Introduction of EFAS Brief Overview of Real Estate Industry Opportunities for Real Estate Industry Threats for Real

Estate Industry EFAS Analysis of DLF Pvt Ltd EFAS Analysis of Shobha Developers Conclusion

Limitation of SWOT Analysis

Uses only single level of analysis No weights to reflect priorities

Advantage of EFAS
Two level of analysis
Study of Threats and Opportunities Study of ability of the organization to respond to above factors

EFAS provides weighted score

External Strategic Factors

Opportunities 1

Weight 2

Rating 3

Weighted Score
4

Comments 5

Threats

Total Weighted Score

1.00

Real estate contributes about 5 per cent to Indias GDP. The total revenue generated in FY11 stood at USD 66.8 billion. The housing shortage in urban and rural India will be around 21.7 and 19.7 million units respectively in 2014 .
Real Estate Sector

Residential

Commercial

Scenario
A localised, fragmented market presents opportunities for consolidation There are few large, panIndia players like DLF and Unitech

Key Drivers
Rapid urbanisation Decreasing household size

Trends
Demand expected to grow at a CAGR of 19 per cent between 2010 and 2014 - Tier 1 metropolitan cities are expected to account for about 40 per cent of this. Demand-Supply gap is highest in low and mid income segments. Demand exceeds supply 3 to 4 fold in low and mid income segments.

Easy availability of home loans

Scenario
Few large developers with a pan-India presence dominate the market

Key Drivers
Rapid growth in services sectors: IT/ITeS, BFSI and Telecom Demand for office space in Tier 2 cities

Trends
The top three cities Mumbai, the NCR and Bengaluru - account for 46 per cent of total demand for office space in India Between 2010 and 2014, demand growth projected to be the highest in cities like Kolkata and Chennai

Increase in tourism

Opportunities Increased FDI Limit

Weight 0.15

Comments Upto 100% FDI allowed with Govt. Permission FDI flows for the period 2012-13 stood at USD 1,260 million Minimum 10 Hectares for Ser ice housing plots and 50,000 sq. mts for other projects. Disposable income to invest in real estate Urbanization Better Infrastructure Allocation of USD 833 million for Rural Housing Fund Rajiv Awas Yojana JnNURM

Increased income Growing Demand

Per

capita 0.1

constant 0.09 0.09

Government Initiatives

Threats High Inflation

Weight 0.05

Comments Interest rate risk. Exchange rate risk. Low savings. Increased cost of project. Deindustrialisation fear. No tax rebate on HRA. No tax rebate on home loan interest. Increased tax on capital gain. D/E ratio requirement of banks decreased to 3:7 from 5:7. New loan disbursement guidelines from RBI to banks.

Land Acquisition bill Direct Tax Code

0.15 0.15

Liquidity Crunch

0.15

Threats Political Instability

Weight 0.05

Comments New government. Red Tape. Parties favouritism. No systematic way of pricing. No Regulator. Multiple brokers mark up.

Non transparency of 0.02 pricing Total 1

DLF LTD
External Factors Opportunities NO FDI investment and higher allowed limits give opportunity to raise fund in future Popular in NRIs, High end residential projects will be good investment opportunities for NRIs Project over 53 MSF is under execution Presence in all over india provide opportunity to Weight Rating Weighted Score Comments

Increased FDI Limit Increased per capita income and NRI customers interest Growing constant demand Government initiative

0.15

4.00

0.60

0.10 0.09 0.09

4.00 4.00 4.00

0.40 0.36 0.36

Threats High Inflation Land acquisition bill Direct Tax code Liquidity crunch political instability 0.05 0.15 0.15 0.15 0.05 3.00 4.00 3.00 1.00 3.00 0.15 0.60 0.45 0.15 0.15 Interest rate risk, low tendency to spend money Land Bank is 314 MSF as on Sept 2013 in 10 major cities of India Taxable home loans will discourage the investors Very High Debt, Debt/Equity Ratio is 7:1 Operational mostly in politically stable regions

Non transparency of pricing

0.02

3.00

0.06

Price based on built up area or super built up area are generally manipulated

Total Scores

1.00 x

3.28

Outstanding

Average

Poor

Shobha Developers
External Factors Opportunities 100% of FDI subject to certain criterion but 60% already invested as per 12-13 AR Popular in NRIs, High end residential projects will be good investment opportunities for NRIs 45 Ongoing projects mainly in Southern regions & NCR Weight Rating Weighted Score Comments

Increased FDI Limit Increased per capita income and NRI customers interest Growing constant demand Government initiative

0.15

3.00

0.45

0.10
0.09 0.09

4.00
4.00 2.00

0.40
0.36 0.18

Threats High Inflation 0.05 3.00 0.15 Interest rate risk,exchange rate risk,low savings

Land acquisition bill

Direct Tax code Liquidity crunch political instability Non transparency of pricing

0.15
0.15 0.15 0.05 0.02

2.00
3.00 5.00 3.00 2.00

0.30
0.45 0.75 0.15 0.04

Increase cost of projects, Less Land bank

Taxable home loans will discourage the investors Good Debt/Equity ratio of 3:5. Required by banks 5:5 or 3:7 Operational mostly in politically stable regions Prices are not transparent

Total Scores

1.00 x

3.23

Outstanding

Average

Poor

EFAS score shows that both DLF and Shobha Developers has average performance to the factors in its external environment.

Thank You