Finance in Real Estate

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Finance in Real Estate Manish Nagori

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Contents Manish Nagori Overview of the market FDI Government Relief Next-gen Financing Options Benefits of REITs and REMFs

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Manish Nagori Real Estate Market Real estate is one of the fastest growing sectors in the Indian economy Contributes about 5% to India's GDP The country's economic growth is driving the demand for real estate Demand for residential space is expected to grow at a CAGR of 19% between 2010 and 2014 Source: IBEF March 2014 Real Estate report

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Manish Nagori FDI- Foreign Direct Investment Real estate sector is the fourth largest sector in terms of FDI in the country From April 2012-January 2013, the sector accounted for 8.8 per cent of total FDI inflows into India FDI in the sector is estimated to grow to US$ 25 billion in the next 10 years Source: IBEF March 2014 Real Estate report

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Manish Nagori Government Relief Housing for economically weaker sections: Allocation of USD1.1 billion for Rural Housing Fund and USD0.37 billion for Urban Housing Fund in FY14 budget FDI : The govt. has allowed FDI of up to 100 % in development projects for townships and settlements FDI of up to 100 % is allowed in the hotel and tourism sector through the automatic route Ease in housing finances: Deduction of up to USD 1,841 on interests payable on home loans of up to USD 46,032 announced in the Union Budget 2013–14 Source: IBEF March 2014 Real Estate report

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Manish Nagori Next-Gen Financing Options Real Estate Mutual Funds (REMF) Functions like any other mutual fund REMF invests directly in property or indirectly in the equity of real estate companies instead of investing in stock or bonds Real Estate Investment Trust (REIT) A security that sells like a stock on the major exchanges and invests in real estate directly, either through properties or mortgages REITs receive special tax considerations and offer investors high yields Highly liquid method of investing in real estate

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Manish Nagori Benefits of REITs and REMFs Capital availability for real estate and infrastructure projects Entry to small investors due to high liquidity and small investor size Diversification benefits in portfolios Dividend income and long term capital appreciation Attractive to institutional investors due to transparency and professional management

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Manish Nagori Thank You