Real Estate Market Scenario in India- Extension, 2015

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Agenda

Investments tradition in India: Two safe and High Net worth asset class for Indians

• Gold

• Real Estate

Policy reforms to attract investment in India| Foreign Investment Scenario in India

• Current trends of Real Estate in cities of India

• Trends in investments and PE deals held in 2013

Current Inflation, GDP and GNI rate in India

Major Real Estate players: Company information and Performance review

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Investments tradition in India: Two safe and High Net worth asset class for Indians

• Physical assets accounted for more than two-thirds of household savings in 2012-13, up 48%, from five years earlier. Low interest rate regime and economic stimulus (post 2008 financial crisis) by various countries were one of the most important factors for people moving towards this asset class. With the financial markets in a turmoil and availability of abundant liquidity, real estate and gold turned out to be the most attractive investment avenue for investors.

• Indian consumers buy gold as an investment and for adornment. More than 75 per cent of respondents perceived gold as a safe investment and 53 per cent consider it primarily an adornment; and the overwhelming majority believe that gold is both.

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Investments in physical assets: Scenario

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Gold

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Distribution of Savings and Investment of Average Respondent

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Real Estate

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Dream of an Indian: Own a house

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The above graph clearly shows average consumption of income for housing and consumer durables across various segments of lifestyle. This shows that after food which is vital requirement, Indian majorly spend to own a house. This spending is likely to grow by 4 times by 2020. Also, if we go by debt percentage incurred by urban household (2012), there are 82% of households which incurred loans on house-financing, marriage and higher studies out of which house-financing is the major part.

In India, on an average 55% of families are owning houses which shows there are more families still planning to own a house in near future and hence, there is huge demand for residential units.

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Population growth of India, their rising incomes

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Why housing demand is rising in India

• Mumbai and Delhi-NCR are the two major spots for real estate business which constitute approximately 60% of the total estimated demand and approximately 40% of the total supply amongst the top eight cities. In these regions major upcoming supply will be absorbed by the investors who will purchase property to sell and not to live in. This will keep the end-user demand subserviced and significant proportion of the end users will be living in rented accommodations.

• Also, unsold homes are expensive, located in upscale societies and in cities like Delhi and Mumbai, where residential property prices more than doubled from 2009 to 2012. Instead of cheaper housing, most developers built apartments that cost over Rs. 1 crore on average but the average Indian cannot afford them. Their demand is in a far lower range of Rs. 5 lakh to Rs. 20 lakh.

• So while apartments remain empty, India's middle class is faced with a housing crisis for a lack of affordable housing. Demand for affordable housing has risen sharply, and supply shortage is close to 19 million homes.

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• FDI flowing in India in various sectors has shown its impact on real estate business as well. Pharmaceutical and Automobile sectors are two major sectors which have attracted huge amount of FDI. And for the development of these sectors real estate business has also received the benefits.

• Visakhapatnam with its 1,400 acre pharma city is fast emerging the country's biggest pharma hub and many global pharma giants are moving their investment plans out

Japanese pharmaceutical company Eisai Co. opened its knowledge center in Vishakhapatnam in Jawaharlal Nehru Pharma City. The facility earlier occupied 33 acres, started the expansion in 2012 with the remaining 17 acres.Eisai has been present in India since 2004. By setting up the Eisai Knowledge Centre, the company strengthened its position and integrated its development, production and sales functions in India.

The Visakhapatnam facility is Eisai's second API manufacturing site with the first one being located in Kashima, Japan. The Kashima plant

supplies APIs to global markets. The Eisai Knowledge Centre is also the fourth knowledge-based centers of Eisai, the others being located in Japan, the UK and the US. The Jawaharlal Nehru Pharma City also houses about 20 pharma companies -- including Dr. Reddy's, Pharmagel, Biocon, Hetero Drugs, GVK Bio, Orchid Chemicals

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How FDI is affecting real estate - especially housing and development

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• Chennai is emerging as the country's largest automotive and auto components manufacturing hub in terms of volume and investment. Over the last couple of years the city has truly developed into a world class industrial and manufacturing hub with organizations across IT, automotive, telecom, retail springing up everywhere. The Chennai-Bangalore corridor is in line to be the biggest industrial corridor in the next few years

• Nissan Motor India Private Ltd. (NMIPL) is a 100% subsidiary of Nissan Motor Co. Ltd. Japan. Nissan together with its global alliance partner Renault set up a manufacturing plant and a Research & Development Centre near Chennai.Nissan in India has a portfolio of two brands, NISSAN and DATSUN. Nissan has partnered Hover Automotive India Pvt. Ltd for the distribution, sales and service of vehicles under NISSAN brand. While Nissan Motor in India will be responsible for distribution, sales and service of vehicle under the DATSUN brand. The Renault Nissan Alliance plant was inaugurated in 2010, just 21 months after

the groundbreaking ceremony in 2008, a record for this scale of factory Nissan Motor Corporation's investment in Datsun is just one part of its ongoing

commitment to expanding its presence across its commercial, research & development and manufacturing functions in India.

• Apart from this in year 2012, US carmaker Ford India, Korean car manufacturer Hyundai, German premium automaker BMW, and Franco-Japan joint venture Renault-Nissan have set up manufacturing facilities in the city and its suburbs.

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Since 1991, FDI growth in India

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The Modi effect on FDI-Overall

• According to data released by the Reserve Bank of India (RBI) in its annual report for the financial year 2014-15, the aggregate FDI received in rose 54 per cent to $24.7 billion from $16 billion in the previous year ended March 2014. This is also the highest FDI received in at least five years.

• As a result of the government’s push on manufacturing in India and ease of doing business initiative, the FDI in manufacturing has witnessed a boost as it has accounted for 38 per cent of the total FDI received and rose to $9.6 billion. It stood at $9.3 billion in 2011-12 and declined in the following two years to $6.5 billion and $6.3 billion in FY13 and FY14, respectively.

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FDI from Japan

SHARE OF JAPAN IN FDI EQUITY INFLOWS FROM APRIL 2000 TO FEBRUARY 2014 • Rank: Japan ranks 4 th• Percentage share of total FDI inflows: is 7.46%• Total FDI Inflows from Japan: are US$ 15.97 billion SECTORS THAT ATTRACTED MAXIMUM FDI EQUITY INFLOWS FROM JAPAN: Top sectors that attracted FDI equity inflows(from April 2000 to February 2014), from Japan, are:• Drugs & Pharmaceuticals (28%)• Automobile Industry (16%) • Services Sector (15%) • Metallurgical Industries (9%) • Electrical Equipment (4%) TOP FDI EQUITY INFLOWS RECEIVED: (from April 2000 to February 2014, from foreign companies, into Indian companies from Japan)• DAIICHI SANKYO CO. LTD. • JFE STEEL CORPORATION • NIPPON LIFE INSURANCE COMPANY• NISSAN MOTORS COMPANY• MATSUSHITA ELECTRIC WORKS LTD • SUMITO MITSUI BANKING CORPORATION• HONDA MOTOR CO LTD • HITACHI CONSTRUCTION MACHINERY CO LTD • SUZUKI MOTOR CO. LTD., • MITSUI SUMITOMO INSURANCE CO. LTD

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How has Japan FDI into India improved in last one year

• Japan has actively taken part in making the first stage of $100 billion Delhi-Mumbai Industrial Corridor a grand success, as they have invested close to $5 billion as of now. Japan International Cooperation Agency and Japan Bank for International Cooperation collectively hold 26% stake in this venture.

• Besides launching these 11 industrial townships across India, Japan has also committed to initiate major projects in: Investment & Infrastructural Development; IT projects to the tune of $10 billion; Enhancing co-operation in strategic sectors such as defense and power; Creation of a mega Asia-Pacific Economic Corridor.

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Benefits to Japanese companies/investors for investing into India

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India Inflation Rate since 2014

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India Annual GDP growth rate

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India Annual GNI/GNP rate

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Indian GDP/GNP comparison with other countries

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Major Real Estate players: Company information and Performance review

DLF (Delhi Land and Finance)History:• DLF's first residential project was Krishna Nagar in East Delhi, which was completed in 1949.

Subsequently, the company developed 21 colonies in Delhi, including some in the South Extension, Greater Kailash, Kailash Colony and Hauz Khas. The passage of Delhi Development Act in 1957 was the first serious challenge to company’s growth . The Act meant that the government would assume control of all real estate development activities in the city.

• As a result DLF decided to move beyond Delhi and zeroed in on the suburb of Gurgaon in Haryana, which had the potential for development of residential and commercial properties. As DLF started to acquire land under the leadership of Chairman, K.P. Singh, Gurgaon embarked on a period of rapid growth.

Success story:It was founded in 1946 for doing real estate business. Later, it developed residential colonies in Delhi like Krishna Nagar. During 70s, it started developing its DLF City project to transform Gurgaon from a farming village to a commercial and real estate hub which completely changed its destiny. At present K P Singh is the chairman of DLF. Last year, in the month of July, DLF created history by releasing US$ 2 billion IPO which is the India’s biggest IPO till date. At the moment, DLF has invested close to Rs 80,000 crore (Rs 800 billion) in projects running into 100 million square feet.

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Current SituationRevenue and profitsShare prices- 110.45 as of 2 Sept. 2015New investments-• Outflow: Realty major DLF will invest about Rs 900 crore over the next three years on construction of its new

commercial project in Gurgaon covering about 2.2 million sq. ft. of office space.The project will be developed on a 14-acre land.

• Inflow:DLF Home Developers (DHDL), a wholly-owned subsidiary of realty major DLF, has formed a joint venture (JV) with Singapore's sovereign wealth fund GIC. GIC will invest Rs 1,990 crore in the two projects, adding that the projects are in early stages of planning and development.

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DLF-Revenue and Profit Trend

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Anant Raj

• History- Established in 1969, the company is focused in building Special Economic Zones (SEZs), IT Parks, Hotels, Commercial Complexes, Malls, Residential / Service Apartment and deals in other infrastructure projects. Delhi-NCR has been the focus region for this group.

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AnantRaj- Revenue and Profit Trend

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Unitech

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Established in 1972, Unitech is India’s leading real estate developer in India. It is the first developer to have been certified ISO 9001:2000 in North India.Project Spectrum: Unitech offers diversified projects across residential, commercial IT parks, retail, hotels, amusement parks and SEZ segments. Unitech was the first real estate company to be part of NSE’s NIFTY 50 Index. The company has over 600,000 shareholders.

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Supertech

Snapshot:• Supertech Limited was founded in 1988• Claims to have pioneered concept of mixed-use development in India• First Indian real estate developer to introduce precast and jump form technologies in construction• Developing projects in different verticals such as residential, commercial (retail, office spaces), townships and

hospitality• Constructing projects like North Eye and Supernova – North India’s tallest residential and mixed-use

developments respectivelyFinancials:• Authorized capital: Rs 150.20 million• Paid up capital: Rs 124.85 million• Total sales consideration from existing projects: Rs 19,090 million• Revenue (FY 2013 – 2014): Rs 19,472 million (provisional)• Increase in total turnover over 2012-13: Rs 395 million• Increase in Net Worth: Rs 900 million

Highlights:• More than 60,000 customers• More than 12,000 residential units delivered till date• Built more than 33 million square feet of residential and commercial spaces• 38 projects worth Rs 18,000 crore in progress• Over 90 million square feet under development• Delivery target of 10,000 units across different projects for the year 2014

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