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KEY TRENDS & DRIVERS

REAL ESTATE • October 2007

Market Trends and Outlook

Parameters Growth Rate

Structure

Market Concentration

Competition

Extent of Regulations

Financing

Characteristics/ Trends

  • High growth of around 30% in last 2-3 years

  • Highly unorganized sector

  • Entry of numerous new players

  • Highly concentrated within top 6- 8 cities in the country

  • High concentration leading to significant property price rise in such cities

  • High competition with 4-6 key national players and numerous regional players

  • Moderate-No functional regulatory body

  • Region/Location specific building laws

  • 100% FDI is allowed under the automatic route

  • 30-40% annual increase in the home loan disbursements loan disbursals from Indian housing finance companies

  • Loan tenures have increased: 150 months (2001) to 173 months (2006) due to declining age of borrowers

Outlook

  • Expected to maintain the same growth in the medium term (5-7 years)

  • Phase of consolidation expected in 5-7 years

  • Entry of large number of international players

  • Preference towards strategic development alliances

  • Growth to be driven primarily by Tier-II and Tier-III cities in the near future, across segments

  • Emergence of at least 10-15 new cities as growth centers

  • Increased development of planned cities

  • Shift in competition towards product focus/ differentiation

  • Stringent regulations expected to be introduced inline with international norms

  • Reforms in local development guidelines

  • Larger mortgage penetration

  • Introduction of globally accepted instruments/modes such as REITs

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