PEST analysis stands for "Political, Economic, Social, and Technological analysis" and

describes a framework of macro-environmental factors used in the environmental scanning

component of strategic management. Some analysts added Legal and rearranged the mnemonic
to SLEPT;[1] inserting Environmental factors expanded it to PESTEL or PESTLE, which is
popular in the United Kingdom.[2] The model has recently been further extended to STEEPLE
and STEEPLED, adding education and demographic factors. It is a part of the external analysis
when conducting a strategic analysis or doing market research, and gives an overview of the
different macroenvironmental factors that the company has to take into consideration. It is a
useful strategic tool for understanding market growth or decline, business position, potential and
direction for operations.

The growing importance of environmental or ecological factors in the first decade of the 21st
century have given rise to green business and encouraged widespread use of an updated version
of the PEST framework. STEER analysis systematically considers Socio-cultural, Technological,
Economic, Ecological, and Regulatory factors.

Composition
 Political factors, are how and to what degree a government intervenes in the economy.
Specifically, political factors include areas such as tax policy, labour law, environmental
law, trade restrictions, tariffs, and political stability. Political factors may also include
goods and services which the government wants to provide or be provided (merit goods)
and those that the government does not want to be provided (demerit goods or merit
bads). Furthermore, governments have great influence on the health, education, and
infrastructure of a nation.

 Economic factors include economic growth, interest rates, exchange rates and the
inflation rate. These factors have major impacts on how businesses operate and make
decisions. For example, interest rates affect a firm's cost of capital and therefore to what
extent a business grows and expands. Exchange rates affect the costs of exporting goods
and the supply and price of imported goods in an economy

 Social factors include the cultural aspects and include health consciousness, population
growth rate, age distribution, career attitudes and emphasis on safety. Trends in social
factors affect the demand for a company's products and how that company operates. For
example, an aging population may imply a smaller and less-willing workforce (thus
increasing the cost of labor). Furthermore, companies may change various management
strategies to adapt to these social trends (such as recruiting older workers).

 Technological factors include technological aspects such as R&D activity, automation,

technology incentives and the rate of technological change. They can determine barriers
to entry, minimum efficient production level and influence outsourcing decisions.
Furthermore, technological shifts can affect costs, quality, and lead to innovation.
 Environmental factors include ecological and environmental aspects such as weather,
climate, and climate change, which may especially affect industries such as tourism,
farming, and insurance. Furthermore, growing awareness of the potential impacts of
climate change is affecting how companies operate and the products they offer, both
creating new markets and diminishing or destroying existing ones.

 Legal factors include discrimination law, consumer law, antitrust law, employment law,
and health and safety law. These factors can affect how a company operates, its costs, and
the demand for its products.
 Introduction

K.P Singh, the Chairman of India’s largest real estate company DLF Ltd. sheds light on factors
affecting the pace of Indian real estate. According to him, it’s stringent monetary policies and
subsequent high mortgage rates.

Prices of residential property in India would only begin to fall in a fast flourishing economy with
an increase in supply, says Mr. Singh. He also adds that property prices will take a slip only if
pushed by increased supply and not mere monetary policies.

The Reserve Bank of India (RBI) raised interest rates five times since March 2006. The authority
has also lifted banks’ reserve requirements to curb rising inflation and credit growth.

This created a need for commercial banks to raise lending rates including those on home loans by
more than 200 basis points.

Another factor affecting Indian property market is increasing interest rates on home loans.
However, growth in home loans may slow to 17-20 per cent in the current fiscal, as per the data
showcased by the Associated Chambers of Commerce and Industry.

Mortgage loans have risen by 26.6 per cent in the last financial year. And it was lower than 29.1
per cent in 2005-06. And, the sale of residential property in India has seen a sharp downslide by
over 70 per cent in May-June 2007.
Economic factors
Up to the end of 2007 real estate sector in India was growing at a very high rate. There was a
situation
of boom in this sector. The home loans were easily available and RBI was following very liberal
policies regarding the interest rates. But in 2008 the things are changing due to the high rate of
inflation in the Indian economy. There is uncertainty in the market as share market is showing
depression and the RBI is also increasing the Bank rate leading to the increase in the interest
rates. So
the buying power is reducing. The major reasons for this downfall are inflation and the low rate
of
GDP. Inflation rate is touching the heights as shown by the figure given below:

Inflation rate in India

Date Inflation rate
Feb 5, 08 3%
Mar 22, 08 6.68%
April 4, 08 7%
April 26, 08 7.61%
May 10, 08 7.82%
May 24, 08 8.24%
June 7, 08 11.05%
June 14, 08 11.43%
Inflation rate is increasing continuously in India making the market unstable.
Barriers in GDP Growth
The present contribution of the housing construction industry in India is small when compared to
developing and developed countries. This sector contributes only 1% of the GDP in India, as
compared
to 3 to 6% in other developing countries. If the above issues are addressed and the economy was
to
grow at 10% a year, the housing sector would grow at 14% a year and create over new3.2 million
jobs
over the next 10 years. The problems are numerous, the solutions are obvious and clear, but the
choices
are difficult and few. The advantages of implementing these changes will overcome all the
negative
and political issues, which have kept the problems dormant for so long. India does not have
option, but
to act strongly and immediately. This will provide the impetus to get Indian economy back on
the track
for a double digit growth. Figure 8 shows the various barriers, keeping the GDP growth in India
at
5.5% in 2000, and the resulting GDP growth of 10.1% with the complete reforms by 2010.

Barriers in GDP
Status Quo
Growth, 5.50%
Product M kt
Barriers, 2.30%
Land M kt
Barriers, 1.30%

Privatization,
0.70%

Labor M kt
Barriers, 0.20%

Lack of
Infrastructure,
0.10%

• As the GDP increases the real estate prices also increases because there is a high degree of
positive correlation between the real estate prices and GDP.
• Real estate prices also increases with increase in the per capita income as there is high degree
of
positive correlation between these two also.
• The infrastructure of India is also growing day by day so it adds to the better facility to
different
sectors which affect the real estate prices.
• The FDI into the country affects the real estate FDI and real estate having a positive correlation
leads to the boom in this sector. Increase in FDI from 2006 to march 2007 is 10%. Earlier it was
16% and now in 2008 it is 25%.
• The interest rate also affects the real estate prices because it affects the lending and borrowing
by
the investors.
• The growth in the real estate sector is between 25-30% in a residential sector, 10-15% in
commercial sector and agriculture sector.
• Housing sector constitute 80% of real estate in terms of value and 20% by commercial sector.
• In residential segment, availability of easy home finance and rising purchasing power has
driven
the growth. Builders are launching high-end, life style residential products to cater to the
growing
bunch of high net worth individuals.
• In 2008 the growth of real estate sector is going down due to high inflation and hike in home
loan
rates by the banks following the increase in bank rate and SLR by the RBI.
• The outsourcing and IT/ITES industry have contributed to the demand for quality office-space.
The estimated demand from IT/ITES sector alone is expected to be 150mm sq. ft. of space across
the major cities by 2010.
Political factors

At the Government level many new policy initiatives have been taken recently to boost the real
estate Property in India . These policy decisions will lend a stimulus and impetus to the industry.
It is beyond doubt that the new initiatives will unlock the potential of the sector. Also, along with
the stimulus package announced by the Government, the Reserve Bank of India (RBI) has taken
a definitive step whereby banks are allowed to devise new schemes beneficial to the property
sector.

As part of the Government initiatives to boost real estate boom sector India, RBI has declared
concessional schemes for the real estate sector. Such initiatives include:
* Urban Land (Ceiling and Regulation) Act, 1976 (ULCRA) repealed by increasingly larger
number of states.
* In case of integrated townships, the minimum area to be developed has been brought down to
25 acres from 100 acres.
* 51 per cent FDI allowed in single-brand retail outlets and 100 per cent in cash-and-carry
through the automatic route.
* Full repatriation of original investment after three years.
* Minimum capital investment for wholly-owned subsidiaries and joint ventures stands at US$
10 million and US$ 5 million, respectively.
* 100 per cent FDI allowed in realty projects through the automatic route.

Further, in its endeavour to initiate new policies to boost the real estate sector in India, the
Ministry of Commerce and Industry, Government of India, has taken steps to reduce the time
taken to develop special economic zones (SEZs) by simplifying the procedures to get the tax-tree
industrial enclaves notified. Now developers can easily get their land classified as an SEZ at the
outset itself by producing title deeds to prove their ownership. Again, the Government has
announced several concessions in the Budget 2008-2009.

New Government initiatives to boost sector of Real Estate India include granting a tax holiday
on profits from initiates in the financial year 2007-2008. In order to enjoy this benefit, the
housing projects should be of the affordable housing unit type of 1000 to 1500 square feet.
Another condition is that such projects should be completed by March 1, 2012. Further, the
Finance Ministry has allocated US$ 207 million to grant 1% interest subsidy on home loans up to
US$ 20, 691. In order to avail this benefit, the cost of the home should not be above US$41, 382.
It is believed that these initiatives will be add further impetus to the real estate sector in the
country.
Legal factors
With a vast amount of land area in India remaining untapped, equip yourself with the twists and turns of
the Indian legal system in case you're aspiring to start with a new housing project.

In case of building flats, one needs to check with the mandatory regulations stipulated by the civic
authorities. Formalities like plan approval, building plan, completion certificate, undivided share, taxes,
extent come into play and need to be properly scrutinized. People from various economic classes are
involved in property transactions and consequently the present property market is seemingly the most
vibrant.

Regarding the legal charter or right through which the holder is able to stake his claim, the strength of
the title is ascertained by going through the earlier deeds of the property. It is not necessary for the title
holder to have possession over the property and the same applies vice versa. Acquire the best plots
available in the real estate market with Indiahousing Legal Aspects.
Technological aspects

The use of Information Technology is slowly but surely changing the Real Estate business
landscape in India.  The real estate brokerage business is in the midst of dramatic changes
brought about by online technology, increased automation and enhanced accessibility to
information. Business survival is becoming more closely tied to real estate consulting firms’
abilities to adapt to technological changes and to use technology to attract customers. The most
important question for anyone who is in the real estate business is – Whether you are ready to
reinvent yourself in these changing circumstances in order to propel towards the rapid phase of
growth that lies ahead?

Changing profile of potential customers:  Customers expect much more from a real estate
broker/salesperson today than in the past. Potential clients are far well informed since they are
able to harness the power of the Internet to access information. They in turn also expect real
estate professionals to raise their service offerings and use a professional approach to meet client
needs. This becomes almost a necessity in case of high value NRI clients who rely on online
information and prefer consultants with a good brand image.

Realtors implementing IT certainly have the edge! -  The implementation of Information

Technology plays a key role in bringing down operational costs, improving customer
relationships and reaching out to online prospects on the internet. Information Technology can
add a lot of value to Real Estate businesses by helping them with Customer Relationship
management, online advertisement and brand positioning. Such realtors can manage their
business efficiently, market properties using digital channels, increase sales, and provide a
noticeably higher level of service to both buyers and sellers. 

What opportunities exist and how can IT help?

By implementing a robust and efficient real estate software solution like Realty Redefined, real
estate consultants can target the following areas in order to streamline and grow their business:

Business Management

 Manage fresh and resale properties with requirements efficiently

 Match properties for a requirement and shortlist them for clients
 Schedule inspections and generate inspection reports to give the client the exact match
for his requirement
 Efficiently manage and track agreements and transactions
 Generate professional quality proposals, property listing reports, registration reports for
personalized communication

Integrated Marketing and Networking

 Easily conduct Email and SMS campaigns to a targeted group

 Instantly network with a large number of realtors on a platform such as Realtor Connect
to share properties and requirements
Benefiting from the huge online market of buyers and sellers via personalized portals

 Grab a significant share of online traffic (over 200,000 real estate searches per month as
on today)
 Give a professional touch to your business by establishing a strong online presence.
 Integrate website with your software to easily list properties with photographs on the
website
 The green technology has become an unavoidable segment of the construction companies
in the west but it is very sad that it hasn’t progress much in India. When it comes to
taking an example of complete green building then the name of Wipro shines brightly.
One can say that it might be the start of the concept of green technology.  It has been
reported that a few real estate companies have received a good count of proposals from
various multi-national companies. There is a possibility that it would gear up the
implementation of green technology in real estate property India.
 Presently house interior designers and decorators in the real estate sector are focusing
much on this crucial technology. People those who have decorated their apartments with
the help of such designers are living happily with the well constructed and decorated
apartments. Even most of the multi-national companies in India have been using green
interior designers for giving a green look to the interior parts of their commercial
building. Although the building many not be designed with the green technology but they
have used this next generation technology in a small way.
 The future plans of real estate property India is to adopt green technology and to utilize it
in the upcoming new projects. Some the well-known property experts suggest that the
government of India should make it compulsory for any multi-national company to
construct building with complete usage of green technology. Some of the critics in the
real estate sector say that green buildings would cost lots of money. However, it is not
like that. Green technology helps companies to save much on their utility bills. One of the
most sophisticated tools of this technology is the improved water supply facility. Most of
the big hotels in different parts of the world use solar water heating system which results
in less electricity bills. Hence real estate property India has miles to cover in the field of
green technology.
Social factors

House buyers have a lot of thing to consider and not just the price of the property. There are
several social factors that people should consider when buying a house. Make sure that even if
you have the money to buy the property you still stop and consider some of the factors that affect
you and your family when you buy the house. This article will help you to check some of the
social factors that needs checking when buying a house.

First thing that you should check is the noise level inside the house emanating from the outside.
Make sure that you research if you can sleep in the bedrooms without getting disturbed by noises
outside. Check if there a lot of dogs prone to barking and children or teenagers outside who get
rowdy. These are uncontrollable things that you should learn to check before buying the house.
Note down the vehicular traffic noise that emanates form the outside as well.

Next, it is important that you check the air quality in the neighborhood . Make sure that you
check out the surrounding areas of the neighborhood and the neighborhood itself at various times
during a span of a week. Take a mental note on how the air smells at various times of the day in
the house. Observe if there are surrounding restaurants and manufacturing plants around the area.

Third thing to check is the distance of the house from your work and children’s schools. You will
be very wise if you invest in a house that will be near your job and the school your children go
to. You will definitely save on gas and the time you spend commuting. Make sure that you do
not buy a house that is so far away from your work and your children’s school.

It is important that you check whether these social factors are okay in the location of the house
you are going to buy. Make it a point that you make a checklist when you are visiting open
houses. This checklist will be helpful in buying a house that will be conducive for rest and for
play. This will ensure that you are buying a house that will be perfect for you and your family.
Do not buy a house that will prove to be a liability to you.