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Analysis of the real estate services market in India

Release date 30.04.2020

Number of pages 51

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The relevance of research

Real estate activity is the activity of organizing and making transactions with residential and non-residential premises, structures, buildings, structures, land plots and rights to them and is carried out by agreement with the person concerned or by his power of attorney. At the same time, the real estate agency can carry out actions on its own behalf, on behalf of the client and at his expense.

Purpose of the study

Analysis of the state of the real estate services market, assessment of the market size, analysis of competitors, as well as identification of factors affecting the real estate services market

Content

Part 1. Overview of the Indian real estate market

1.1. Definition and Characteristics of the Indian Real Estate Market
1.2. Dynamics of the volume of the Indian real estate market, 2015-2019
1.3. Market structure by type of service provided in India
1.4. The structure of services for the purchase and sale of real estate in the market of real estate services in the union territories
1.5. Assessment of current trends and development prospects of the studied market
1.6. Assessment of factors affecting the market
1.7. Analysis of sectoral indicators of financial and economic activity

Part 2. Competitive analysis in the real estate market in India

2.1. Major players in the market
2.2. Market shares of the largest competitors
2.3. Profiles of major players

Part 3. Analysis of the consumption of real estate services

3.1. Estimation of consumption of real estate services per capita
3.2. Market Saturation and Estimated Market Potential in India
3.3. Description of consumer preferences
3.4. Price analysis

Part 4. Assessment of factors of investment attractiveness of the market

Part 5. Forecast for the development of the real estate services market until 2024

Part 6. Conclusions on the prospects of creating enterprises in the study area and recommendations for current market operators

Research excerpt

Part 1. Overview of the Indian real estate market

1.1. Definition and Characteristics of the Indian Real Estate Market

Directions of real estate activity:
- intermediary activities in transactions with real estate or rights to it between third parties;
- activities for the provision of consulting services;
- services for studying the conjuncture of the real estate market;
- other reimbursable services that accompany the purchase and sale, rental of real estate;
- activity on the organization of trade in real estate;
- activities of the attorney;
- agency;
- dealer;
- brokerage.

The situation in the market of real estate services is not stable, due to the influence of various macro and micro factors. Consider the crisis of 2015-2017. in the real estate services market, the main reasons for which were:
- the tense political situation in the world in relation to India and the imposition of sanctions;
- the growth of the dollar and the euro;
- rising prices for consumer goods;
- Decrease in real disposable incomes of the population and, in connection with this, a decrease in demand for real estate.
- the growing supply of real estate on the market due to the high pace of construction and commissioning of residential buildings.
- increase in the supply of commercial real estate due to the closure of organizations, as well as the reduction of points of sale and their optimization by commercial organizations in connection with the economic crisis;
- lower prices per m2 of real estate depending on the region.

Until 2015 the real estate market in India was actually a seller's market - supply and demand were high, which ensured the growth of prices and incomes. Supply and demand grew evenly, the level of competition in the market was quite low and stable for many years.
...

Consider the structure of the real estate services market in the context of federal districts.

Diagram 1. Market structure of real estate agencies by federal districts, %

1.2. Dynamics of the volume of the Indian real estate market, 2015-2019

Consider the dynamics of the market volume, according to GidMarket, the volume of the real estate services market in 2019. in India was...
...

1.3. Market structure by type of service provided in India

The structure of the real estate services market in India is dominated by services for the purchase and sale of real estate.
...

The share in …% of real estate appraisal services is also associated with their low cost compared to the remuneration for real estate services for the sale and purchase of real estate, as well as the fact that this type of service is highly competitive with companies specializing in real estate appraisal services, especially since banks determine the final list of appraisal firms with which they work and only from which they accept documentation for assessing real estate when issuing mortgage loans.

1.4. The structure of services for the purchase and sale of real estate in the market of real estate services in the union territories

Consider the structure of the main type of services for the sale and purchase of real estate provided by real estate agencies, for which in 2018. accounts for …% of India's market volume in terms of money across union territories.
...

This trend is explained by the higher cost of m2 and a significant number of real estate transactions compared to other federal districts.

1.5. Assessment of current trends and development prospects of the studied market

Key trends in the real estate market include:
...

Among the prospects of the analyzed market are:
...

1.6. Assessment of factors affecting the market

Consider the main factors affecting the market and, accordingly, demand.

Economic forces

GDP dynamics is a determining factor in the development of the country's economy, determines the main trends in consumer effective demand and economic activity.
...

Industry GDP Dynamics: Real Estate Operations

Consider the index of physical volume of GDP and gross value added in the industry: real estate activities. The market of real estate services and its development is closely connected with the dynamics of the real estate market.
...

Bank of India key rate
The key rate of the Bank of India directly affects the value of money in the economy. The higher the key rate, the higher the mortgage lending rates of banks and credit organizations become, which in turn affects the solvency of the population and demand in the real estate market and real estate services.
...

Volumes and availability of mortgage lending
...

In 2019 as a result of the presidential address to the Federal Assembly, a number of measures were taken to increase the availability of mortgage lending, including subsidizing the interest rate to the level of ...% per annum for families with two or more children, paying maternity capital for the first and second child, closing mortgages in the amount of 450 thousand at the birth of a third child.
...

Social factors

Population

Real disposable income of the population
According to the Bank of India, the recovery of real incomes of the population after the crisis of 2008-2009. contributed to the expansion of demand for housing and the intensification of housing construction. Taking into account the average duration of the construction cycle, this led to an increase in housing commissioning in 1-3 years.

Political and legal factors
...

Instructions of the President of India to the Federal Assembly
- from 01.01.2019/6/54, extend for the entire loan term subsidizing a part of the mortgage rate (exceeding 2019% per annum) used to purchase housing from legal entities in families where a second and subsequent child was born. Planned expenditures in the state budget in the amount of 2022 billion Rs. for -
...

Technological factors

Despite the difficult situation in the market, many opportunities are currently opening up for the real estate business. Many companies are developing new products with the introduction of new technologies, for example, integrating their database with the Rosreestr database, which allows them to quickly and efficiently meet the needs of customers in the necessary documentation.

The introduction of IT technologies, CRM systems, mobile applications allow you to increase sales and not miss a single client. In the framework of intense competition, the introduction of the latest technologies will allow real estate agencies to remain at a competitive level.
...

Table 1. STEP-analysis of factors influencing the market of real estate services

Macro-environment factors have both positive and negative impact on the real estate services market, however, economic and political factors have a decisive influence.
...

1.7. Analysis of sectoral indicators of financial and economic activity

The analysis of industry indicators of financial and economic activity of the real estate services industry was carried out on the basis of a combination of large and medium-sized enterprises in the industry.
...

Table 3. Gross margin of the real estate services industry in comparison with all sectors of the Indian economy, 2015-2019, %.

As follows from the information presented in Table 4, the highest profitability of real estate services during the period under review 2015-2019. observed in...
...

Diagram 11. Current liquidity (total coverage) in the field of real estate services for 2015-2019, times

...

Table 5. Absolute liquidity in real estate services in comparison with all sectors of the Indian economy, 2015-2019, times

According to Indian regulations, an absolute liquidity ratio of at least 0,2 is considered normal. During 2015-2019 the absolute liquidity ratio of the real estate services industry was declining until 2018. reached …
...

For the period under review 2015-2019. indicators of financial stability (security of own working capital) in the industry of real estate services in India ...

Part 2. Competitive analysis in the real estate market in India

2.1. Major players in the market

The real estate market in India is characterized by a low level of concentration (a large number of agencies, franchisees with relatively small market shares).
...

2.2. Market shares of the largest competitors

Conducting a competitive analysis in the real estate services market is complicated by the fact that the networks are represented by several legal entities and individual entrepreneurs. Many networks are franchised, where agencies providing real estate services are included in the network, but are separate legal entities or individual entrepreneurs.
...

According to GidMarket, the leader of the real estate services market in India is the company XXX, which occupies a niche for renting warehouse space, which accounts for …% of the market share in terms of revenue in 2019, …
...

2.3. Profiles of major players

...
The largest market shares are held by companies that either occupy a narrow segment of the market with limited competition, or real estate companies that are closely associated with developers.

Higher revenue growth rates of the largest operators in the real estate services market relative to the overall dynamics of the market volume in current consumer prices allows us to conclude that there is a concentration of weak power that takes place in the Indian real estate services market.

Part 3. Analysis of the consumption of real estate services

3.1. Estimation of consumption of real estate services per capita

Estimation of the volume of consumption of real estate services in India per capita was made by GidMarket based on the ratio of the volume of the Indian market of real estate services to the number of adults in India.

Diagram 16. Consumption of real estate services per capita, 2015-2019, Rs./person

According to GidMarket analysts, the volume of demand for the purchase of housing using mortgages is highly dependent on the level of interest rates on loans.
...

3.3. Description of consumer preferences

Based on a preference survey conducted by Lenstroytrest Group of Companies in March 2019. we can draw the following conclusions about the preferences of consumers in the market for the sale of real estate and real estate services:
1. A small number of apartments per floor and good neighborly relations.
Having lived in high-rise buildings ""anthills"", buyers began to give preference to a more comfortable building density. Buyers have an understanding that the quality and lifestyle that apartment owners receive in low-rise and mid-rise complexes are fundamentally different from the living environment in densely built high-rise buildings. Consumers want to see the sky and trees from their window, and not just the wall of the opposite building. They understand that a small number of apartments on the floor provide a friendly atmosphere - there are few neighbors, everyone knows each other, it is easier to form friendly relations and it is easier to reach compromises in resolving common house issues.

2. The effective area of the apartment without ""extra"" square meters.
The approach of buyers to the choice of housing remains rational - they are not ready to pay for ""extra"", unused square meters. The focus is on a well-planned living space with a minimum number of zones that do not bring benefits to the owners. Euro-format apartments, which include a combined kitchen-living room and small bedrooms, are in great demand. The cost of such an apartment allows you to save on the budget without losing the quality of housing. The layouts are interesting, where rooms for storing things of various sizes are provided - dressing rooms, pantries, apartments on the first floors with cellars.

3. Developed public spaces as an integral addition to the apartment.
Buyers pay more and more attention to public areas in projects. They want to be able to develop, learn, get new experiences and comfort outside their apartment. Today's client understands: to walk, play sports, play with children, barbecue together with friends in a special place, read in a cozy gazebo, just enjoy life, you need a large landscaped area and enough green areas, places for active and relaxing holidays, playgrounds, bicycle and roller tracks, sports infrastructure.

4. Apartment as a set of advantages.
Clients consider the purchased real estate as a set of benefits that they can get for their budget - an effective planning solution for an apartment, functional halls and common areas, cozy clean courtyards and high service from the management company, rich intra-quarter infrastructure (social facilities, playgrounds, workouts , areas for quiet rest and walks), security and restriction of access of outsiders to the territory, a sufficient number of parking spaces, commercial infrastructure in the project or in the adjacent territory.

3.4. Price analysis

Price dynamics for real estate services are primarily influenced by inflationary factors, as well as factors that limit the demand for real estate, such as a decrease in real incomes of the population, demographic trends and amendments to legislation (escrow accounts).
...

Diagram 18. Average prices for real estate services in the Union Territories per m2 in the primary market, thousand Rs.

From the point of view of GidMarket analysts, the cost of real estate in the primary market was somewhat overestimated …
...

Part 4. Assessment of factors of investment attractiveness of the market

The most significant negative factors
...
The most significant positive factors
...

Part 5. Forecast for the development of the real estate services market until 2024

We will analyze the real estate services market based on methods based on identifying trends over time, adjusted for expert opinion in the industry.
...
To achieve the goal, it is planned to solve the following main tasks:
...

Part 6. Conclusions on the prospects of creating enterprises in the study area and recommendations for current market operators

According to GidMarket, the capacity of the real estate services market in India in 2019 Amounted to … billion Rs.,
...
According to the results of STEP-analysis, macro-environment factors have both positive and negative effects.
...
GidMarket analysts predict…
...
Both new and existing real estate agencies in India can be recommended:
...

Diagrams

Diagram 1. Market structure of real estate agencies by federal districts, %
Diagram 2. Dynamics of the volume of the real estate services market, 2015-2019
Diagram 3. The structure of the market of real estate services by type,%
Diagram 4. The structure of the provision of real estate services in India by Union Territories, %
Diagram 5. Dynamics of India's GDP, in 2015-2019, % to the previous year
Diagram 6. Index of physical volume of GDP and gross value added in the industry ""real estate activities"" 2015-2019, % to the corresponding period of the previous year
Chart 7. Monthly dynamics of the average monthly exchange rate of the US dollar against the rupee, 2014-2019, Rs. for 1 US dollar
Diagram 8. Dynamics of the population of India, 2015-2019, million people
Diagram 9. Dynamics of real disposable income of the population in India, 2015-2019, % to the previous year
Diagram 10. Profitability of profit before tax (profit of the reporting period) in the field of real estate services in comparison with all sectors of the Indian economy, 2015-2019, %
Diagram 11. Current liquidity (total coverage) in the field of real estate services for 2015-2019, times
Diagram 12. Business activity (average period of receivables turnover) in the field of real estate services, for 2015-2019, days days
Diagram 13. Financial stability (security of own working capital) in the field of real estate services, in comparison with all sectors of the Indian economy, 2015-2019, %
Diagram 14. Market shares by revenue of real estate market operators in 2019, %
Diagram 15. Dynamics of the total revenue of the largest operators of the real estate services market (TOP-5) in India, 2015-2019, million Rs.
Diagram 16. Consumption of real estate services per capita, 2015-2019, Rs./person
Diagram 17. Consumer price indices for real estate services in India in 2015-2019, %
Diagram 18. Average prices for real estate services in the Union Territories per m2 in the primary market, thousand Rs.
Diagram 19. Average prices for real estate services in the Union Territories per m2 in the secondary market, thousand Rs.
Diagram 20. Forecast of the volume of commissioning of multi-apartment residential buildings by developers, mln m2
Diagram 21. Forecast of the volume of the real estate services market in 2020-2024

Tables

Table 1. STEP-analysis of factors influencing the market of real estate services
Table 2. Profit (loss) from the sale of real estate services in the Union Territories of India, 2015-2019, billion Rs.
Table 3. Gross margin of the real estate services industry in comparison with all sectors of the Indian economy, 2015-2019, %
Table 4. Gross margin of the real estate services industry in the Union Territories of India, 2015-2019, %
Table 5. Absolute liquidity in real estate services in comparison with all sectors of the Indian economy, 2015-2019, times
Table 6. Main companies participating in the real estate services market in 2019
Table 7. Basic information about participant No. 1 of the real estate services market
Table 8. Basic information about participant No. 2 of the real estate services market
Table 9. Basic information about participant No. 3 of the real estate services market
Table 10. Basic information about participant No. 4 of the real estate services market
Table 11. Basic information about participant No. 5 of the real estate services market
Table 12. Assessment of factors of investment attractiveness of the real estate services market

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