Real Estate Sector
Real estate is a very important sector and one of the biggest drivers of economic growth and investments. The Indian real estate sector can be broadly categorized as residential, commercial, retail and hospitality. The real estate demand from the hospitality sector is very modest compared to the other three segments. While a bulk of the current real estate demand comes from the residential segment, retail and commercial segments are expected to grow much faster over the next few years.

The fast improving quality and opportunity landscape of the Indian real estate sector has attracted many globally renowned companies, retailers, architects and planners to bring their operations in India. As a result, many foreign investment companies that focus on real estate, like private equity funds, pension funds and development companies are drawn to invest in the sector.

Construction development is one of the largest recipients of FDI and has attracted 11.5 percent of the total FDI inflows to the country. During the year, the sector attracted INR 683 million in FDI or 6 percent of the total FDI inflows to the country.
Residential Segment
While the strong structural economic drivers like the rising income level, increasing mobility of the workforce, reducing family size, increasing aspirations, easier access to credit at competitive rates, favourable demographic and growing urbanisation, have helped in maintaining the demand of the quality residential spaces, the cyclical factors like the weakness in economic growth momentum, high input cost inflation leading to sharp price appreciation, execution delays and high interest rates have kept the demand momentum under check during the last 6-8 quarters.

Despite slow growing demand momentum, most cities witnessed a slight increase in capital values with a few cities like Delhi, Hyderabad, Mumbai and Pune witnessing a double digit increase in prices.

Commercial Segment
The demand of commercial properties in India is strongly related to the growth and prospects of service sector, especially the IT-ITES sector, their net hiring and their future outlook. As shown in the graph alongside, the IT sector was the largest office occupier, contributing to 40 percent of the occupied space.
Since the last two years, the weak growth outlook has dampened corporate sentiments and impacted their expansion and hiring plans. There has been a slowdown in the services sector including IT/ITES and BFSI. As per NASSCOM, the hiring by the Indian IT sector might reduce to 1,30,000 – 1,50,000 in FY’14 as compared to 1,80,000 in FY’13. This is when the IT industry is projected to grow by 12-14 percent in FY’14, better than the 10.2 percent growth it saw in FY’ 12-‘13.

The weakening sentiments also got reflected in the HSBC Services Purchasing Managers’ Index, where the services growth eased for the third straight month to the eighteen month low during April 2013.
During the period June 2012- Mar 2013, Mumbai, NCR and Bengaluru together accounted for over 75 percent of the total supply in the top seven cities. While within the three regions, Mumbai accounted for almost 30 percent of the total supply, both NCR and Bengaluru accounted for around 23 percent each of the total supply.
Demand-wise, for the period June 2012- Mar 2013, Bengaluru accounted for the maximum demand amongst the top seven cities, accounting for a little less than 29 percent of the total demand, followed by Mumbai which accounted for 23 percent of the total demand and NCR accounting for close to 20 percent of the total demand.
Retail Segment
India has one of the largest yet one of the least organised retail markets in the world. As per a study by Deloitte, over the next few years while the retail industry will continue to grow in double digit, the share of modern retail is slated to increase multifold with its penetration expected to increase from the current less than 5 percent to over 20 percent by the year 2020.
Like other real estate segments, the demand in the retail segment was impacted by the economic slowdown over the last two years. But the recent government policy actions including passage of the Bill for allowing 51 percent
FDI in multi-brand retail after permitting 100 percent FDI in single brand retail is likely to provide a strong fillip to the organised retail sector and should help increase its demand momentum.

During the year, there was continued expansion in all major cities by international apparel and F&B retailers. Retail being a location driven activity, there has been an increase in competition between domestic and international retailers in select pockets. Despite the slowing growth momentum, many international brands including IKEA, Walmart, Tesco, Carrefour, Pavers, Fossil, Brooks Brothers, Damiani, Decathlon Sports, Lotus Arts De Vivre, Officina Farmaceutica Italiana, Le Creuset, Uniqlo and Starbucks among others have evinced interest to expand their operations in India.

City-wise, Delhi holds a little less than a third of the total organised retail assets in India’s top seven cities followed by Mumbai which holds a little over a quarter.
Management Discussion & Analysis
Economic Overview
Real Estate Sector
Business Overview
Risk Management
Internal Control Systems
Human Resource
Cautionary Statement
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