F-RE-01

Introduction To Real Estate

Trainings by Vidya Bhagwat

Objective of this Chapter

• The objective of this chapter is to give you an overall and quick view of real estate and real estate industry.

• You could be aware of the current market scenario of real estate.

• This chapter also aims at informing you regarding the sectors involved in real estate along with the type of industry which they include within them.


Agenda

• Defination of Real Estate• The Real Estate Zoner View• The Real Market Scenario Today• Segments in Real Estate Sector– Residential Space– Commercial Space– Retail Space– Hospitality Space– SEZs


Defination of Real Estate

Real Estate is "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; (also) an item of real property; (more generally) buildings or housing. Also the business of real estate is the profession of buying, selling, or renting land, buildings or housing.


The Real Estate Zoner View

a) Rapid expansion of the IT/ ITES and business outsourcing industry (including knowledge process outsourcing and clinical testing outsourcing);

b) Rising demand in the residential sector, encouraged by rapidly increasing income levels;

c) Acceptance of shopping malls as “one stop destinations” for consumers; and

d) Growing popularity of Special Economic Zones as preferred destinations for both manufacturing and service industries.


The Real Market Scenario Today

• The real estate sector is a critical sector of our economy. • It has a huge multiplier effect on the economy and therefore,

is a big driver of economic growth.• It is the second-largest employment-generating sector after

agriculture. • Growing at a rate of about 20% per annum and this sector has

been contributing about 5-6% to India’s GDP. • Not only does it generate a high level of direct employment,

but it also stimulates the demand in over 250 ancillary industries such as cement, steel, paint, brick, building materials, consumer durables and so on.


The Real Market Scenario Today

• The sector not only witnessed the entry of many new domestic realty players but also the arrival of many foreign real estate investment companies including private equity funds, pension funds and development companies entered the sector lured by the high returns on investments.

• The industry achieved new heights during 2007 and early 2008, characterised by a growth in demand, substantial development and increased foreign investments.

• However, by mid 2008, the effects of the global economic slowdown were evident here too, and the industry took a ‘U’ turn. FDI inflow into real estate dropped significantly and what had emerged as one of the most promising markets for foreign investments experienced a downturn.


Segments in Real Estate Sector

There are various segments in Indian Real Estate sector. They are as follows:

• Residential Space• Commercial Space• Retail Space• Hospitality Space• SEZs


Residential Space

• Residential Space is the space which is meant to live in. It is a space which people construct and prefer to live with their family. This includes apartments, buildings, row houses, bunglows etc.


Commercial Space

Commercial property includes office buildings, industrial property, medical centers, hotels, malls, retail stores, farm land, multifamily housing buildings, warehouses, and garages.


Retail Space

• Retail space is the last stop in the manufacturing chain, the spot where merchants sell products to customers.

• Retail space differs from other commercial properties, such as industrial or office space, in that the emphasis is on product display and customer accommodation.

• Retail space comes in a variety of shapes and sizes and may be located in free-standing buildings, enclosed malls, strip shopping centers, downtown shopping districts, or mixed-use facilities. You will also find retail space in airports and other transportation facilities, hotel lobbies, sports stadiums, and temporary or special-event venues.


Hospitality Space

• The Hospitality Space is that space which is required so that people could be able to enjoy, relax and enter into a friendly and relaxed environment.

• It is a broad category of fields within the service industry that includes lodging, restaurants, event planning, theme parks, transportation, cruise line, and additional fields within the tourism industry.

• A hospitality unit such as a restaurant, hotel, or even an amusement park consists of multiple groups such as facility maintenance, direct operations (servers, housekeepers, porters, kitchen workers, bartenders, etc.), management, marketing, and human resources.


SEZs

• A Special Economic Zone (SEZ) is a geographical region that has economic and other laws that are more free-market-oriented than a country's typical or national laws. "Nationwide" laws may be suspended inside a special economic zone.

• The category SEZ covers, including free trade zones (FTZ), export processing Zones (EPZ), free Zones (FZ), industrial parks or industrial estates (IE), free ports, free economic zones, urban enterprise zones and others..

• Usually the goal of a structure is to increase foreign direct investment by foreign investors, typically an international business or a multinational corporation (MNC), development of infrastructure and to increase the employment.


Summary

• Real estate is "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature.

• Real estate is a separate industry or a separate sector.• The real estate industry is one of the fastest growing industries in

our economy, with an Compound Annual Growth Rate of approximately 30%.

• It is the second-largest employment-generating sector after agriculture. Growing at a rate of about 20% per annum and this sector has been contributing about 5-6% to India’s GDP.

• There are various segments in Indian Real Estate sector such as Residential Space, Commercial Space, Retail Space, Hospitality Space, SEZs.


Assignments

1. Calculate the growth rate of any 5 sectors in comparison with Real estate.

2. Which are the other industries associated with Real Estate? Also mention the top brands of those associated companies.

3. Make a Report on current status on Real Estate Industry in your city.

F-RE-01

Education

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