A REPORT

ON
DYNAMICS OF REAL ESTATE IN BANGALORE

By
Anudeep.R
Enrollment no. 09BS0003023

At HDFC SALES
 A REPORT

ON

DYNAMICS OF REAL ESTATE IN BANGALORE

By

Anudeep.R 09BS0003023

HDFC Sales

A report submitted in partial fulfillment of the requirements of MBA Program of

ICFAI University, Dehradun

Company Guide Faculty Guide

Mr. Prashanth Barcha Prof.Santhanam Murali

Date of Submission: 17.05.2010

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 DECLARATION
I declare that the project entitled “DYNAMICS OF REAL ESTATE
IN BANGALORE” Conducted at “HDFC Sales” is a record of independent live
project carried out by me during the academic year 2010-11 under the guidance of
my Faculty Guide Prof. Santhanam Murali of ICFAI Business School, Bangalore
and my Company Guide, Mr. Prashanth Barcha. Branch Manager, HDFC Sales.
I also declare that this project is the result of my effort and has not been submitted
to any other University or Institution for the award of any degree, or personal favor
whatsoever. All the details and analysis provided in the report hold true to the best
of my knowledge.

Place: Bangalore Anudeep.R

Date: 17th May,2010 09BS0003023

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 Acknowledgements
I whole heartedly thank and acknowledge,

Mr.Prashanth Barcha, Branch Manager, HDFC Sales, for providing me with this
golden opportunity to work for the organization. Mr.Prashanth laid the direction
and path for the project and in spite of his very busy schedule guided me through
the project.

Mr. Bhaskar, Assistant Sales Manager, HDFC Sales, for extending support and
help during the project.

Mr. Santhanam Murali Sir, Faculty, IBS Bangalore for continuously guiding me
through the project and evaluating the project.

Last but not the least my Alma-mater for blessings, my college IBS-Bangalore for
the support.

-Anudeep R

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 Executive summary
I have completed the project on real estate dynamics in Bangalore by using
secondary data and primary survey. The objective of the project is to study the
changing market dynamics of real estate market, identification of developers, their
projects and banks which fund various projects. The primary research consisted of
a market survey where I interviewed the developers and builders of Bangalore. The
task has fetched insights about the builder mindset and HDFCs deliverance. I have
also tried to understand major drivers of real estate, the organization HDFC‟s
functions and its objectives, the competitors of home loan market (Real Estate
finance in a way)

The project also gives insights about economic impact of real estate sector. The
relevance of real estate to a developing country like India is indeed very important.
To provide shelter for teeming millions is very important. This job is smoothened
by home loan market. The real estate finance also finances the builders‟ projects
and serves as a link to consumer and seller (builder here).

Infrastructure is raising needs and expectations day-to-day. All these combined

together have been successfully been done by these institutions. In process the
competition is very high. The need of hour is consistency, coverage and
courteousness. The organization I have worked is well known for its decent
business. It has always been a pioneer in this field. Not to forget the institution is
named and came up for home finance.

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 TABLE OF CONTENTS

Page

Authorization 3

Acknowledgments 4

Executive summary 5

Introduction…………………………………………………..……………….8
 Organization…………………………………….………………….…..8
HDFC and its wings……………………………………….…...8
HDFC Sales…..........................................................................12
 Sector………………………………………………………………….20
Indian Real Estate Sector……………………………………………...20
Favorable demographics…………………………………….………...28
Key Regulations in Real estate sector………………………………...42

Overview…………...………………………………………………...………44
 Research Design………………………………………………………44
 Questionnaire………………………………………………………….45
 Objective………………………………………………………………48
 Purpose of report……………………………………………………...48
 Limitations…………………………………………………………….48
 References and sources…………………………………..……………49

Findings and Conclusions………………………………………………..….51

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 List of Diagrams
1. Organization wings- Flow chart (HDFC Ltd.)
2. Organization structure- Flow chart(HDFC sales)
3. Branch structure- Flow chart(HDFC sales)
4. Table of Interest Rates- Table
5. Process flow at HDFC Sales- Flow chart
6. Shortage of housing units- Map of India
7. Construction vs. GDP- Graph
8. Major Builders in India- Table
9. Growth of GDP and Indian Services Sector- Graph
10.Urban population of Countries- Graph
11.Rising disposable income- Graph
12.Growing urban population- Graph
13.Urban growth- Graph
14.Population Profile- Table
15.Urban rural growth rate- Graph
16.Home loan as a percentage of GDP
17.Industry wise classification of SEZs- Table
18.Growth of IT/ITes vs. GDP- Graph
19.Growth of Indian Retail Industry- Graph
20.Retail growth- Graph
21.Upcoming Mall numbers- Table
22.Demand forecast- Table
23.Change in Rental value(Bangalore)- Graph
24.Change in capital value(Bangalore)- Graph
25.Expected Ratings Home Loan Institutions- Table

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 26.Expected Ratings HDFC- Table
27.Expected Ratings SBI- Table
28.Expected Ratings Home Loan Institutions- Graph
29.Expected Ratings HDFC- Graph
30.Expected Ratings SBI- Graph
31.Comparison Ratings Home Loan Institutions, HDFC and SBI(Ease of
Process)- Graph
32.Comparison Ratings Home Loan Institutions, HDFC and SBI(Faster
processing)- Graph
33.Comparison Ratings Home Loan Institutions, HDFC and
SBI(Legal/Technical flexibility)- Graph
34.Comparison Ratings Home Loan Institutions, HDFC and SBI(Reputation of
the financier)- Graph
35.Comparison Ratings Home Loan Institutions, HDFC and SBI(Customer
preference)- Graph
36.Comparison Ratings Home Loan Institutions, HDFC and SBI(ROI)- Graph
37.Comparison Ratings Home Loan Institutions, HDFC and SBI(Existing
relationship)- Graph
38.Comparison Ratings Home Loan Institutions, HDFC and SBI(Funding
Value)- Graph

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9|Page
 Introduction
Organization
The organization HDFC Sales is a wholly owned subsidiary of HDFC Ltd. The company
was floated as the Distribution Arm of HDFC. The objective of HDFC Sales is to offer
superior, „doorstep service‟ to prospective clients of the HDFC group.

Housing development finance corporation (HDFC) was established in 17 th October 1977.

The head office is located at Mumbai. It is Pioneer in the Housing Finance sector in
India.

Key executives of HDFC are:

Chairman - Mr. Deepak Parekh
Vice Chairman & CEO - Mr. Keki Mistry
MD - Ms. Renu Sud Karnad

HDFC ltd. has various wings. They are:

• HDFC Bank
The Housing Development Finance Corporation Limited (HDFC) was amongst the first
to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a
bank in the private sector, as part of the RBI's liberalization of the Indian Banking
Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank
Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations
as a Scheduled Commercial Bank in January 1995.

• HDFC Home Loans

Helping Indians experience the joy of home ownership. The road to success is a tough
and challenging journey in the dark where only obstacles light the path. However,
success on a terrain like this is not without a solution. Today, nearly three million
satisfied customers whose dream we helped realize, stand testimony to the success.
Objective, from the beginning, has been to enhance residential housing stock and
promote home ownership. Offerings range from hassle-free home loans and deposit
products, to property related services and a training facility. Offers specialized financial
services to our customer base through partnerships with some of the best financial
institutions worldwide.

• HDFC Deposits
HDFC has instituted well-defined service standards for both depositors and deposit
agents. HDFC has been able to mobilize deposits from over 10 lac depositors.
Outstanding deposits grew from Rs. 1,458 crores in March 1994 to 19,359 crores in
March 2009. Much of this success can be attributed to its strong brand image, superior
services, security and above all, the significant contribution made by HDFC's deposit
agents. HDFC has over 15,000 deposit agents and distributes all its retail savings

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 (deposit) products primarily through this channel. HDFC has been awarded “AAA”
rating for its deposits from both CRISIL and ICRA for the FIFTEENTH consecutive
year, representing highest safety as regards timely payment of principal and interest.

• HDFC Standard Life Insurance

HDFC Standard Life Insurance Company Limited. is one of India's leading private
insurance companies, which offers a range of individual and group insurance solutions. It
is a joint venture between Housing Development Finance Corporation Limited (HDFC
Limited), India's leading housing finance institution and a Group Company of the
Standard Life Plc, UK. As on February 28, 2009 HDFC Ltd. holds 72.43% and Standard
Life (Mauritius Holding) 2006, Ltd. holds 26.00% of equity in the joint venture, while the
rest is held by others.

• HDFC Mutual Funds

HDFC Asset Management Company Ltd (AMC) was incorporated under the Companies
Act, 1956, on December 10, 1999, and was approved to act as an Asset Management
Company for the HDFC Mutual Fund by SEBI vide its letter dated July 3, 2000.
The registered office of the AMC is situated at Ramon House, 3rd Floor, H.T. Parekh
Marg, 169, Backbay Reclamation, Churchgate, Mumbai - 400 020.
In terms of the Investment Management Agreement, the Trustee has appointed the HDFC
Asset Management Company Limited to manage the Mutual Fund. The paid up capital of
the AMC is Rs. 25.161 crore.

• HDFC Ergo
HDFC ERGO General Insurance Company Limited is a 74:26 joint venture
between HDFC Limited, India‟s premier Housing Finance Institution & ERGO
International AG, the primary insurance entity of Munich Re Group.
HDFC ERGO focuses on providing the “Right Insurance Solution” for all. We offer our
customers complete range of general insurance products ranging from Motor, Health,
Travel, Home and Personal Accident in the retail space and customized products like
Property, Marine and Liability Insurance in the corporate space.
HDFC ERGO has been expanding its presence across the country and is today present
across 71 cities with 78 branch offices with an employee base of over 950 professionals.
The company has a right balance of distribution channel comprising of Dealerships,
Brokers, Retail and Corporate Agents, Bancassurance and Direct Sales Team.

• HDFC Centre of Housing Finance

A synonym for convenient and hassle-free service, HDFC's Training Centre, CHF
presents a unique focal point to hold training programmes.CHF is located in the serene
ambience of Lonavala, 2000 feet above sea level, 120 km from Mumbai. The hills and
valleys and scenic landscape make your training a unique pleasurable experience, so
much so you may even prefer having your sessions out in the open lush green lawns.
HDFC‟s Centre for Housing Finance (CHF) provides technical assistance to national
governments and housing finance institutions in developing countries in the South Asian
and African regions, especially in the field of institutional development for effective
shelter finance delivery.

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 The second major area of activity of the CHF is managerial training for housing finance
institutions. Besides effective housing finance operations, some established housing
finance institutions also seek training for systems development and improvement.

• CIBIL
CIBIL‟s aim is to fulfill the need of credit granting institutions for comprehensive credit
information by collecting, collating and disseminating credit information pertaining to
both commercial and consumer borrowers, to a closed user group of Members. Banks,
Financial Institutions, Non Banking Financial Companies, Housing Finance Companies
and Credit Card Companies use CIBIL‟s services. Data sharing is based on the Principle
of Reciprocity, which means that only Members who have submitted all their credit data,
may access Credit Information Reports from CIBIL. The relationship between CIBIL and
its Members is that of close interdependence.

• HDFC Realty
HDFC Realty is a wholly owned subsidiary of HDFC. We have assisted individuals in
acquiring homes valued at 5000 million rupees.
HDFC is a pioneer housing finance institution in India and with over 30 years in
operations has provided finance to over a million families in India.
It is a team of real estate professionals facilitating Buying, Selling or Leasing of
Residential / Commercial property.
At HDFC Realty, we provide personalized attention to the individuals and corporates in
their process of identifying properties. From understanding the requirement to organizing
the site visits to completion of transaction, we make every effort to make the process of
acquiring a property, hassle free and convenient.
Presently our services are available in Mumbai, Navi Mumbai, Pune, Bangalore, Delhi /
NCR, Kolkata, Kochi & Hyderabad.

HDFC Distribution Channels

• Walk-ins

• HDFC Sales* – Distribution Arm of HDFC (Wholly Owned Subsidiary Co.)

• HDFC Bank

• DSAs

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HDFC SALES

HDFC Sales was incorporated on 23 rd January, 2004. HDFC Sales offers Financial
Management solutions encompassing Home Loans, Life Insurance, Mutual Funds, Property
Solutions and Education Loans. The company mirrors the philosophy and values of its parent,
HDFC.

• Home Loans: HDFC Sales is present in over 200 locations across the country with 60+
offices and over 2000 employee.

• Financial Services: HDFC Sales offers services in 17 cities and is continuously

expanding its reach.

• HDFC Realty: HDFC Sales manages the HDFC Realty business and the Website
(www.hdfcrealty.com) which offers property solutions – buying, selling, leasing to
Individuals and Corporate. HDFC Realty is present in 12 cities across the country as well
as in Dubai.

Key executives of HDFC Sales are:

Chairperson - Ms. Renu Sud Karnad
CEO HDFC Sales - Mr.Gautam Bhagat

Organization Structure – Mortgages

Gautam Bhagat
CEO

Abhishek Deora Rohan Charles Subhorov Roy

Regional Regional Regional
Manager Manager Manager

SM / ASM SM / ASM SM /ASM

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Branch Structure

Option 1

Sales
Manager

Asst Sales Credit

Manager Manager

Team Credit Co-

Leader Ordinator

Executives

Option 2

Asst. Sales
Manager

Credit
Co-Ordinators

Sales Team
Team Leader
Manager

Executives Executives

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OBJECTIVES OF HDFC SALES

• To understand HDFC Home Loan Products

• Calculate Eligibility
• Documentation
• Understand commonly used Mortgages terms
this is the objective which is set for the employees of the HDFC sales.

"HDFC's finest investment is in its Human Resources. It draws its personnel from many
disciplines. They are the building blocks on which the company's performance &
productivity is based". H T Parekh, Founder - Chairman, HDFC

HDFC Sales values integrity, commitment, teamwork and excellence in customer service.
Our most valuable assets are our Human Resources. We are truly proud that today we
have a highly motivated team of sales persons and that we have the lowest employee
turnover rate in the Industry.

Basically products are of two types:

1.Based on repayment mode
2.Based on purpose.

Product can be of fixed and floating nature.

Based on the purpose, product can be of 8 types:

• Home Loans –Purchase /Construction

• Home Extension Loan
• Home Improvement Loan
• Home Equity Loan (LAP)
• Top up loan
• Non Residential Premises (NRP)
• Land Loans
• Balance transfer

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Here is a table that illustrates the interest rates

LCR
Product % ROI Tenure

Salaried Self Employed Salaried Self Employed

Home Purchase Loan 85 8.75 9 15 15

Resale Purchase 85 8.75 9 15 15

Home Construction Loan 85 8.75 9 15 15

Home Extension Loan 85 8.75 9 15 15

Home improvement Loan 85 8.75 9 15 15

Top Up Loan 60 10.25 10.25 10 10

Balance Transfer 100 8.75 9 15 15

Non Residential Premise 80 12.25 12.25 15 15

Home Equity 50 12.25 12.25 15 15

Land Purchase 70 9.25 9.25 10 10

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Credit Appraisal
What does credit appraiser check ?

– Ability to pay

– Intention to pay

– Property

Eligibility

• How do we decide if “A” is eligible for a loan?

• We talked about ability & intention and property

• How do we decide on ability?

Eligibility Key Ratios

• IIR – Installment to Income Ratio

• FOIR- Fixed obligation to Income Ratio

• LCR- Loan to Cost Ratio

• LTV- Loan to Value Ratio

IIR= proposed home loan installment*100/ gross monthly income

FOIR is calculated to understand what % of Gross Monthly Income is going towards servicing
of proposed HDFC Home Loan + All other existing EMI.

LCR is calculated to understand what % of the total value of the property is required as loan.
Formula for this HDFC loan account*100/ property cost.

LTV is calculated in the same manner as LCR but the only difference is the property cost is
calculated at market price. The acceptable ratio between LCR and LTV should be 85%.

Recommendations for IIR/FOIR exceeding 40% based on…

– Gross Salary
– Educational Qualifications
– Company where applicant is employed
– Other sources of Income not considered while working out IIR
– If the applicant currently owns a property and plans to retain the same High savings
history

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How rate of interest is determined?

The Rate of Interest is based upon two factors

1.The RPLR
2.Spread

 RPLR – Retail Prime Lending Rate is the bench mark rate

 Spread –is the discount or markup on the RPLR given which gives us the effective rate
(ROI)
 RPLR +/- Spread = Effective ROI

EMI – Equated Monthly Instalment

EMI has two components –Interest & Principal

Pre EMI – paid from date of disbursement till last day of the month(In case of construction
linked case customer pays Pre –EMI till possession)

EMI is due on the first of the next month and payable by the 5 th of the next month

– ECS: Check dates with your local branch

– PDC

Now how ROI changes?

• Quarterly Reset Cycle (3 months after disbursal)

• Spread once given is fixed for the term of the loan

Documents:

KYC

ID & Residence proofs to be accepted from:

– a) Applicant
– b) Co-applicant/s
– c) Power of Attorney (for HDFC purposes)
– d) Guarantor/s
– e) Any person/s who is mortgaging his property/ cash securities as third party
mortgage or as additional security.

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Following documents can serve as Customer ID & residence proof :

– Identity Proof
Passport
PAN Card
Voter ID Card
Driving License
Employer ID Card
– Residence Proof
Telephone Bill
Electricity Bill
Ration Card
Bank Statement (in original, duly attested by the Banker)
Letter from employer

2. Documentation-Salaried

Salary Slips Last 3 months(6 in case of variable components)

Last 6 months updated bank statement salary a/c
ITR & Form 16
Photographs
ID proof
Address proof
Processing Fee Cheque
Employment letter in case of new job
Details of any existing obligations
Bank statement of spouse, in case spouse working +other a/c‟s.

3. Documentation –Property Documents (Builder Case)

Sale Agreement - Original

Construction Agreement - Original

OCR - Original

Title Deed / Tripartite Agreement

NOC from Builder

Demand Letter

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4. Documentation –Property Documents (Construction / Extension Case)

Title Document

Prior Title Document for 13 Years

Encumbrance Certificate for 13 Years

Land Tax Receipt - Original

Approved Plan*

Building Permit*

Estimate

Location Sketch

Process Flow at HDFC sales:

File Login Legal Technical

Credit Disbursement
Appraisal Sanction
(Full/ Part)

Loan Double Loan

Recommendation Checking Repayment

The above diagram illustrates the process flow at HDFC sales.

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 REAL ESTATE IN INDIA

The Indian economy has transformed substantively over the last two decades, growing
consistently at an average of 8 per cent and is poised to take its place among the leading
economies in the years to come. Strong performance of the economy can be particularly
attributed to healthy growth in manufacturing and services sectors. The economic performance
of India has provided strong impetus to the real estate sector, which has been witnessing
heightened activity in the recent years. Substantial end-user and investor interest, large scale
investment in infrastructure and rapid urbanization have contributed to the growth trajectory of
Indian real estate. The real estate growth story is clearly visible in urban centers such as Delhi,
Mumbai and Bengaluru which have acquired global character and recognition.

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Indian Real Estate: Riding the growth wave

The strong fundamentals of the Indian economy are having a favorable impact on all asset
classes of Indian real estate viz. housing, commercial – office space and retail and hospitality. In
recent years, the growth has spread out to tier-II and III cities as well. High growth in services as
well as manufacturing sector has resulted in high demand for commercial and industrial real
estate. Further the economic growth has trickled down to the large Indian middle class increasing
affordability and affluence. Improving living standards are driving the demand for better quality
housing and urban infrastructure. In fact, housing in India is today moving from being viewed as
a purely basic need to an aspirational purchase. Though high interest rates coupled with soaring
property prices have temporarily impacted affordability of home buyers the demand-supply
mismatch and low home loans to GDP ratio in India (a meager 5 per cent as against more than 50
per cent in US, UK and Germany) are expected to fuel demand for housing in the medium long
run. The growth of the sector has been complemented by favorable policy changes like
liberalization of Foreign Direct Investment (FDI) guidelines and significant increase in
investment on physical infrastructure

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The Indian real estate sector plays a significant role in the country's economy. The real estate
sector is second only to agriculture in terms of employment generation and contributes heavily
towards the gross domestic product (GDP). Almost five per cent of the country's GDP is
contributed to by the housing sector. In the next five years, this contribution to the GDP is
expected to rise to 6 per cent. The real estate sector has all the trappings of a winner underpinned
by the booming IT/ITES, organized retail, hotels and logistics sectors, and the emergence of
India as a global manufacturing hub. Further, resilient economic factors and strong inflows have
added muscle to the growth story. Oversupply fears have been overdone; though watch out for
changes in Government policies on real estate. Overall, the sector offers lucrative investment
opportunity as evidenced in realty companies of South and West India, which are trading at
significant discount to their inherent values.

The overall economic health (upswing or downswing in the economic activity) is a leading
indicator of demand and prices in the sector. Economic growth provides impetus to commercial
real estate by improving rentals, reducing vacancy rates and increasing demand for further office
space. On the other hand, rising income levels fuel demand for residential and retail real estate.
In India, real estate and economy are deeply interlinked and interdependent for growth. The real
estate industry has linkages with various sectors of the economy (associated with 250 industries)
as is corroborated by the fact that investment in real estate results in 78% addition to the GDP
(source: Report of International Union for Housing Finance). A unit increase in expenditure in

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this sector has a multiplier effect, generating 5x income growth. As per industry estimates, real
estate could generate 3.2mn jobs over a decade, thus adding ~10mn to the current employment
base. This makes the realty sector the second largest employer after agriculture. The overall
employment generation on the back of additional investment in housing/construction is 8x the
direct employment (source: IIM-Ahmedabad Study, ‟00). The Indian economy‟s impressive
performance has been mainly on account of the rise of the services sector (12.8% annual growth
in the past five years). The services sector now contributes 60% to the GDP and is still showing
unrelenting growth.

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It has also been suggested that India's property sector could begin to improve from late 2010 and
may attract up to US$ 12.11 billion in real estate investment over a five-year period.

The Indian economy has grown at 11% CAGR in the past five years and is expected to deliver
8%+ real growth going forward. India is the tenth largest economy in the world and fourth
largest based on purchasing power parity. Also, India is the second fastest growing economy,
well poised to become the third largest economy in the world by ‟50 (source: PwC). This lends
strong base for a robust growth in the real estate market.

Almost 80 per cent of real estate developed in India is residential space, the rest comprises of
offices, shopping malls, hotels and hospitals. According to the Tenth Five Year Plan, there is a
shortage of 22.4 million dwelling units. Thus, over the next 10 to 15 years, 80 to 90 million
housing dwelling units will have to be constructed with a majority of them catering to middle-
and lower-income groups.

Moreover, India leads the pack of top real estate investment markets in Asia for 2010, according
to a study by PricewaterhouseCoopers (PwC) and Urban Land Institute, a global non-profit
education and research institute.

The report, which provides an outlook on Asia-Pacific real estate investment and development
trends, points out that India, particularly Mumbai and Delhi, are good destinations. Residential
properties are viewed as more promising than other sectors and Mumbai, Delhi and Bangalore
top the pack in the hotel „buy' prospects as well.

The study is based on the opinions of over 270 international real estate professionals, including
investors, developers, property company representatives, lenders, brokers and consultants.

Apart from the huge demand, India also scores on the construction front. A McKinsey report
reveals that the average profit from construction in India is 18 per cent, which is double the
profitability for a construction project undertaken in the US.

The real estate sector is also likely to get a boost from Real Estate Mutual Funds (REMFs) and
Real Estate Investment Trusts (REITs). In fact, according to a CRISIL paper, the REITs would

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have the potential to hold at least 5 per cent share of the total global real estate market, the size
of which would reach US$ 1,400 billion in the next three years.

According to the Federation of Indian Chambers of Commerce and Industry (FICCI), the Indian
real estate sector is likely to experience consolidation wherein bigger players may opt for
outright buy of smaller firms or forge joint ventures or business alliances with them.

Demand Pull Factors

• Robust and sustained macro economic growth
• Upsurge in Industrial & business activities, esp. new economic sectors
• Favorable demographic parameters
• Significant rise in consumerism
• Rapid urbanization
• Gamut of financing options at affordable interest rates
Resultant Impact
• Increasing occupier base
• Significant rise in demand for office/industrial space
• Demand for newer avenues for entertainment, leisure & Shopping
• Creation of demand for new housing
Supply Push Factors
• Policy & Regulatory reforms (100 per cent FDI Relaxation)
• Positive outlook of global investors
• Fiscal incentives to developers
• Simplification of urban development guidelines
• Infrastructure support & development by government
Resultant Impact
• Entry of number of domestic & foreign players increasing competition & consumer
affordability
• Easy access to mean of project financing
• Increases developers risk appetite & allows large scale development
• Improved quality of real estate assets
• Development of new urban areas & effective utilisation of prime land parcels in large cities

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Economic Survey 2006-07: Key Highlights

Factors Driving Growth

• Favorable demographics expected to benefit India till 2045

• High growth with demographic „dividend‟ will increase savings, improving investment

• Mature and progressive domestic market

• Growth in services such as IT/ITes, tourism and hospitality etc.

Growing Tourism

• Foreign tourist arrivals in India grew at a CAGR of 17.6 per cent between 2003-04 and 2005-
06

• Foreign exchange earnings from tourism during the same period has growth at a CAGR of 22.1
per cent

• India accounts for more than half of the international tourist arrival in the region

Credit to Real Estate

• RBI raised risk weight on exposures to CRE from 125 per cent to 150 per cent

• Credit to housing loans expanded by US$ 12.4 billion (38.0 per cent) in 2005-06

• Loans to other real estate during 2005-06 increased to US$ 3.12 billion at a growth rate 94.7
per cent

• Share of real estate in financial institutions lending to sensitive sectors increased from 88.9 per
cent to 90.8 per cent 2005-06

Real Estate Housing Index

• National Housing Board (NHB) set up a Technical Advisory Group (TAG) to evaluate the
feasibility of a real estate price index

• Work on property price indices in 5 cities and methodology to be adopted for compilation and
regular dissemination of the index is underway

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Favorable demographics for real estate sector

Rising income levels

India‟s per capita disposable income has grown 2.6x in the past 10 years and 1.6x in the past five
years. From the current levels of Rs29, 800, we expect the per capita disposable income to grow
8-13% in the next five years.

Affordability

Which measures the number of years‟ annual income required to buy a house, dipped to as low
as 4.3 years in ‟04 from 20 years in 1995? However, the affordability index has started rising,
reaching 5.1 years by ‟07. We expect a sharper rise in realty prices that would further increase
the affordability index. However, affordability, in terms of years of annual income, is still not the
key concern – the affordability index was >10 years before 1997-98. Rising financing cost and
the impact of increasing mortgage payments are key concerns.

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Growing urban population

India‟s urban population has grown ~3% annually to 285mn in ‟01 from 109mn in 1971. We
expect the growth trend to continue, with the urban population touching ~370mn by ‟11E. Indian
cities with >1mn population grew from 12 in 1981 to 35 in ‟01 and are expected to reach 70 by
‟25. The urban population in these cities would likely grow to 41% by ‟25 from 37.8% in ‟01,
implying migration from smaller to larger cities.

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Burgeoning Indian middle class

The number of Indian middle class households with annual income between Rs0.2mn and
Rs2mn has quadrupled in the past 10 years from 4.7mn households in 1996 to 17.5mn in ‟06.
The number of upper-class households with annual income at >Rs2mn has grown 6x from
0.08mn in 1996 to 0.6mn in ‟06. The Indian middle and upper class together stand at ~100mn
and are expected to grow 15-16% annually in the next five years, which will drive housing
demand further.

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Young India

India‟s median age was 24 in ‟05 against China‟s 33 years and Japan‟s 43 years. As per industry
estimates, average age of a home buyer has decreased from 42 years to 31 years. The younger
generation is creating further demand for residential units and the trend should continue as the
income generation capability of the Indian youth improves.

Nuclearisation

Reduction in household size has created additional demand in residential units. The size of an
average urban household decreased from 6.06 in ‟01 to 5.5 at present against the average
household size in Europe varying from 2.3 to 2.8 respectively. Rising income, greater number of
income generators per household, especially working women and the younger generation, and
changing mindset are the primary reasons for reduction in the household size. We expect the
household size to continue to decline 0.5-0.3% annually, reaching ~5.14 in the next 10 years.

33 | P a g e
Increasing funding options

In India, home loan as a percentage of GDP was at ~6% as of FY07 versus ~4% in FY06. The
ratio is still considerably low compared to developed countries – the US (71%), the UK (80%),
and Denmark (94%) – and other Asian countries. We believe that a sizeable opportunity exists
for funding residential units in India, which in turn would propel further residential demand.
However, rising interest rates have reduced the attractiveness of home loans.

Growth in other sectors supporting real estate

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IT/ITES and other businesses

The IT/ITES sector grew at a phenomenal pace in the past decade, significantly impacting office
real estate in India. The sector comprises ~75-80% of the current commercial demand. In FY06,
industry exports grew 33% to US$23.6bn and the sector is expected to grow 25-30% annually in
the next few years. At present, the IT/ITES sector employs ~1.3mn people, with more than
350,000 additions expected next year. We estimate the number of employees in the IT/ITES
sector at ~4.5mn by FY12E and ~8mn by FY17E. As per industry estimates, ~3.5mn jobs will be
outsourced to India by FY17E. Bangalore is the traditional hub for IT/ITES space in India. In the
South, Hyderabad,Pune and Chennai are developing as key centers of commercial development.
In the North, Delhi, Noida and Gurgaon are the preferred destinations. As regards the West,
Mumbai is grappling with upcoming demand that is pushing up the prices in commercial
business districts (CBDs) and peripheral areas. At present, Tier II cities offer more advantages to
IT/ITES companies, considering the lower real estate prices. Cities such as Coimbatore,
Mangalore, Chandigarh, Vishakapatnam, Madurai, Mangalore, Kochi, Jaipur, Gurgaon, and

35 | P a g e
Nagpur are also in the midst of the IT/ITES led real estate boom. Apart from IT/ITES,
biosciences, insurance, banking and consulting sectors are also contributing to office space
demand. Further, India has emerged as the global manufacturing base, especially for textiles,
auto & auto components and light engineering industries. Office space in India currently stands
at 135mn sqft, which is low than international peers. Hong Kong alone has more office space
than India and Manhattan (New York) has > 430mn sqft.

Organized retail

At present, India‟s retail market is ~US$270bn and growing ~7-9% annually – we estimate the
retail market to be US$600bn by FY17E. And, given that retail is globally the largest industry at
~US$7.2trn, we expect significant action in the space as is evident by the fact that many
international retailers and brands are entering the Indian retail market. AT Kearney‟s recent retail
report – Global Retail Development Index, ‟06 – rated India as the most attractive place for the
retail industry. The size of the organized retail market, as a component of total retail, increased
from 2% in FY03 to ~6% in FY07. However, the share of organized retail in India is very low

36 | P a g e
against >15% in China and >40% in other Asian countries.

We expect organized retail to grow at 21% CAGR to US$109bn in FY17E. Improving

demographics, increasing urbanization and cultural shift are key reasons for growth in organized
retail.

In next three years, ~220 malls are expected to come up in India, including specialized malls
catering to automobiles, jewellery, furniture and electronics. Further, many upcoming malls
would offer hotel and amusement facilities.

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Hotels and logistics

The growth in tourism and business travel and the emergence of low cost airlines have led to
increased demand for hotel rooms. As a result, there is a shortage of quality hotel rooms across
all major cities. Occupancy rates are at an all-time high, with luxury hotels in Mumbai, New
Delhi and Bangalore quoting room rates higher than the average room rate (ARR) in the US.
Further, the mid-tier budget hotel segment, which aptly meets the service demands of the average
Indian, is witnessing a supply crunch and is expected to grow 40% through the next 2-3 years.

In ‟05, 4mn tourists arrived in India, generating US$5.7bn revenue. India‟s share of international
tourism is very low – at 0.84% revenue wise and 0.49% in terms of international tourist arrivals.
The country is gradually emerging as one of the key destinations for international tourism. A
recent World Travel & Tourism Council (WTTC) tourism annual growth estimate of India is
8.6% for the next 10 years. According to the Department of Tourism, there are ~105,000 hotel
rooms in India, of which only 25% are branded against Manhattan that alone has >100,000
branded hotel rooms. China has >800,000 branded hotel rooms.

The IT/ITES sector has also contributed to the hotel boom. NASSCOM estimates that the sector
accounted for 8,900 hotel rooms/day in FY07 and is likely to generate 30,000 rooms/day
demands by FY12E.

Real estate developers have aggressively ventured into the hotel business to capture unmet
demand. We believe the sectors offers tremendous opportunity and would be a significant growth
driver. The usual business model followed by developers is to build and own hotels and
multinational hotel chains are tied-up for management, branding, and marketing.

Logistics and warehousing (new territories for real estate developers) offer tremendous growth
opportunities. Key segment drivers are growth in overall industrial and manufacturing activity,
increasing exports and imports, entry of large retailers in the Indian market, growth in organized
retail and increasing reach in rural India. We foresee a paradigm shift in logistics, warehousing
and retailing from the unorganized to organized sector. In a developed market, logistics space
contributes 10-15% to non-residential real estate demand.

38 | P a g e
Indian real estate pie

We estimate the current size of Indian real estate market at US$57bn or 6.2% of India‟s GDP. In
terms of value, the real estate market would likely grow at 12.8% CAGR in the next five years to
US$105bn or 7.1% GDP by FY12E. In the next five years, the average annual investments
required in the real estate sector are ~US$85bn, of which the residential segment constitutes 88%
at US$74bn. We estimate annual investments for office space at US$5.7bn and retail segment at
US$4.8bn. These are based on requirements of investment in land and construction cost to meet
the intrinsic real estate demand in India and not on sales as the mark up on costs could vary with
market conditions.

As of end-FY07, the stock estimates (in terms of constructed area) are as follows – residential -
~38bn sqft, office - ~135mn sq.ft and retail - ~90mn sqft. In FY07, ~1.8bn sq.ft residential,
35mn sqft office and 24mn sq.ft retail space was added. We estimate the market to grow at 4.6%
CAGR with 4.2%, 15.2% and 14.3% CAGR in residential, commercial and retail segments
respectively. Also, we expect the next five-year average annual demand for residential, office
and retail space at 2bn sq.ft, 65mn sq.ft and 37mn sq.ft respectively.

39 | P a g e
Current demand and supply

We believe that demand and supply are on an even keel across India and estimate that there
would not be significant oversupply in either residential, office or retail segments till end-CY09.
However, further tightening of interest rate could reduce demand, leading to lesser absorption of
supply. We believe that there would not be a sharp correction in real estate prices, although a
mild correction can not be ruled out. However, such a correction should not last long and would
be predominantly confined to a few overheated locations. Given the significant capital
appreciation in the past two years and higher operating margins enjoyed by developers (50-80%),
a marginal drop in prices should not impact the sector significantly.

Residential segment

Residential markets are stabilizing and we do not expect prices to rise beyond the normal
inflationary growth. Given the current supply scenario and recent hikes in interest rate, home
buyers have adopted a wait and watch stance, implying that differentiated product offerings and
brand name would play a critical role in closing a sale. Further, this would increase the
possibility of a sporadic drop in prices in certain pockets. However, once the interest rates
stabilize, improving demographics and the latent housing demand would again push up the
residential demand. We believe that as this market in various Indian cities matures (i.e. no
supply-side constraints for quality homes), developers with business competencies/skills will
differentiate themselves and move forward.

As per the National Housing Bank (NHB), there was a housing shortage of 19.4mn units
(12.7mn units in rural areas and 6.7mn units in urban areas) in FY03. As per the X five-year
plan, there would be a shortage of 22.7mn housing units by ‟07. Industry estimates of cumulative
demand supply gap stand at 4.1bn sqft. We estimate demand for residential units in urban India
at ~2bn sqft/annum. Although, it is difficult to estimate residential demand within the target
segment of real estate developers, we estimate the demand at ~450-550mn sqft. This is based on
the new housing demand created by rising middle and upper income households. Demand for the
high-end residential segment (properties with a ticket size >Rs2.5mn) is 100- 130mn sqft. As per

40 | P a g e
a recent AC Neilson report, supply from the high-end residential segment is ~120mn sqft. This
implies that the demand & supply situation is comfortably matched; we do not expect the
equilibrium to shift significantly.

Office segment

Currently, demand for office space is far exceeding supply in most locations across India. This
can be gauged by the large number of pre-leases and the low vacancy rates. Office properties
have hardly seen drop in prices except in Whitefield, Bangalore, where poor infrastructure was a
damper. We estimate that the current supply pipeline would not lead to an oversupply; however,
the rentals might not move further, signaling an end to capital appreciation on office properties.
The development of IT/ITES SEZs remains a key risk to our estimate, which could create
additional 33mn sqft supply annually.

Retail segment

We estimate retail sector demand at 37mn sqft/annum; currently, there is high demand for
quality retail space across India. We estimate supply to exceed demand in the next two years as
many large projects would come on stream across most metros. In the next two years, we expect
rentals to remain flat or drop marginally. However, we remain wary of the possible oversupply
situation post CY09. Oversupply is likely to hit retail before office and residential segments and
would have a more severe impact given the high land and construction cost (input costs).

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Bangalore – Rental value

Bangalore- Capital value

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Key regulations in the real estate sector – A snapshot

Urban Land (Ceiling and Regulation) Act, 1976/Rent Control Act

ULCRA, which was an impediment to the consolidation of land for private development, has
been repealed by all states except West Bengal, Maharashtra and Andhra Pradesh. This would
enable the development of land parcels >500sq meters in metros.

Land Acquisition Act, 1894

This Act, to a large extent, still governs the procurement of raw land. Its provisions need to be
reviewed to enable private developers (certified by a designated authority) to procure land
directly from farmers for public purposes and to obviate need for hundreds of entities to be
created to procure a large parcel of land.

Registration Act, 1908 and Indian Stamp Act, 1899

Registration and Other Related Laws (Amendment) Act, ‟01 received the assent of the President
on September 24, ‟01 and was notified in the official gazette as Act 48 of ‟01. But the official
press release states that it will come into force from a date to be notified by the Government. A
de-materialized form of execution of land titles to promote a healthy property market. Urgent
need to review the laws and focus on stamp and registration laws, restrictive conditions in
leasehold properties, lender protections vis-à-vis leasehold properties, transfer facilitation in
restructuring and mergers and/or de-mergers.
In several states, stamp duty on transfer of land continues to be high at 14-15%. While many
states have reduced this to 6-8%, the industry expects it to be rationalized further to 2-3% over
the medium term.

Public-private partnership for amenities

A regulatory framework that encourages private sector participation in formulating and delivery
of basic amenities such as water, sanitation, sewerage, transport and electricity is necessary.
Foreclosure laws Existing laws are cumbersome and time consuming for a resolution in instances

43 | P a g e
of default. Amendment of National Housing Board (NHB) Act has been initiated and
implementation must be expedited.

Real Estate Investment Trusts (REIT)

Although there has been a lot of talk about REITs in India, it seems it will be quite some time
before we see any active play from them. The current regulatory environment in the form of high
stamp duties and other impediments are still a burden for them.

Real Estate Mutual Funds

The SEBI, in June ‟06, approved guidelines for real estate mutual funds, allowing them to invest
directly in real estate properties in India. These funds would initially be close-ended schemes.
Their units would be compulsorily listed on stock exchanges and NAVs of the schemes would be
declared daily. However, they are yet to take off in any significant way.

44 | P a g e
45 | P a g e
 OVERVIEW OF THE COMPLETED WORK
RESEARCH DESIGN

There are two stages in this project.

Stages 1: The first stage was preparing questionnaire. The questionnaire had two main sections.
The first section comprised of the introductory details, Sales force details and existing projects
and current projects. In the second section a rating scale to find out the expectations and lapses in
the business of HDFC Sales.
Stage 2: In this Stage personal interview method: builders are identified and called for
appointments. Most of the meetings happen with the marketing heads or associates.
The information is recorded on survey sheet.

46 | P a g e
Questionnaire

Market Survey
Name of Builder/Proprietor:

Address:

Contact person:

Contact numbers:

Organization structure:
1.How many employees work in your organization?

A. 0-20
B. 20-40
C. 40-60
D. 60+

2. Out of the total number of employees how many constitute the sales force?

A. 0-5
B. 5-10
C. 10-20
D. 20+
3. Details of sales Force
Name Department Designation Contact no.

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 Why do you prefer a bank/Finance Institution?

Parameters/Rating 1 2 3 4 5
Ease of process
faster processing
Legal / technical flexibility
reputation of the financier
customer preference
ROI
Existing relationship
Funding value
Others(pl specify)
1-Least and 5-Most

This question will provide us with the need of developers.

Who is your preferred banker? Reasons:

This will enable us to list out the banks which have been doing well in this field.

How do you rate the following Banks/Financial Institutions?

Parameters SBI LIC HDFC ICICI Axis

Ease of process
Faster processing
Legal/Technical flexibility
Reputation of the financier
Customer preference
ROI
Existing relationship
Funding value
Others(Please specify)
1-Least and 5-Most

The grid will enable us to get the position of HDFC in their mind and the competitors which they like,
reasons and comparison.

48 | P a g e
 Existing Projects
-Name of project

-Nature

-Sub classification

-Stage of completion

-Approval Status

-Banks Approved

-No. of Units

-No, of units sold

-Price Range

-Area (Sq.Ft)

-Stage of completion

Future projects
Sl. No Nature Units Location Approval Commencement
Status Target Date

49 | P a g e
PURPOSE OF THE REPORT
The purpose of the project is
1. To increase sales figures of the company
The Company can find out the sales statistics of various builders, target customers and their
needs. This will also create awareness about other banks in the field of real estate financing.
2. In the process create lead generation for HDFC Home loans and HDFC Realty. The survey
consists of the various projects of developers which include residential and commercial projects
which will help in identifying the new developers.

OBJECTIVE OF THE REPORT

The objective of the project is to study the changing market dynamics of real estate market,
identification of developers, their projects and banks which fund various projects.

SCOPE
The scope of the project is to increase sales and get prospective customers for the
company. To introduce the company to new developers as a part of lead generation.

LIMITATIONS
The limitations of the project are:
1. Time is one constraint. Real estate market is too huge to be covered in 13 weeks. There
are about 1550 real estate developers in Bangalore.
2. Travelling distances was also one limitation. The builders are widespread. The
meetings scheduled would be hard to manage.

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 SOURCES & TOOLS OF DATA COLLECTION

The sources for the project are as follows:

PRIMARY SOURCES:
The primary source of information was the data collected by conducting interviews with various
real estate owners.

SECONDARY SOURCES
The secondary sources include the following:

1. Internet: http://www.magicbricks.com/
http://www.99acres.com/

http://wwww.justdial.com/
http://www.hdfc.com/others/popup/about_us/hlsil.htm

2. Print: Daily: Times of India: Friday supplement & Economic Times

Magazines: Real estate reporter & Realty plus

51 | P a g e
 Companies I Interviewed….

Nitesh Estates
Bearys Group
Jain Heights and Structures
IVR Prime(Sister Concern of IVRCL)
Skyline Builders
Concorde
Nandi Constructive
Blue valley
ETA Star
Hiranandani

52 | P a g e
53 | P a g e
 Findings and conclusions

Expected ratings of a Home loan Institution

Responde Ease of Faster Legal/Techni Reputatio Custome ROI Existing Fundin

nt proces processi cal flexibility n of the r relationsh g
s ng financier preferen ip value
ce
1 1 4 5 4 5 5 2 1
2 2 2 2 3 4 1 5 3
3 1 3 2 4 5 2 5 5
4 2 3 4 3 3 3 4 5
5 3 4 5 2 3 3 4 5
6 5 4 4 2 3 1 2 3
7 1 1 1 5 3 4 2 1
8 3 4 2 1 1 1 1 5
9 1 4 5 4 1 4 5 4
10 5 5 2 1 2 3 4 3
11 1 1 1 5 3 4 5 2
12 3 4 5 2 5 4 4 2
13 3 3 4 5 1 1 1 5
14 3 3 4 5 3 4 2 1
15 3 1 2 3 1 4 5 4
16 4 1 5 3 2 2 2 3
17 5 2 5 5 1 3 2 4
18 3 3 4 5 2 3 4 3
19 3 3 4 5 3 4 5 2
20 3 1 2 3 5 4 4 2
21 3 4 2 1 1 1 1 5
22 1 1 1 5 3 4 2 1
23 1 4 5 4 1 4 5 4
24 2 3 4 3 5 5 2 1
25 3 4 5 2 1 1 1 5
26 5 4 4 2 3 4 5 2
27 1 1 1 5 3 3 4 5
28 3 4 2 1 3 3 4 5
29 1 4 5 4 3 1 2 3
30 2 2 2 3 2 2 2 3
31 1 3 2 4 1 3 2 4
32 2 3 4 3 2 3 4 3
33 3 4 5 2 3 4 5 2

54 | P a g e
 34 5 4 4 2 5 4 4 2
35 1 1 1 5 1 1 1 5
36 3 4 2 1 3 4 2 1
37 1 4 5 4 1 4 5 4
38 5 5 2 1 5 5 2 1
39 1 1 1 5 1 1 1 5
40 3 4 5 2 3 4 5 2
41 3 3 4 5 3 3 4 5
42 3 3 4 5 3 3 4 5
43 3 1 2 3 3 1 2 3
44 2 3 4 3 2 3 4 3
45 3 4 5 2 3 4 5 2
46 5 4 4 2 5 4 4 2
47 1 1 1 5 1 1 1 5
48 3 4 2 1 3 4 2 1
49 1 4 5 4 1 4 5 4
50 5 5 2 1 5 5 2 1
51 1 1 1 5 1 1 1 5
52 3 4 5 2 3 4 5 2
53 3 3 4 5 3 3 4 5
54 3 3 4 5 3 3 4 5
55 3 1 2 3 3 1 2 3
56 1 1 1 5 1 1 1 5
57 3 4 5 2 3 4 5 2
58 3 3 4 5 3 3 4 5
59 3 3 4 5 3 3 4 5
60 3 1 2 3 3 1 2 3
61 2 5 4 4 2 5 4 4
62 5 1 1 1 5 1 1 1
63 1 3 4 2 1 3 4 2
64 4 1 4 5 4 1 4 5
65 1 5 5 2 1 5 5 2
66 5 1 1 1 5 1 1 1
67 2 3 4 5 2 3 4 5
68 5 3 3 4 5 3 3 4
69 5 3 3 4 5 3 3 4
70 3 3 1 2 3 3 1 2
71 1 1 1 5 1 1 1 1
72 2 2 2 3 4 1 5 3
73 1 3 2 4 5 2 5 5
74 2 3 4 3 3 3 4 5

55 | P a g e
 75 3 4 5 2 3 3 4 5
76 5 4 4 2 3 1 2 3
77 1 1 1 5 3 4 2 1
78 3 4 2 1 1 1 1 5
79 1 4 5 4 1 4 5 4
80 5 5 2 1 2 3 4 3
81 1 1 1 5 3 4 5 2
82 3 4 5 2 5 4 4 2
83 3 3 4 5 1 1 1 5
84 3 3 4 5 3 4 2 1
85 3 1 2 3 1 4 5 4
86 2 2 2 3 4 1 5 3
87 1 3 2 4 5 2 5 5
88 2 3 4 3 3 3 4 5
89 3 4 5 2 3 3 4 5
90 5 4 4 2 3 1 2 3
91 1 1 1 5 3 4 2 1
92 3 4 2 1 1 1 1 5
93 1 4 5 4 1 4 5 4
94 5 5 2 1 2 3 4 3
95 1 1 1 5 3 4 5 2
96 3 4 5 2 5 4 4 2
97 3 3 4 5 1 1 1 5
98 3 3 4 5 3 4 2 1
99 3 1 2 3 1 4 5 4
100 2 2 2 3 4 1 5 3
101 1 3 2 4 5 2 5 5
102 2 3 4 3 3 3 4 5
103 3 4 5 2 3 3 4 5
104 5 4 4 2 3 1 2 3
105 1 1 1 5 3 4 2 1
106 3 4 2 1 1 1 1 5
107 1 4 5 4 1 4 5 4
108 5 5 2 1 2 3 4 3
109 1 1 1 5 3 4 5 2
110 3 4 5 2 5 4 4 2
111 3 3 4 5 1 1 1 5
112 3 3 4 5 3 4 2 1
113 3 1 2 3 1 4 5 4
114 4 1 5 3 2 2 2 3
115 5 2 5 5 1 3 2 4

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 116 3 3 4 5 2 3 4 3
117 3 3 4 5 3 4 5 2
118 3 1 2 3 5 4 4 2
119 3 4 2 1 1 1 1 5
120 1 1 1 5 3 4 2 1
121 1 4 5 4 1 4 5 4
122 2 3 4 3 5 5 2 1
123 3 4 5 2 1 1 1 5
124 5 4 4 2 3 4 5 2
125 1 1 1 5 3 3 4 5
126 3 4 2 1 3 3 4 5
127 1 4 5 4 3 1 2 3
128 2 2 2 3 2 2 2 3
129 1 3 2 4 1 3 2 4
130 2 3 4 3 2 3 4 3
131 3 4 5 2 3 4 5 2
132 5 4 4 2 5 4 4 2
133 1 1 1 5 1 1 1 5
134 3 4 2 1 3 4 2 1
135 1 4 5 4 1 4 5 4
136 5 5 2 1 5 5 2 1
137 1 1 1 5 1 1 1 5
138 3 4 5 2 3 4 5 2
139 3 3 4 5 3 3 4 5
140 3 3 4 5 3 3 4 5
141 3 1 2 3 3 1 2 3
142 2 3 4 3 2 3 4 3
143 3 4 5 2 3 4 5 2
144 5 4 4 2 5 4 4 2
145 1 1 1 5 1 1 1 5
146 3 4 2 1 3 4 2 1
147 1 4 5 4 1 4 5 4
148 5 5 2 1 5 5 2 1
149 1 1 1 5 1 1 1 5
150 3 4 5 2 3 4 5 2
151 3 3 4 5 3 3 4 5
152 3 3 4 5 3 3 4 5
153 3 1 2 3 3 1 2 3
154 1 1 1 5 1 1 1 5
155 3 4 5 2 3 4 5 2

57 | P a g e
 Ratings for HDFC

Respon Ease of Faster Legal/Tech Reputation Customer ROI Existing Fundi

dent process processing nical of the preferenc relation ng
flexibility financier e ship value
1 1 1 3 3 3 3 2 3
2 1 3 2 1 4 5 3 1
3 5 3 1 5 4 3 1 2
4 1 1 3 3 3 3 2 3
5 1 3 2 1 4 5 3 1
6 5 3 1 5 4 3 1 2
7 3 1 1 3 3 3 3 3
8 1 1 3 2 1 4 5 1
9 5 5 3 1 5 4 3 5
10 3 1 1 3 3 3 3 3
11 1 1 3 2 1 4 5 1
12 5 5 3 1 3 4 3 3
13 3 3 2 3 1 3 3 1
14 4 5 3 1 5 1 1 5
15 4 3 1 2 3 5 5 3
16 3 3 2 3 1 3 3 1
17 4 5 3 1 5 1 1 5
18 4 3 1 2 3 5 5 1
19 1 1 3 3 3 3 2 3
20 1 3 2 1 4 5 3 1
21 5 3 1 5 4 3 1 2
22 3 1 1 3 3 3 3 3
23 1 1 3 2 1 4 5 1
24 5 5 3 1 5 4 3 5
25 3 1 1 3 3 3 3 3
26 1 1 3 2 1 4 5 1
27 5 5 3 1 3 4 3 3
28 3 3 2 3 1 3 3 1
29 4 5 3 1 5 1 1 5
30 4 3 1 2 3 5 5 3
31 3 3 2 3 1 3 3 1
32 4 5 3 1 5 1 1 5
33 4 3 1 2 3 5 5 1
34 1 3 2 1 4 5 3 1
35 5 3 1 5 4 3 1 2
36 1 1 3 3 3 3 2 3
37 1 3 2 1 4 5 3 1

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 38 5 3 1 5 4 3 1 2
39 3 1 1 3 3 3 3 3
40 1 1 3 2 1 4 5 1
41 5 5 3 1 5 4 3 5
42 3 1 1 3 3 3 3 3
43 1 1 3 2 1 4 5 1
44 5 5 3 1 3 4 3 3
45 3 3 2 3 1 3 3 1
46 4 5 3 1 5 1 1 5
47 4 3 1 2 3 5 5 3
48 3 3 2 3 1 3 3 1
49 4 5 3 1 5 1 1 5
50 4 3 1 2 3 5 5 1
51 1 1 3 3 3 3 2 3
52 1 3 2 1 4 5 3 1
53 5 3 1 5 4 3 1 2
54 3 1 1 3 3 3 3 3
55 1 1 3 2 1 4 5 1
56 5 5 3 1 5 4 3 5
57 3 1 1 3 3 3 3 3
58 1 1 3 2 1 4 5 1
59 5 5 3 1 3 4 3 3
60 3 3 2 3 1 3 3 1
61 4 5 3 1 5 1 1 5
62 4 3 1 2 3 5 5 3
63 3 3 2 3 1 3 3 1
64 4 5 3 1 5 1 1 5
65 4 3 1 2 3 5 5 1
66 1 3 2 1 4 5 3 1
67 5 3 1 5 4 3 1 2
68 1 1 3 3 3 3 2 3
69 1 3 2 1 4 5 3 1
70 5 3 1 5 4 3 1 2
71 3 1 1 3 3 3 3 3
72 1 1 3 2 1 4 5 1
73 5 5 3 1 5 4 3 5
74 3 1 1 3 3 3 3 3
75 1 1 3 2 1 4 5 1
76 5 5 3 1 3 4 3 3
77 3 3 2 3 1 3 3 1
78 4 5 3 1 5 1 1 5

59 | P a g e
 79 4 3 1 2 3 5 5 3
80 3 3 2 3 1 3 3 1
81 5 5 3 1 3 4 3 3
82 3 3 2 3 1 3 3 1
83 4 5 3 1 5 1 1 2
84 4 3 1 2 3 5 5 3
85 3 3 2 3 1 3 3 1
86 4 5 3 1 5 1 1 5
87 4 3 1 2 3 5 5 3
88 1 1 3 3 3 3 2 1
89 1 3 2 1 4 5 3 3
90 5 3 1 5 4 3 1 1
91 3 1 1 3 3 3 3 5
92 1 1 3 2 1 4 5 3
93 5 5 3 1 5 4 3 1
94 3 1 1 3 3 3 3 5
95 1 1 3 2 1 4 5 1
96 5 5 3 1 3 4 3 1
97 3 3 2 3 1 3 3 2
98 4 5 3 1 5 1 1 3
99 4 3 1 2 3 5 5 1
100 3 3 2 3 1 3 3 2
101 4 5 3 1 5 1 1 3
102 4 3 1 2 3 5 5 1
103 1 3 2 1 4 5 3 5
104 5 3 1 5 4 3 1 3
105 5 1 3 3 3 3 2 1
106 1 3 2 1 4 5 3 3
107 1 3 1 5 4 3 1 1
108 2 1 1 3 3 3 3 5
109 3 1 3 2 1 4 5 3
110 1 5 3 1 5 4 3 1
111 2 1 1 3 3 3 3 3
112 3 1 3 2 1 4 5 1
113 1 5 3 1 3 4 3 2
114 5 3 2 3 1 3 3 3
115 3 5 3 1 5 1 1 1
116 1 3 1 2 3 5 5 5
117 3 3 2 3 1 3 3 3
118 1 5 3 1 5 1 1 1
119 5 3 1 2 3 5 5 3

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 120 3 1 3 3 3 3 2 1
121 1 3 2 1 4 5 3 5
122 5 3 1 5 4 3 1 3
123 3 1 1 3 3 3 3 1
124 5 1 3 3 3 3 4 5
125 1 3 2 1 4 5 3 1
126 1 3 1 5 4 3 3 1
127 2 1 1 3 3 3 4 2
128 3 1 3 2 1 4 4 3
129 1 5 3 1 5 4 3 1
130 2 1 1 3 3 3 1 2
131 3 1 3 2 1 4 5 3
132 1 5 3 1 3 4 3 1
133 5 3 2 3 1 3 1 5
134 3 5 3 1 5 1 3 3
135 1 3 1 2 3 5 4 1
136 3 5 4 5 4 3 3 3
137 1 3 3 3 3 1 3 1
138 5 3 3 3 3 5 4 5
139 3 1 4 1 4 3 4 3
140 1 5 4 5 4 1 3 1
141 4 3 3 3 3 4 1 4
142 3 2 1 2 1 3 5 3
143 3 1 5 1 5 3 3 3
144 4 3 3 3 3 4 1 4
145 4 3 4 4 4 4 3 4
146 3 1 3 3 3 3 3 3
147 1 5 1 1 1 1 1 1
148 5 3 5 5 5 5 5 5
149 3 1 3 3 3 3 3 3
150 1 3 1 1 1 1 1 1
151 3 4 3 3 3 3 3 3
152 1 5 1 1 1 1 1 1
153 5 3 5 5 5 5 5 5
154 3 1 3 3 3 3 3 3
155 1 3 1 1 1 1 1 1

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 Ratings of SBI Housing

Respon Ease of Faster Legal/Tec Reputati Custom ROI Existing Fundi

dent process processin hnical on of er relation ng
g flexibility the preferen ship value
financie ce
r
1 5 4 3 3 3 3 2 3
2 4 4 3 3 3 3 2 3
3 4 3 2 4 4 5 3 4
4 5 3 4 5 4 3 4 2
5 4 4 3 3 3 3 2 3
6 4 3 2 4 4 5 3 4
7 5 3 4 5 4 3 4 2
8 3 4 1 3 3 3 3 3
9 4 4 3 2 4 4 5 4
10 5 5 3 4 5 4 3 5
11 3 4 4 3 1 3 3 3
12 4 4 3 2 4 4 5 4
13 5 5 3 4 3 4 3 3
14 3 3 2 3 4 3 3 1
15 4 5 3 4 5 4 4 5
16 4 3 4 1 3 1 5 3
17 3 3 1 3 4 3 3 4
18 4 1 3 4 5 4 4 5
19 4 3 4 2 3 5 5 4
20 4 4 1 3 3 3 2 3
21 4 3 2 1 4 5 3 4
22 5 3 4 5 1 3 4 2
23 3 4 4 3 3 1 1 3
24 4 4 3 2 4 4 5 1
25 5 5 3 4 5 4 3 5
26 3 4 1 1 1 1 3 3
27 4 4 3 2 4 4 5 4
28 5 5 1 4 1 4 1 3
29 3 3 2 3 4 3 3 4
30 4 5 3 4 5 4 4 5
31 4 3 1 1 1 1 5 3
32 3 3 2 3 4 3 3 4
33 4 5 3 4 5 4 4 5
34 4 3 1 2 1 1 1 4
35 4 3 2 4 4 5 3 4

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 36 5 1 4 5 1 3 4 2
37 4 4 3 3 3 3 2 3
38 4 3 2 4 4 5 3 4
39 5 1 4 1 4 3 4 2
40 3 4 4 3 3 3 3 3
41 4 4 3 1 1 1 1 1
42 5 5 3 4 5 4 3 5
43 3 4 4 3 3 3 3 3
44 4 4 3 2 4 4 5 4
45 1 1 1 4 3 1 1 3
46 3 3 2 3 4 3 3 4
47 4 5 3 4 5 4 4 5
48 1 1 1 2 3 5 5 3
49 3 3 2 3 4 3 3 4
50 4 5 1 1 5 4 4 5
51 4 3 4 1 1 5 5 4
52 4 4 3 3 1 3 2 3
53 4 3 2 4 4 5 3 4
54 5 3 4 5 4 3 4 2
55 3 4 4 3 3 3 3 3
56 4 4 3 2 4 4 5 4
57 5 5 3 4 5 4 3 5
58 3 4 4 3 3 3 3 3
59 4 4 3 2 4 4 5 4
60 5 5 3 4 3 4 3 3
61 3 3 2 3 4 3 3 4
62 4 5 3 4 5 4 4 5
63 4 3 4 2 3 5 5 3
64 3 3 2 3 4 3 3 4
65 4 5 3 4 5 4 4 5
66 4 3 4 2 3 5 5 4
67 4 3 2 4 4 5 3 4
68 5 3 4 5 4 3 4 2
69 4 4 3 3 3 3 2 3
70 4 3 2 4 4 5 3 4
71 5 3 4 5 4 3 4 2
72 3 4 4 3 3 3 3 3
73 4 4 3 2 4 4 5 4
74 5 5 3 4 5 4 3 5
75 3 4 4 3 3 3 3 3
76 4 4 3 2 4 4 5 4

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 77 5 5 3 4 3 4 3 3
78 3 3 1 3 4 3 3 4
79 4 5 3 4 5 4 4 5
80 4 3 4 2 3 5 5 3
81 3 3 2 3 1 3 3 4
82 5 5 3 4 3 4 3 3
83 3 3 2 3 4 3 3 4
84 4 5 3 4 1 4 4 2
85 4 3 4 2 3 5 5 3
86 3 3 2 3 4 3 3 4
87 4 5 3 4 1 4 4 5
88 4 3 4 2 3 5 5 3
89 1 1 3 3 3 3 1 4
90 4 3 2 4 4 5 3 3
91 5 3 4 5 4 3 4 4
92 3 1 4 3 3 3 3 5
93 1 4 3 2 4 4 5 3
94 5 5 3 4 5 4 3 4
95 3 4 4 3 3 3 3 5
96 1 4 3 2 4 4 5 4
97 5 5 3 4 3 4 3 4
98 3 3 2 3 4 3 3 2
99 4 1 3 4 5 4 4 3
100 4 3 4 2 3 5 5 4
101 3 3 2 3 4 3 3 2
102 1 5 3 4 5 4 4 3
103 4 3 1 2 3 5 5 4
104 4 3 2 4 4 5 3 5
105 5 3 4 1 4 3 4 3
106 5 4 3 3 3 1 2 4
107 4 3 2 4 4 5 3 3
108 4 3 4 5 4 3 4 4
109 2 4 4 3 3 3 3 5
110 3 4 3 2 4 4 5 3
111 4 5 3 4 5 4 3 4
112 2 4 4 3 3 3 3 3
113 3 4 3 2 4 4 5 1
114 4 5 3 4 3 4 3 2
115 5 3 2 3 4 3 3 3
116 3 5 3 4 5 4 4 4
117 4 3 4 2 3 5 5 5

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 118 3 3 2 3 4 3 3 3
119 4 5 3 4 5 4 4 4
120 5 3 4 2 3 5 5 3
121 3 4 3 3 3 3 2 4
122 4 3 2 4 4 5 3 5
123 5 3 4 5 4 3 4 3
124 3 4 4 3 3 3 3 4
125 5 4 3 3 3 3 4 5
126 4 3 2 4 4 5 3 4
127 4 3 4 5 4 3 3 4
128 2 4 4 3 3 3 4 2
129 3 4 3 2 4 4 4 3
130 4 5 3 4 5 4 3 4
131 2 4 4 3 3 3 4 2
132 3 4 3 2 4 4 5 3
133 4 5 3 4 3 4 3 4
134 5 3 2 3 4 3 4 5
135 3 5 3 4 5 4 3 3
136 4 3 4 2 3 5 4 4
137 3 5 4 5 4 3 3 3
138 4 3 3 3 3 4 3 4
139 5 3 3 3 3 5 4 5
140 3 4 4 4 4 3 4 3
141 4 5 4 5 4 4 3 4
142 4 3 3 3 3 4 4 4
143 3 2 4 2 4 3 5 3
144 3 4 5 4 5 3 3 3
145 4 3 3 3 3 4 4 4
146 4 3 4 4 4 4 3 4
147 3 4 3 3 3 3 3 3
148 4 5 4 4 4 4 4 4
149 5 3 5 5 5 5 5 5
150 3 4 3 3 3 3 3 3
151 4 3 4 4 4 4 4 4
152 3 4 3 3 3 3 3 3
153 4 5 4 4 4 4 4 4
154 5 3 5 5 5 5 5 5
155 3 4 3 3 3 3 3 3

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The above ratings are tabulated and the average of these is plotted on a graph. I have collected ratings
for ICICI, Axis, and IDBI as well. But I have chosen to compare the expected ratings and ratings for
HDFC with SBI because out of 155 respondents few have not dealt with Axis or IDBI.

Expected Ratings(Average)

3.5000

3.0000

2.5000

2.0000

1.5000

1.0000

0.5000

0.0000

fig. Average Expected Ratings

By this graph I interpret that builders/developers largely go by reputation of builder, existing

relationship, funding value and legal/technical flexibility. This graph is the ratings of expectation from
finance institutions. By this HDFC can look up to where they need to match the current levels.

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 HDFC Ratings(Average)
3.5000

3.0000

2.5000

2.0000

1.5000

Average Ratings
1.0000

0.5000

0.0000

Fig. Ratings for HDFC

HDFC is rated to be technically less flexible. Stringent process and speed of process is
alright. Surprisingly, the reputation is voted down. Funding value is lesser than it s
competitors. But many builders applauded the systematic processing of HDFC which is
not at all present in nationalized banks.

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 SBI Ratings(Average)
4.0000

3.5000

3.0000

2.5000

2.0000

1.5000
Average Ratings

1.0000

0.5000

0.0000

Fig. Ratings of SBI

SBI is nationalized bank which has people‟s never dying trust. People find every
parameter satisfactory. The coverage is far more widespread than HDFC. They finance
all the projects and have very high customer preference.

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4.0000

3.5000

3.0000

2.5000

2.0000

1.5000

1.0000 Expected
HDFC
0.5000 SBI

0.0000

The above graph shows overview of comparison of Expected, HDFC and SBI ratings.

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 Ease of process

Ease of process

4
3.5
3
2.5
2 Rating

1.5
1
0.5
0
Expected HDFC SBI

Here 0 being the least easy process (rigid process). HDFCs process is stringent and does
not flout any of norms i.e., rules and regulations. SBI is slightly customer friendly. Large
numbers of builders prefer SBI on HDFC for the same.

Faster processing

Faster processing

4.0000

3.5000

3.0000

2.5000

2.0000 Rating

1.5000

1.0000

0.5000

0.0000
Expected HDFC SBI

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Here in the above mentioned graph, 0 means slowest processing and 5 meaning fastest
processing. The average rating shows that expectation and deliverance is up to mark. But people
feel SBI has comparatively faster system. This is where HDFC has to improve in order to
compete with SBI.

Legal/Technical flexibility

Legal/Technical flexibility

3.5000

3.0000

2.5000

2.0000
Rating
1.5000

1.0000

0.5000

0.0000
Expected HDFC SBI

HDFC is known for its strict checks on property details. Each and every document is verified and
checked. Many builders who are on par with these standards don not find any problem with this
factor but, the builders who do not possess land conversion documents find the procedure
cumbersome and irritable just because the other banks do not seek these documents. The
nationalized banks like SBI also are flexible in such matters. By the above graph we can observe
HDFC is voted to have been rigid both in terms of expected and SBI.

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 Reputation of the financier

Reputation of Financier

3.5000

3.0000

2.5000

2.0000
Rating
1.5000

1.0000

0.5000

0.0000
Expected HDFC SBI

Shockingly, HDFC is voted for less reputation than SBI and expected from any home loan
institution. SBI has very good reputation even though it has a cumbersome and delayed process
but, match the expected levels.

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 Customer preference

Customer preference

4.0000
3.5000
3.0000
2.5000
2.0000 Rating

1.5000
1.0000
0.5000
0.0000
Expected HDFC SBI

Customers forget all the ill points when it comes to SBI. SBI with cumbersome process, delayed
disbursements, lack of organized handling is still most preferred in the list of banks I surveyed
upon. People have complete faith in the nationalized banks. Here in this graph the 5 rating means
highly preferred by customers. HDFC is not preferred over SBI.

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 ROI

ROI

4.0000

3.5000

3.0000

2.5000

2.0000 Rating

1.5000

1.0000

0.5000

0.0000
Expected HDFC SBI

In terms of ROI, expected, HDFC and SBI all are not independent but bound by rules of RBI. So
discussing on this point in not on the free lines of ones‟ own organization. But here also we can see that
SBI is meeting the expectations of the builders above par expected and HDFC.

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 Existing relationship

Existing relationship

3.6000
3.5000
3.4000
3.3000
3.2000
3.1000 Rating
3.0000
2.9000
2.8000
2.7000
2.6000
Expected HDFC SBI

Existing relationship as a parameter of choosing a bank is voted as one of the important ones.
HDFC has fewer relationships than compared to SBI. SBI has its own positive points. Builders
feel there is a personal touch with nationalized banks than private banks. The private bank like
HDFC is bound by its own rules and regulations. For Eg., A builder gave me the reason being
availability of cheque book at branch. HDFC has a centralized system where Cheque book is
delivered by mail and not handed over to the customer. Such minor things prove as thorns in the
path of competition.

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 Funding Value

Funding value

4.0000

3.5000

3.0000

2.5000

2.0000 Rating

1.5000

1.0000

0.5000

0.0000
Expected HDFC SBI

The above graphs give a comparison of the expectations, deliverance of HDFC and its toughest
competitor SBI. The HDFC mainly lags behind coverage in Bangalore. Most of upcoming projects are
from BMRDA approved areas. HDFC does not fund the BMRDA projects. The speed of process needs
to improve. There should be more technical/legal flexibility which is completely rigid now. Funding
value needs to be increased according to general opinion. Existing relationship is playing a significant
role where HDFC is not doing its best. Customers need to be educated about the positive side of
HDFC as a private bank.

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 Suggestions
HDFC is rated to be technically less flexible. Stringent process and speed of process is alright.
Surprisingly, the reputation is voted down. Funding value is lesser than it s competitors. But
many builders applauded the systematic processing of HDFC which is not at all present in
nationalized banks.
SBI is nationalized bank which has people‟s never dying trust. People find every parameter
satisfactory. The coverage is far more widespread than HDFC. They finance all the projects and
have very high customer preference.

HDFCs process is stringent and does not flout any of norms i.e., rules and regulations. SBI is
slightly customer friendly. Large numbers of builders prefer SBI on HDFC for the same.

The average rating shows that expectation and deliverance is up to mark. But people feel SBI has
comparatively faster system. This is where HDFC has to improve in order to compete with
SBI.HDFC is known for its strict checks on property details. Each and every document is
verified and checked. Many builders who are on par with these standards don not find any
problem with this factor but, the builders who do not possess land conversion documents find the
procedure cumbersome and irritable just because the other banks do not seek these documents.
The nationalized banks like SBI also are flexible in such matters.
HDFC is voted for less reputation than SBI and expected from any home loan institution. SBI
has very good reputation even though it has a cumbersome and delayed process but, match the
expected levels.
Customers forget all the ill points when it comes to SBI. SBI with cumbersome process, delayed
disbursements, lack of organized handling is still most preferred in the list of banks I surveyed
upon. People have complete faith in the nationalized banks.
In terms of ROI, expected, HDFC and SBI all are not independent but bound by rules of RBI. So
discussing on this point in not on the free lines of ones‟ own organization. But here also we can
see that SBI is meeting the expectations of the builders above par expected and HDFC.
Existing relationship as a parameter of choosing a bank is voted as one of the important ones.
HDFC has fewer relationships than compared to SBI. SBI has its own positive points. Builders
feel there is a personal touch with nationalized banks than private banks. The private bank like

77 | P a g e
HDFC is bound by its own rules and regulations. For E.g., A builder gave me the reason being
availability of cheque book at branch. HDFC has a centralized system where Cheque book is
delivered by mail and not handed over to the customer. Such minor things prove as thorns in the
path of competition.
The HDFC mainly lags behind coverage in Bangalore. Most of upcoming projects are from
BMRDA approved areas. HDFC does not fund the BMRDA projects. The speed of process
needs to improve. There should be more technical/legal flexibility which is completely rigid
now. Funding value needs to be increased according to general opinion. Existing relationship is
playing a significant role where HDFC is not doing its best. Customers need to be educated
about the positive side of HDFC as a private bank

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 My learning
I have learnt many things during this project. First and foremost, perseverance is the key to
success. I once remember seeing a motivation poster in one of the institutes that I studied in. it
had a picture of a mark of shoe on a white surface. It read “Persevere… that is how man landed
on the moon.” Now I have learnt most tasks are possible by hard work, faith and relentless
perseverance.

I have learnt discipline and punctuality (in a hard way at times). I have learnt to communicate
better and effectively. I have come across various types of people. The exposure to the set of
people did no wonder teach me patience and also how to tackle irate and rude people.

The course of this project did reward me and will help me with future endeavors.

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