Real Estate Investment

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REAL ESTATE AS A POPULAR INVESTMENT OPTION

SIMS

Chapter 1 INTRODUCTION Real estate is "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; (also) an item of real property; (more generally) buildings or housing in general. Also: the business of real estate; the profession of buying, selling, or renting land, buildings or housing." A real estate investment trust or REIT is a tax designation for a corporate entity investing in real estate. The purpose of this designation is to reduce or eliminate corporate tax. In return, REITs are required to distribute 90% of their taxable income into the hands of investors. The REIT structure was designed to provide a real estate investment structure similar to the structure mutual funds provide for investment in stocks. REITs can be publicly or privately held. Public REITs may be listed on public stock exchanges. REITs can be classified as equity, mortgage, or a hybrid. The key statistics to examine in a REIT are net asset value (NAV), funds from operations (FFO), adjusted funds from operations (AFFO) and cash available for distribution (CAD). In the period from 2008 to this writing (2011), REITs face challenges from both a slowing United States economy and the late-2000s financial crisis, which depressed share values by 40 to 70 percent in some cases.

OBJECTIVES 1. To find out whether real estate is a good long term investment. 2. To determine how much is the investor expecting in return of investment.

LIMITATIONS/SCOPE 1. Age group is limited to only 25-55 years only. 2. Study limited to Pune and working people only. 3. Legal issues create a barrier for investment.

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REAL ESTATE AS A POPULAR INVESTMENT OPTION

SIMS

Chapter 2 REVIEW ON LITERATURE Vandana Singh, Komal did a research on “Prospects and Problems of Real Estate in India” in 2009 which attempted to reveal the issues concerned with real estate sector investment in India covering both the negative and the positive aspects of real estate investment and after reading that we concluded. After studying all the factors of the real estate it can be concluded that the Real Estate is a very wide concept and it is highly affected by the macro-economic factors like GDP, FDI, per capital income, Interest rates and employment in the nation. The most important factor in the case of Real Estate is location which affects the value and returns from the Real Estate. India needs a stronger capital market base for property financing. The debate on the potential introduction of REITs and real estate funds points in the right direction. The introduction of REIT s in 2007, will give international investors in particular a familiar investment vehicle. Private investors could also enter into indirect investment in real estate. Although interest in new projects is most likely to come primarily from institutional investors, the rising middle class is likely to seek new instruments aside from direct property investments in the medium term. Tania Kishore Jaleel & Yogini Joglekar (3 May 2012) did a research on Real Estate Investment Business Standard With the Securities and Exchange Board of India’s (Sebi) new dictate on the minimum investment limit in private equity (PE) funds at Rs 1 crore, many smaller investors would have to look at alternatives. Many had begun using this route to invest in real estate. Those in the sector feel Sebi’s guidelines are restrictive. Amit Goenka, national director, capital transactions, at Knight Frank India, says raising capital from local investors is going to be difficult. “At present, most domestic investors have individually invested close to Rs 50 lakh or less. Now, raising more will be challenging and it will affect the PE funds, too,” he said. However, investors with less than Rs 1 crore investible surpluses can look at other options in real estate. A high...
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