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Contents
Introduction
Regional Overview
Site Analysis
Decision Analysis
Conclusion
Jampel-yang (contracted
toJamyang)
2
Introduction
introduction
Objective of the Study
Inductotherm the Client owns and operates an
industry on a land parcel measuring about 17.79
acres, located in Bopal, Ahmedabad, Gujarat.
Scope of Work
Regional
Overview
Gujarat Overview
Fact Sheet
Area (sq.km.)
181,338
Population
60,383,60
0
Urban Population
5,411,700
` 95,100
45%
11%
SEC A
SEC B
SEC C
SEC D & E
9%
25,675,70
0
Total Urban
Households
19%
23%
13%
12%
27%
20%
22%
Annual Population 2%
Growth
Rate
Socio
Economic
Classification Urban Households
100%
88%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Urban
79%
70,000
60,000
73%
50,000
Population 000
50,671
55,808
60,384
63,532
66,774
69,812
73,231
40,000
30,000
20,000
10,000
Rural
Total
2001
2007
2012
2017
2022
2027
2032
Indias economic growth story over the last 20 to 30 years has been pre-dominantly driven by the services sector,
especially the IT / ITeS sector.
The next leg of the India growth story is poised to be driven primarily by the manufacturing sector.
Infrastructure
Passengers handled by Gujarat
Airports
Airports
Roads
Railways
2010
Ahmedab
837,000
ad
Vadodara
451,200
Surat
32,100
Bhavnaga
66,400
r
Jamnagar
65,600
Rajkot
195,200
Porbandar
19,500
Bhuj
Ports 88,900
1,755,900
Total
2015
1,018,400
603,800
44,200
73,300
73,800
273,800
22,200
101,100
2,210,600
Industrial Scenario
Industrial Performance
Industrial
Promotion
Bodies
Output Specialization
Growth Forecasts
Gujarat has seen a strong industrial growth in the past in the Petroleum and Chemical sectors, with these sectors
constituting over 45% in the states economic output.
The state has witnessed a number of emerging sectors like Metal & Metal Fabrication, Food Processing and
8
Engineering, which are forecasted to grow at CAGRs of 25%, 18% and 16% respectively.
Ahmedabad is at the center of gravity for significant industrial developments taking place across various clusters
and along the Dedicated Freight Corridor (DFC) alignment in Gujarat
Significant upcoming industrial growth with Ahmedabad at its center of gravity shall result in a multiplier effect of
9
capital deployed being fed in Ahmedabad city, particularly, on the Ahmedabad real estate prices.
Ahmedabad Overview
Fact Sheet
Area (sq. km.)
Total Population Census
Population Density (persons per sq.
km.)
Population 0 to 6 years (%)
646
5,570,585
8623
10.57
897
853
89.62
5th largest city of the country and 7th largest urban agglomeration
One of the fastest growing urban agglomeration with a decadal growth rate in population of 23%
Its a mono-centric city with proportionate growth in all the directions
Western part of the city has seen more organized developments
One third of the households have annual income levels greater than ` 500,000 per annum
The city is witnessing one of the fastest growths in income profile
City administration has responded favourably to the increasing urbanization pressures and is developing public
10
transport in the form of BRTS and also high density corridors along it
Real Estate
Analysis
11
North
Zone 3
13%
13%
7%
West
Zone 2
East
Zone 1
21%
Zone 1
Zone 2
Zone 3
Zone 4
Zone 5
3% 1%
25 50
10%
51%
35%
46%
50 100
100 - 200
200 and
Above
Unsold Units
Central
Zone 5
16%
South
Zone 4
13%
8%
19%
43%
12
Zone 1
Zone 2
Zone 3
Zone 4
Zone 5
3% 1%
25 50
10%
49%
37%
50 100
100 - 200
200 and
Above
Supply Analysis
Ticket
Size (`
lakh)
Zone 1
Zone 2
Zone 3
0-25
4,252
1,827
5,885
42,89
Zone 4
5,839 1,114
9
Zone 5 1,055 9,387 3,121
55,91
Total
37,814 11,003
8
%
51%
35%
10%
Unsold
Locatio
0-25
ns
25
50
Market Size
Ahmedabad
market has
48
50,406 46%
Premium Projects
594
205
3,058
1,249
3%
Units
1%
14,362 13%
109,04
2
100%
100 200
1,135
963
608
227
343
182
200
and
Above
285
212
23
687
256
1,105
233
99
4,498
10%
1,241
3%
627
1%
109,000
506
50
100
over
Western
Ahmedabad
has
the
highest
Total
5,910
3,750
8,872
13%
8%
19%
19,841
7,393
43%
16%
45,766
100%
13
Absorption
Out
of
the
total
109,000
units
in
market Analysis
Ahmedabad Market
Developer /Zone/Bopal
10.00
Grade A Developers
8.00
6.00
Bopal Market
4.00
2.00
-
Zone 2
Zone 1
Zone 2
Zone 3
Zone 4
Zone 5
QTS - QTC
4.00
6.00
8.00
10.00
12.00
QTS - QTC
400
Price Index
2.00
300
200
100
Zone
12 Qtrs
20 Qtrs
28 Qtrs
North
16.28%
20.93%
29.01%
South
14.94%
14.57%
21.53%
West
20.94%
16.25%
26.88%
Central
12.27%
17.45%
33.06%
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Overall there is a slow down in Ahmedabad market and developers are struggling to clear the inventory.
Developers are facing a cash crunch situation and therefore investment into land is not an attractive option for
them.
14
Central zone has shown highest appreciation followed by the western zone. However, over the past 3 years period,
Bopal Market
Increment
Market
Total
al
Year Appreciati
Appreciati
Appreciati
on
on
on
Western Zone
12.00
10.00
8.00
Bopal; 26%
6.00
2016
15.76%
57.15%
72.92%
2018
27.63%
79.17%
106.80%
2021
47.75%
111.34%
159.08%
4.00
Total; 74%
2.00
0.00
Actuals
Bopal - Ahmedabad
Noida Expressway
Gurgaon NPR
Pune Peripheral
Over the past 10 years, the market has seen a significant development
Bopal market has seen a 5.5 fold increase in prices over the last 10 years
15
Panvel Mumbai
Nagpur
Growth of Bopal
16
Site Analysis
17
Location
Railway
Route
Sardar
Patel Ring
Road
Sarkhej
Gandhinagar
Highway
Ambli
Road
Railway
Station
Ambli
Bopal Road
Subject
Property
Sabarmat
i River
Ahmedaba
d Railway
Station
Nearest Highway
(S. P. Ring Road)
1 km
Nearest Railway
Station
(Ambli Road)
5 km
Nearest Airport
(Ahmedabad
Airport)
23 km
10 km
Nearest Port
(Khambhat)
The
subject
100
site km
is
an
Bopal
Road
17.79 acres
of
the
prime
South
Bopal
Road
approximately
upcoming
locations
and
of
Ahmedabad
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The
site
connectivity
enjoys
excellent
Regulatory Aspects
Real estate development at the subject location is governed by the General Development Regulations (GDR)
of the Ahmedabad Urban Development Authority (AUDA)
Following are some key regulations that are applicable to the subject property:
The subject site falls under two zones:
The base zone applicable is Residential Zone II (R-II)
There is also an overlap of the Residential Affordable Housing Zone (R-AHZ)
Major difference in the applicable norms under these two zones is in the
permissible FSI
Zoning
Bas
e
FSI
R-II Zone
R-Affordable
Housing Zone
1.2
1.2
Chargea
ble FSI *
0.6
1.5
Permissible Development
Total FSI
1.8
2.7
* Additional
chargeable
FSI shall be
permitted on
payment of
charges
equal to 10%
to 40% of the
Government
(Jantri) Rates.
19
20
Valuation
Comparable Instances
Sr.
No.
1
2
3
Location
Opposite
Applewoods
Township
Sahara City
Township Road
(left side)
Sahara City
Township Road
Comparabl
(right
e 3 side)
Property
Area
Type
(acres)
Rate (`
per
sq.yd.)
Survey
Number: 501, ~ 20 Quote 30,000
502
Survey
Number
~ 20 Quote 25,000
485....
Survey
Number
~ 30 Quote 25,000
645....
Subject
Property
59,339 sq.mt.
Residential ~ 2.54
million
Essential Retail ~ 0.12
million
Comparabl
e1
Comparabl
e2
21
Capital Value
Total Revenue
` 12,857 mn
Total Cost
` 6,316 mn
Absolute Profit
` 6,541 mn
` 2,183 mn
Tax implications
o The provisions of Income Tax Act, 1961, as amended by Finance Act 2013, with reference to the following need to
be given special consideration
Capital Gains Tax: LTCG 20%
Section 54G : Exemption of capital gains on transfer of asset in case of shifting of industrial
undertaking from the urban area
Where the capital gain arises from transfer of capital asset situated in an urban area, in consequence of shifting of
such industrial undertaking to any area other than urban area, and the assessee has within a period of one year before
and three years after the date on which the transfer took place:
Acquired building or land or constructed building for the purpose of his business in the new area
Shifted the original asset and transferred the establishment of such undertaking to such area
Where the total income of the assessee includes any income arising from the transfer of long term capital asset, which
is chargeable under the head capital gains the tax payable by the assesse on the total income shall be the aggregate
of .
The amount of income tax payable on the total income as reduced by the amount of such long term capital
gains, had the total income as so reduced been its total income; and
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(w.e.f. 1-4-2013) the amount of income tax on long term capital gains arising from the transfer of a capital
Option B
(Sec 50B of Income Tax Act) of all assets and liabilities except
land in Bopal.
implications.
indexation and set off of new land and building (if one year
After the new company takes over, the old company shall be
left with only land in its book.
Also the Capital gains arising due to the sale of company and
thereby transfer of land, shall ,as per Sec 112, be subject to a
10% of income tax, however, the benefit of indexation will
not be available in this case.
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Decision Analysis
24
Decision Tree
25
Option Evaluation
Financial
Assessment
Risk
Assessment
Taxation
Aspects
Other
Aspects
Option
Sell After 3
Years
Self
Development
Management
/ Marketing
Contract
Joint
Developmen
t
1,120
3,755
9,438
9,136
8,471
1,013
2,344
1,652
1,537
1,852
Regulatory Risk
Nil
Nil
Medium
Medium
Medium
Market Risk
Nil
Low
High
Medium
High
Nil
Limited
downside; high
upside
High
High
High
54G: Set-off
available;
Demerger:
Reduced rate
Reduced rate
Applicable: 20%
Applicable:
20%
Applicable:
20%
Dividend Distribution
Tax
54G:
Applicable;
Demerger: Nil
Nil
Applicable
Applicable
Applicable
Stamp Duty
54G:
Applicable;
Demerger: Nil
Nil
Not Applicable
Not Applicable
Not Applicable
Transfer Pricing
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Liquidity
High; upfront
cash
generation
Low
Low; longer
gestation period
Low; longer
gestation
period
Low; longer
gestation
period
Capability Requirement
Nil
Nil
High
Medium
Low
High;
continuation of
existing
High;
continuation of
existing
High;
continuation
of existing
Operational Flexibility
High;
High;
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continuation of continuation of
existing
existing
Summary
Option Evaluation Net Present Value
NPV: ` 2,344
mn
NPV: ` 1,852
mn
NPV: ` 1,652
mn
NPV: ` 1,013
mn
NPV: ` 1,537
mn
Recommend
ed Option
27
Conclusion
28
conclusion
What are the factors which influence the value of this land?
o Gujarat is fast transforming into one of the most industrialized states of the country.
o The state economy is recording growth rates far in excess of the country average.
o Ahmedabad, on account of its location and proximity to state capital, is at the center of gravity of these
developments.
o The city is fast transforming into a metropolitan.
o The boundaries of the cities are witnessing rapid expansion.
o The income profile of the residents is also witnessing rapid increase.
o The multiplier effect of significant development is being felt on Real estate market, resulting in a number of
localities getting revalued
conclusion
If sell, then who are the potential buyers for the property?
o Todays Ahmedabad real estate market is dominated by local players.
o National level players who had entered the market have either seen mediocre performance, or have not
initiated their developments.
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o Thus, the potential buyers for the asset are predominantly Ahmedabad based developers.
conclusion
Disclaimer
The statements, information and opinions expressed or provided in this publication are intended only as a
guide to some of the important considerations that relate to property investment. Although we believe they are
correct and not misleading, with every effort having been made to ensure that they are free from error, they
should not be taken to represent, nor are they intended to represent, investment advice or specific proposals,
which must always be reviewed in isolation due to the degree of uniqueness that will attach thereto.
Neither Knight Frank nor any persons involved in the preparations of this publication give any warranties as to
the contents nor accept any contractual, tortuous or other form of liability for any consequences, loss or
damage which may arise as a result of any person acting upon or using the statements, information or opinions
in the publication. This publication is confidential to the addressee and is not to be the subject of
communication or reproduction wholly or in part.
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Thank You
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