they sought. The remaining thirteen projects
did not have land totaling 1,35,000 acres available. Of this Adani Exports Limited did not
have the 75,000 acres if land available at that stage. The companies are not having the
required land for their projects making the prices of land very high.

 Investment by IDFC

The Infrastructure Development Finance Company (IDFC) plans to invest Rs.1,000 crore
every over five years on township projects, InfoTech parks, hotels, retail and transport
sectors.

 Commercial Boom

According to an expert to a real estate consultancy, there are currently 18 malls in New Delhi,

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Gurgaon, Nodia and Faridabad, with approximately built up space of 3 million sq. ft. While
66 new mall projects have been announced, the crush in the meantime is on the existing
space. Abhijit Das, head, Ansalplaza Mall Management Company, confirms the rental
increase. Shops on the first and second floors of the mall, he says which were being leased at
rates between Rs. 175 and Rs. 225 per sq.ft. two months ago are now being out at a minimum
of Rs. 250 per sq. ft.

 10-Year Tax Holiday

The finance Ministry has announced a 10-year tax holiday for developers of Industrial parks
set up from April 1, 2009 to March 31, 2011. According to the Industrial Park Scheme 2010
notified by the Central Board of Direct Taxed (CBDT), the industrial park developers will be
eligible for 100% tax Deduction which is to be provided for 10 consecutive assessment years
out of 15 years after the commencement of operations of such units. The developers will be
free to choose the 10 consecutive years for the purpose of availing themselves of the tax
holiday.

Constraints in the Real Estate Investment

The various constraints are as under-

Urban Land Ceiling Regulation Act (ULCRA)

The central government has replaced this archaic law in 1999-2000, but the state government
has not followed the lead. Some states like Punjab, UP, MP, Rajasthan, Gujrat and Orissa are
yet to act on it. This law has been failed and this is the right time to act on it and to release
more land into the market. This will definitely lower the price of land, which accounts for
about 50% of the price of real estate property in India, unlike the developed countries, where
it is much less.

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Clear Title

90% of the lands in India do not have clear title. The ownership is unclear, thereby creating a
scarcity of land. This is due to poor record keeping and outdated complaint processes. All
updated records must be computerized to increase transparency in land ownership. And
special fast track courts must be set up to clear all legal land disputes in a short period of
time.

Stamp Duty & Registration

The cost of transferring land titles must be reduced from rates of 10% stamp duties to
reasonable levels of 3 to 5%; similar to prevailing rates in developed countries. This will
encourage sellers to pay stamp duties, instead of trying to cheat the government, thus
increasing the revenue for the country. The high duties have also encouraged unaccounted
money being used in most real estate transactions in India. The registration procedure should
also be made transparent and simple so that corruption can be
minimized.

Rental Laws

Obsolete tenancy and rental control laws keep a large part of the urban properties off the
market. The rental laws must be revised to protect the owner and his/her property from the
tenant. The tax laws must be revised to make renting of properties a financially viable option.
Some states like Maharashtra, Goa, Bengal and Karnataka have already made amendments to
the rent act.

Foreclosure Laws

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Though the level of foreclosure for the housing finance companies are relatively low at
around 1.5 to 2%, these must be revised and made up-to-date to suit the current context. The
laws for non-payment of Equated Monthly Installments (EMIs) and consequent foreclosure
and repossession of the property law must be revised so that the financing companies have
the final rights on the property, which is collateral for the housing loan.

Building Codes, Standards & Permissions

There are several building guidelines and standards in various cities and states, however they
are neither followed by the developers nor implemented by the authorities.

Development and Planning

In India development and planning concerned with real estate sector is not up to the mark.
The city or state authorities must use professionals to plan and execute all development plans
for cities and towns, with future development in mind. This must be done without political
compulsions. This will allow proper zoning within cities and towns, green areas and other
infrastructure systems to fall into place as the development plans unfold.

Present Scenario in India

Up to the end of 20011 real estate sector in India was growing at a very high rate. There was
a situation of boom in this sector. The home loans were easily available and RBI was
following very liberal policies regarding the interest rates. But in 2012 the things are
changing due to the high rate of inflation in the Indian economy. There is uncertainty in the
market as share market is showing depression and the RBI is also increasing the Bank rate
leading to the increase in the interest rates. So the buying power is reducing. The major
reasons for this downfall are inflation and the low rate of GDP.

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Chapter 3
FACTORS AND PARAMETERS CHOSEN FOR SURVEY

Factors were -

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1. Brand name – Brand name is something that immediately comes into your mind when you
think of any product. Even in case of purchase of property, brand name plays a major role. Many
people to prefer buy the property developed by well-known and reliable developers. Moreover
properties developed by established developers help buyers in getting the best returns, as these
properties can be sold any time at a premium.

2. Advertisements – It’s an old belief that advertisement can sell literally anything. In order to
ascertain whether it’s true for property or not, it was also included as a first pull factor in the
questionnaire.

3. Location – This deals with property and connectivity to road links, airports, railway stations and
bus stops. The more approachable the property is to the public transport terminal, the more value it
holds. Proximity to the Central Business District also plays an important role in this aspect.

4. Affordability – Budget plays an important role in short listing the options available in the
market. Its only when the budget is decided, one starts looking for the available options in the
price range decided.

Some other factors were:

Need for More Space

Need for Better facilities

Need for Healthy environment

Want for Quality Construction

Lack of facilities in previous residence

Proximity to Workplace.

Others.(investment, own house, job transfer)

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Parameters were

1. Proximity to Kolkata- This parameter includes all the location factors such as proximity to
central business district, to schools, to hospitals, existence of huge shopping malls, etc.

2. Business Hub – This parameter helps in analyzing the perception that people have about the
job opportunities and business prospects available in different cities.

3. Education Hub- This parameter helps in analyzing the perception that people have about the
education system and facilities available for better education in different cities.

4. Quality of Living – This parameter helps in analyzing what people think about the style of
living.

5. Law and Order – This parameter helps in analyzing what people about the safety and security
situation.

6. Infrastructural Development – This parameter helps in analyzing how respondents rate cities
chosen for the survey, on the basis of conditions of road and highways, availability of public
transport, etc.

In order to know the degree of importance of various factors, which people consider while
purchasing the property, various factors were taken into consideration.

Factors were:

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External Factors influences the choice of customers-

1. Price Range

2. Connectivity to Public transport

3. Property Dealers

4. Proximity to workplace

5. Availability of loan

6. Experts on T.V. shows related to Property

7. Easy Payment Plans

8. Rate of Interest

9. Resale Value

10. Clear title of property

11. Proximity to School

12. Proximity to Hospitals

13. Proximity to Entertainment Centers

In Locality Factors influence the choice of customers –

1. Peaceful Locality

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2. Pollution Free environment

3. Population/occupancy

4. Quality of Construction

5. Maintenance/ maintenance cost

6. Suitability of Home Type

7. Utilization of space

8. Water Availability

9. Power Backup

10. Safety-Security

11. Recreational facilities/Sports Complex

12. Car Parking facility

13. Club Membership.

DATA ANALYSIS

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 In order to attain the objective of knowing the degree of importance of various factors which
people consider while purchasing the property, A questionnaire was included. From the
questionnaire the responses to these questions were recorded in the computer and analyzed.

 While in order to know about the perception of people about different cities and also to know the
major reasons for buying the property three questions were included in the questionnaire.
Responses to these questions were recorded in MS excel and were analyzed through tables and
Charts in MS word.

 The following pages of the report contain Factor Analysis.

Q.2 FACTOR ANALYSIS OF EXTERNAL FACTORS –

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 Rotated Component Matrixa

Component

1 2 3 4

peaceful locality .457 .156 -.004 .255

pollution free environment .631 .293 -.124 -.411

population/occupancy .645 -.045 .187 -.167

quality of construction -.183 .724 .172 -.112

maintenance cost .255 -.090 -.022 .730

suitability of home type .163 .521 -.564 .347

club membership -.195 .773 -.131 .149

car parking .064 393 .590 .207

safety and security .605 -.086 .079 .262

power backup -.255 -.016 .793 .131

water availability .025 -.004 .016 .689

utilization of space .316 .186 .474 .316

Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.

a. Rotation converged in 6 iterations.

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 FACTOR 1 ANALYSIS –

NI SI AI VI VMI TOTAL

prox. To workplace 2 4 16 80 23 125

prox. To 7 6 51 48 13 125
school/hospital
9 10 67 128 36 250

HYPOTHESIS FORMULATION-

It improves the understanding of the situation under study, Identify the variables under study and Helps
to frame hypothesis that are testable.

Working Hypothesis (H1) – “Locational factor will influence the choice of customers while choosing
the housing complex”.

Null Hypothesis (Ho) –“Locational factor will not influence the choice of customers while choosing
the housing complex”.

Alternative Hypothesis - “Locational factor will influence the choice of customers while choosing the
housing complex”.

HYPOTHESIS TESTING –

CHI SQUARE TESTING - It allows finding independence of two attributes, population is divided
into small categories according to two attributes. Using chi square method can verify that whether
these two attributes are dependent on each other or not.

28
 Expected value =

S.N Observed value Expected value (Fi-ei)2 (Fi-ei)2/ei

1 2 4.5 6.25 1.38

2 7 4.5 6.25 1.38

3 4 5 1 .2

4 6 5 1 .2

5 16 33.5 306.25 9.1

6 51 33.5 306.25 9.1

7 80 64 256 4

8 48 64 256 4

9 23 18 25 1.38

10 13 18 25 1.38

total 32.12

χ2 = ∑

χ2 = 32.12

Degree of freedom= (no. of rows -1) x (no. of columns-1)

(2-1) x (5-1) =1x4 = 4

29
 Alpha value = 5% i.e. 0.05 (see the appendix at last)

χ2tab = χ alpha value, Degree of freedom

= χ 0.05, 4 (see in the table1)

= 9.49

χ cal > χ tab

FINDINGS - So the Working Hypothesis (H 1) will be accepted and it proves that Locational factor
will influence the choice of customers while choosing the housing complex.”

ANALYSIS OF FACTOR 2 -

SN FACTORS NI SI AI VI MI TOTAL

1 brand image 19 45 50 6 4 125

2 property dealers 18 52 44 3 8 125

3 Total 37 97 94 9 12 250

HYPOTHESIS FORMULATION –

Working hypothesis (H1) – The Brand name of company and dealers in the market will influence the
choice of customers in choosing housing complex.

Null Hypothesis (Ho) - The Brand name of company and dealers in the market will not influence the
choice of customers in choosing housing complex.

Alternative Hypothesis - The Brand name of company and dealers in the market will influence the
choice of customers in choosing housing complex.

Hypothesis Testing – By using chi –square method -

Expected =

30
S.N Observed value Expected value (Fi-ei)2 (Fi-ei)2/ei

1 19 18.5 .25 .013

2 18 18.5 .25 .013

3 45 48.5 12.25 .25

4 52 48.5 12.25 .25

5 50 47 9 .19

6 44 47 9 .19

7 6 4.5 2.25 .5

8 3 4.5 2.25 .5

9 4 6 4 .6

10 8 6 4 .6

Total 3.10

χ2 = ∑

χ2 = 3.10

Degree of freedom = (no. of rows -1) x (no. of columns-1)

= (3-1) x (5-1) =2 x 4 =8

Alpha value = 5% i.e. 0.05 (see the appendix at last)

χ2tab = χ alpha value, Degree of freedom

= χ 0.05, 8 (see in the table1)

31
 = 15.50

So, χ cal < χ tab

FINDINGS - So the Null Hypothesis (Ho) will be accepted and it proves that Brand name and dealers
in the market will not influence the choice of customers while choosing the housing complex

ANALYSES OF FACTOR 3 -

SN FACTORS NI SI AI VI MI TOTAL

1 Payment type 12 34 54 18 7 125

2 Interest rate 4 12 62 32 15 125

total 16 46 116 50 22 250

HYPOTHESIS FORMULATION –

Working hypothesis (H1) – Interest rate and type of payment will influence the choice of customers
in choosing housing complex.

Null Hypothesis (Ho) - Interest rate and type of payment will not influence the choice of customers
in choosing housing complex.

Alternative Hypothesis - Interest rate and type of payment will influence the choice of customers in
choosing housing complex.

Hypothesis Testing – By using chi –square method –

Expected value =

32
SN Observed value Expected value (Fi-ei)2 (Fi-ei)2/ei

1 12 8 16 2

2 4 8 16 2

3 34 23 121 5.2

4 12 23 121 5.2

5 54 58 16 .27

6 62 58 16 .27

7 18 25 49 1.96

8 32 25 49 1.96

9 7 11 16 1.45

10 15 11 16 1.45

TOTAL 21.76

χ2 = ∑

χ2 = 21.76

Degree of freedom= (no. of rows -1) x (no. of columns-1)

(2-1) x (5-1) =1 x 4 =4

Alpha value = 5% i.e. 0.05 (see the appendix at last)

χ2tab = χ alpha value, Degree of freedom

33
 = χ 0.05, 4 (see in the table1) = 9.49

So, χ cal > χ tab

Findings – working hypothesis (H1) will be accepted it means Interest rate and type of payment will
influence the choice of customers in choosing housing complex.

FACTOR 4 ANALYSES –

SN Factors NI SI AI VI MI TOTAL

1 connectivity to 8 30 59 16 12 125
public transport
2 clear title of 2 17 33 40 33 125
property
3 Total 10 47 92 56 45 250

Hypothesis Formulation –

Working Hypothesis (H1) – clear title and connectivity will influence the choice of customers in
choosing housing complex.

Null Hypothesis (Ho) - clear title and connectivity will not influence the choice of customers in
choosing housing complex.

Alternative Hypothesis - clear title and connectivity will influence the choice of customers in
choosing housing complex.

Hypothesis testing – By using chi square method -

Expected =

34
 S.N. Observed value Expected value (Fi-ei)2 (Fi-ei)2/ei

1 8 5 9 1.8

2 2 5 9 1.8

3 30 23.5 42.5 1.7

4 17 23.5 42.5 1.7

5 59 46 169 3.67

6 33 46 169 3.67

7 16 28 144 5.14

8 40 28 144 5.14

9 12 22.5 110.25 4.9

10 33 22.5 110..25 4.9

χ2 = ∑

χ2 = 34.28

Degree of freedom= (no. of rows -1) x (no. of columns-1)

(2-1) x (5-1) =1 x 4 =4

Alpha value = 5% i.e. 0.05 (see the appendix at last)

χ2tab = χ alpha value, Degree of freedom

= χ 0.05, 4 (see in the table1) =9.49

As χ cal > χ tab

35
 Findings – So working hypothesis (H1) will be accepted it means clear title and connectivity to public
transport will influence the choice of customers in choosing housing complex.

Analysis of Factor 5 -

1 price range 4 6 17 53 45 125

2 home loan 9 10 24 44 38 125

availability
3 resale value 3 8 12 48 54 125

4 total 16 24 53 145 137 375

Hypothesis Formulation –

Working Hypothesis (H1) – the Cost effectiveness factor will influence the choice of customers in
choosing housing complex.

Null Hypothesis (Ho) - the Cost effectiveness factor will not influence the choice of customers in
choosing housing complex.

Alternative Hypothesis - the Cost effectiveness factor will influence the choice of customers in
choosing housing complex.

HYPOTHESIS TESTING – By using chi square method -

Expected =

36
 SN Observed value Expected value (Fi-ei)2 (Fi-ei)2/ei

1 4 5.3 1.69 .31

2 9 5.3 13.69 2.58

3 3 5.3 5.3 1

4 6 12 36 3

5 10 12 4 .33

6 8 12 16 1.33

7 17 26.5 90.25 3.40

8 24 26.5 6.25 .23

9 12 26.5 210.25 7.93

10 53 48.3 22 .45

11 44 48.3 18.5 .38

12 48 48.3 .09 .001

13 45 45.6 .36 .007

14 38 45.6 57.76 1.26

15 54 45.6 70.56 1.54

16 Total 23.74

χ2 = ∑

χ2 = 23.74

Degree of freedom= (no. of rows -1) x (no. of columns-1)

(3-1) x (5-1) =2 x 4 = 8

37
 Alpha value = 5% i.e. 0.05 (see the appendix at last)

χ2tab = χ alpha value, Degree of freedom

= χ 0.05, 8 (see in the table1) =15.50

As χ cal > χ tab

Findings - So working hypothesis (H1) will be accepted it means clear title and connectivity to
public transport will influence the choice of customers in choosing housing complex.

CONCLUSION –

 Thus with the help of factor analysis we come to the conclusion that following External
factors are most important.

1. Home Loan Facility – Many people in India still prefer to buy property by taking
home loan. Easy home loan is one of the major reasons for the boom in the real estate market. Stiff
competition in the home loan segment has brought in a wide range of products to the customers for
them to choose from. These days the top property developers themselves help the customers to avail
home loan. They provide the customers with necessary details regarding home loan.

2. Price – Price or in other words budget is always an important factor while

purchasing something. And when it comes to the property, price is a major detrimental factor.
According to the budget people choose the property. Even the leading developers are well aware of
this fact and thus have been building homes for all the classes of people – Independent Villas and
luxurious flats for high class and upper-middle class people and Small flats for middle class people.

3. Proximity to workplace – Well no doubt people want to stay near to their

workplace. No one actually likes to spend hours in commuting between the workplace and home.
38
Developers are well aware of this fact too and therefore opening up new projects only in those places
where the industries are existing or are coming up.

4. Resale Value – It has been realized that people while purchasing the house also
considers the resale value of it. No one likes to spend money on something, which will fetch no return
after a certain period of time. Property fetches high returns for its owner. It is considered by many as
the safest investment tool.

5. Proximity to School /hospitals – A hospital near one’s home definitely has its pros like availing
medical facility in case of emergency; it saves on a lot of time and if a family member is hospitalised
in a hospital that is close to their home and a school near home also save time of their children’s.

6. Clear title - customers don’t buy a property if the title of property is not clear. If title is not clear or
marketable it will cause problem in future and financial institutes refuse to finance on such properties.

7. Connectivity to Public Transport - Public transportation provides personal mobility and freedom
for people from every walk of life. And better Access to public transportation gives people
transportation options to get to work, go to school, visit friends, or go to a doctor’s office.so having
home at nearby transport is what people look for these days.

8. Payment type – people these days became more concern about the available plan for payment like
easy/ flexible or it’s linked to construction and the charges joined with them.

9. Interest rate - When deciding regardless of whether or not to buy a property the rate has a
dramatic effect on buying power and ought to be taken into consideration. Sellers also ought to be
conscious of where interest rates are heading due to the fact the next buyer for their home could have
merely got priced out driving values for your home downward.

39
 Q.3 – FACTOR ANALYSIS OF LOCATIONAL FACTORS –

ANALYSIS OF FACTOR 1-

Population/occupancy 11 12 34 42 16 125

Pollution Free 9 13 30 51 22 125

environment
safety /security 4 9 14 62 36 125

Peaceful locality 6 32 48 28 11 125

Total 30 66 126 183 85 500

HYPOTHESIS FORMULATION –

Working Hypothesis (H1) – the surrounding factor will influence the choice of customers in
choosing housing complex.

Null Hypothesis (Ho) - the surrounding factor will not influence the choice of customers in
choosing housing complex.

Alternative Hypothesis - the surrounding factor will influence the choice of customers in
choosing housing complex.

HYPOTHESIS TESTING – By using chi square method –

40
 Expected =

SN Observed value Expected value (Fi-ei)2 (Fi-ei)2/ei

1 11 7.50 12.25 1.63

2 9 7.50 2.25 .3

3 4 7.50 12.25 1.63

4 6 7.50 2.25 .3

5 12 16.50 20.25 1.22

6 13 16.50 12.25 .74

7 9 16.50 30.25 1.83

8 32 16.50 24.25 1.46

9 34 31.50 6.25 .19

10 30 31.50 2.25 .07

11 14 31.50 306.25 9.72

12 48 31.50 272.25 8.64

13 42 45.75 14.06 .30

14 51 45.75 27.56 .60

15 62 45.75 264.56 5.7

16 28 45.75 315.06 6.88

17 16 21.25 27.56 1.29

18 22 21.25 .56 .026

19 36 21.25 122.37 5.75

20 11 21.25 113.3 5.33

41
 21 Total 53.5

χ2 = ∑

χ2 = 53.5

Degree of freedom= (no. of rows -1) x (no. of columns-1)

(4-1) x (5-1) =3 x 4 =12

Alpha value = 5% i.e. 0.05 (see the appendix at last)

χ2tab = χ alpha value, Degree of freedom

= χ 0.05, 4 16(see in the table1) = 21.09

As χ cal > χ tab

Findings - So working hypothesis (H1) will be accepted it means Surrounding factor will
influence the choice of customers in choosing housing complex.

ANALYSIS OF FACTOR 2 –

1 Club 28 66 16 6 5 125
membership
2 Space 20 48 38 12 7 125
utilization

3 Car parking 16 57 37 9 8 125

42
 4 Power 18 66 32 4 5 125
backup
5 Total 82 231 123 31 25 500

HYPOTHESIS FORMULATION –

Working Hypothesis (H1) – additional factors will influence the choice of customers in choosing
housing complex.

Null Hypothesis (Ho) – additional factor will not influence the choice of customers in choosing
housing complex.

Alternative Hypothesis – additional factor will influence the choice of customers in choosing
housing complex.

HYPOTHESIS TESTING – By using chi square method –

Expected =

SN Observed value Expected value (Fi-ei)2 (Fi-ei)2/ei

1 28 20.5 56.25 2.74

2 20 20.5 .25 .01

3 16 20.5 20.25 .98

43
 4 18 20.5 6.25 .30

5 66 57.75 68.06 1.17

6 48 57.75 95.06 1.64

7 57 57.75 .56 .01

8 66 57.75 68.06 1.17

9 16 30.75 10.5 .34

10 38 30.75 52.56 1.7

11 37 30.75 39.06 1.27

12 32 30.75 1.56 .05

13 6 7.75 3 .38

14 12 7.75 18 2.32

15 9 7.75 1.5 .19

16 4 7.75 14 1.8

17 5 6.25 1.56 .24

18 7 6.25 .56 1.08

19 8 6.25 3.0 .48

20 5 6.25 1.56 .24

total 17.11

χ2 = ∑

χ2 = 17.11

Degree of freedom= (no. of rows -1) x (no. of columns-1)

44
 (4-1) x (5-1) =3 x 4 =12

Alpha value = 5% i.e. 0.05 (see the appendix at last)

χ2tab = χ alpha value, Degree of freedom

= χ 0.05, 12(see in the table1) = 21.02

As χ cal < χ tab

Findings - So In this case Null hypothesis (Ho) will be accepted it means additional factor will
not influence the choice of customers in choosing housing complex

FACTOR 3 ANALYSES –

1 Quality of 1 4 15 54 51 125
construction
2 Suitability of 5 12 41 40 27 125
home type
3 Total 6 16 56 94 78 250

HYPOTHESIS FORMULATION –

Working Hypothesis (H1) –quality and suitability will influence the choice of customers in choosing
housing complex.

Null Hypothesis (Ho) - quality and suitability will not influence the choice of customers in choosing
housing complex.

45
Alternative Hypothesis - quality and suitability will influence the choice of customers in choosing
housing complex.

HYPOTHESIS TESTING – By using chi square method –

Expected =

SN Observed value Expected value (Fi-ei)2 (Fi-ei)2/ei

1 1 3 4 1.3
2 5 3 4 1.3
3 4 8 16 2
4 12 8 16 2
5 15 28 169 6.03
6 41 28 169 6.03
7 54 47 49 1.04
8 40 47 49 1.04
9 51 39 144 3.69
10 27 39 144 3.69
total 28.12

χ2 = ∑

χ2 = 28.12

46
 Degree of freedom= (no. of rows -1) x (no. of columns-1)

(2-1) x (5-1) =1 x 4 =14

Alpha value = 5% i.e. 0.05 (see the appendix at last)

χ2tab = χ alpha value, Degree of freedom

= χ 0.05, 4 (see in the table1) = 9.49

As χ cal > χ tab

Findings - So working hypothesis (H1) will be accepted it means quality and suitability factor will
influence the choice of customers in choosing housing complex.

ANALYSIS OF FACTOR 4-

1. Water 2 5 16 72 30 125
availability
2. Maintenance 5 22 32 48 18 125
cost
3. Total 27 48 110 48 250
7

HYPOTHESIS FORMULATION –

Working Hypothesis (H1) – water availability and maintainence cost will influence the choice of
customers in choosing housing complex.

Null Hypothesis (Ho) - water availability and maintainence cost will not influence the choice of
customers in choosing housing complex.

Alternative Hypothesis - water availability and maintainence cost will influence the choice of
customers in choosing housing complex.

47
HYPOTHESIS TESTING – By using chi square method –

Expected =

SN Observed value Expected value (Fi-ei)2 (Fi-ei)2/ei

1 2 3.5 2.25 .64

2 5 3.5 2.25 .64

3 5 13.5 72.25 5.35

4 22 13.5 72.25 5.35

5 16 24 64 2.6

6 32 24 64 2.6

7 72 55 289 5.25

8 48 55 289 5.25

9 30 24 36 1.5

10 18 24 36 1.5

Total 30.68

χ2 = ∑

χ2 = 30.68

Degree of freedom= (no. of rows -1) x (no. of columns-1)

(2-1) x (5-1) =1 x 4 =4

48
 Alpha value = 5% i.e. 0.05 (see the appendix at last)

χ2tab = χ alpha value, Degree of freedom

= χ 0.05, 4 (see in the table1) = 9.49

As χ cal > χ tab

Findings - So working hypothesis (H1) will be accepted it means water availability and maintenance
cost factors will influence the choice of customers in choosing housing complex.

CONCLUSION –

Thus with the help of factor analysis it can be concluded that following in-locality factors are
important:

1. Quality of Construction – Obviously when one buys a property he makes sure that the quality of
construction is good. Everyone while buying a new product wants to buy quality stuff. Same applies
to the property. Every buyer wants to buy a well built house.

2. Pollution Free Environment – The immediate surroundings of the property is always evaluated
by the buyer. These days developers give due importance in making the surroundings beautiful with
innovative and creative landscaping. They involve landscape architects from different corners of the
world to give their customers the best. The city is becoming more and more popular among home
buyers because of its greenery and pollution-free environment.

3. Water Availability – Water Availability, power backup and safety and security are some very
important factors which people do consider while purchasing the property.

49
4. Occupancy - Due to increasing crime this factor is becoming more and more important for the
buyers. They don’t want to settle down in such a place where hardly anyone else lives. People prefer
to stay in a reasonably well-occupied housing complex. But it’s also true that people don’t prefer to
stay in highly populated areas as it was observed in the case of Shipra Sun City, Ghaziabad where
5000 families live in one single housing complex fight for space and car parking place.

5. Suitability of Home Type – Nowadays due to the wide range of options available people can
afford to be choosy. Now they don’t need to compromise on anything. They don’t buy a property till
the time all of the essential things match their requirements. Developers do pay attention to the
different requirements of different customers. Some want a flat on the second floor while some want
a flat with two bedrooms. All these requirements are tried to be met by the developers.

6. Peaceful locality –people now a day want a home away from anti-social thing in the society where
they can spend their time peacefully. HOA rules are generally framed by the affiliates of the
association in aid with the legal experts to offer a life of comfort in the neighbourhood area. Mostly
these rules ensure peaceful stay in the neighborhood.

7. Maintenance Cost - Often a home's purchase price can be helpful in projecting maintenance costs.
The recommendations for annual maintenance costs range from 1.5 to 4 percent of the home's
original cost. While this is not always true, especially when the purchase price of a home is three-
quarters of a million dollars or more, it is a good rule of thumb for the average home buyer.

50
SWOT ANALYSIS

STRENGTHS WEAKNESS

 Teamwork  Branding and Reputation.

To maximize efforts, satisfaction and
results by having everybody working
together toward a common goal.  Limited human resources and staff.

 Understanding
To meet client’s needs by first
 Limited financial resources.
understanding our client’s businesses

and needs.

OPPORTUNITY THREATS

 Bright Future of Real Estate in India.  Excess Competition.

 Increase in Real Estate Prices.  Threats from Online Marketing.

51
Chapter-4
Findings

• As the GDP increases the real estate prices also increases because there is a high degree of
positive correlation between the real estate prices and GDP.

• Real estate prices also increases with increase in the per capita income as there is high
degree of positive correlation between these two also.

• The infrastructure of India is also growing day by day so it adds to the better facility to
different sectors which affect the real estate prices.

• The interest rate also affects the real estate prices because it affects the lending and
borrowing by the investors.

• The growth in the real estate sector is between 25-30% in a residential sector, 10-15% in
Commercial sector and agriculture sector.

• Housing sector constitute 80% of real estate in terms of value and 20% by commercial
sector.

• In residential segment, availability of easy home finance and rising purchasing power has
driven the growth. Builders are launching high-end, life style residential products to cater to
the growing bunch of high net worth individuals.

• The outsourcing and IT/ITES industry have contributed to the demand for quality office-
space.

• The estimated demand from IT/ITES sector alone is expected to be 150mm sq. ft. of space
across the major cities by 2012.

52
 Recommendations

The following recommendations are made by this paper-

• Due to high prices the lower income group is not able to purchase the land, so govt. should
take measures to protect the lower income group.

• The agriculture land covered into the commercial and residential purpose. But the
population is also increasing day by day. So govt. should steps for the same.

• The investors should analyze the type of land in which they are going to invest and the
potential returns from it.

• Privatization of Airports and ports needs to be speed up.

• There is a lack of proper data and management of the real estate sector so govt. should take
the corrective steps in this regard so that the proper estimation and management of the real
estate can be made possible.
.
• Stamp duty is extremely high and must be rationalized and brought down to 2-3% as per
global practice, which is now in India varies from 13-14%.

• Due to lot of investment avenues in real estate in India, fraud cases are also increasing day
by day like in Delhi deconstruction of buildings. Thus careful measures and laws should be
Enacted to deal with these types of situations.

Chapter – 5
53
 Conclusion

1. The major external factors which people consider while purchasing the property are Price,
Availability of loan, resale value, interest rate, and Proximity to workplace and hospital /schools,
clear title of property.

2. The major In-Locality factors which people consider while purchasing the property are Quality of
construction, safety, occupancy, suitability. Maintainence cost. Availability of water and Pollution-
free environment

3. The real estate market in India is yet in a nascent stage and the scope is simply unlimited. It does
not resemble a bubble that will burst. An unhindered growth for the next twenty years is almost sure.
This is because the outsourcing business in India is going in great guns and this entails a huge
demand for commercial buildings and urban housing besides improvement in infrastructure. The
organized retail market in India is also accelerating with players like WalMart, Bharti, Reliance etc.
looking forward to make a foray thus stepping up the demand for real estate.

APPENDICES

54
 Questionnaire

1) Kindly tell us the type of property you are interested in?

a) Official Building

b) Apartment

c) Plot

d) Land

2) To what extent do the following factors influence your choice of housing complex?

Not at Very large

55
 all extent

Brand image

Price range

Property dealers

Connectivity to public transport

Experts on property related shows

on TV.

Proximity to workplace

Availability of loan

Easy/flexible payment

Rate of interest

Resale value

Proximity to school/hospital

Proximity to entertainment sector

Clear title of property

3) Are you aware about the current real estate market prices?

a) Yes

b) No

56
 4) What is your Budget?

a) Between Rs. 2000000 – Rs. 3000000

b) Between Rs. 3000000 – Rs. 4000000

c) Between Rs. 4000000 – Rs. 5000000

d) More than this.

5) What is the area of the property you are interested in?

--------------Sq feet

6) For an apartment, flat or house, room?

a) 1BHK

b) 2BHK

c) 3BHK

d) 4BHK

7) To what extents do the following “in locality” factors influence your choice of housing

Complex?

Not at Very large

all extent

57
Peaceful locality

Pollution free
environment

Population/
occupancy

Quality of
construction

Maintenance/
maintenance cost

Suitability of home
type

Club membership

Car parking

Safety/security

Power backup

Water availability

Utilization of space

BIBLIOGRAPHY

Referred Books:

 Kothari C.R.- “Research Methodology” New Delhi Tata McGraw Hill In (95-102)
 Singh Harpreet–“Research Methodology”-Kalyani Publishers.(page no. 1-8, 68-102)

58
  India Today Buyer’s Guide – November 2008 Edition

Websites:
1) www.magicbricks.com
2) www.99acres.com
3) http://www.slideshare.net
4) http://www.scribd.com

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