Real Estate Business Opportunity Evaluation

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Business OpportunityBusiness Opportunity
EvaluationEvaluation
Need for One-Stop Shop in Real Estate

www.mastersungroup.com,
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 Opportunity
 Development and Asset Management
 NRI & HNI :Vacation Home s
 Middle Class : Sales & Marketing
 Conclusions

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OpportunityOpportunity
 Economy growing at least 7-8 % per annum
 Unorganized & fragmented real estate sales & marketing channel
 Growing affluence and investment appetite fuelling the concept of
Vacation Home for lifestyle and investment needs
 Demand for world class development
 Growing asset management & development opportunity for budget
hotels and service apartments

+Target Consumers
 1.6 million luxury consumers
 6-7 million very affluent
 9-10 mid affluent
 11-12 million mass affluent
 40 million upper middle class
 72 million up graders
 140 million bottom of the pyramid
Urban Population
50%
40%
10%
Bottom of the pyramid Middle Class Rich
Rich
Middle Class
Bottom of
the pyramid

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Land Development – Value ChainLand Development – Value Chain
Vacant Land
Developable Land
Pre-construction Land
Completed Project
Value (example)
Rs 50 Cr
Rs 200 Cr
Rs 250 Cr
Rs 1000 Cr
Concept, plans, approvals,
financial models, business
plans etc
Infrastructure (if required)
Construction finance,
Contractors, Project
Management, pre-sales

+Land Development Process
Market
research
Design brief
World class
architects
Design and concept
Modelling
and
forecasting
Marketing
plan
Business plan
Fundraising
agent
Fundraising
Project
management
Construction
Sales and
marketing
Asset
management
Realisation
PRE-CONSTRUCTION
Detailed
plans
Building
approvals
Financial
analysis
Self Outsourced

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Development Snapshot
 Customers : Landowners
 Initial Value Proposition
 Maximize the value of asset
 Sustainable Value Proposition
 Market based concepts
 ROI
 Quality of Development
 World class design
 Case studies

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Development Methodology
Pre-Construction
 Financial analysisFinancial analysis
 What options are there and which is most profitable?What options are there and which is most profitable?
 Benefits of doing this areBenefits of doing this are
 Differentiated product – able to sell your product in a crowdedDifferentiated product – able to sell your product in a crowded
marketmarket
 Delivering what the market wants = building a brandDelivering what the market wants = building a brand
 Price premium and faster sales ratesPrice premium and faster sales rates
 = more profit and less risk= more profit and less risk
 Then, translating this concept into a site plan and designThen, translating this concept into a site plan and design
 A collaborative effort between Promoters, we and panelA collaborative effort between Promoters, we and panel
architects.architects.

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Business Plan
 BUSINESS PLAN = Who is going to do what to make this projectBUSINESS PLAN = Who is going to do what to make this project
work?work?
 How are we intending to SELL what we build?How are we intending to SELL what we build?
 Who will construct it?Who will construct it?
 Who will oversee construction?Who will oversee construction?
 What is the operational and marketing plan?What is the operational and marketing plan?
 How much money do we expect to make and what funds do weHow much money do we expect to make and what funds do we
require?require?
 How will we manage the risks of the project?How will we manage the risks of the project?
 Requires decisions on branding and marketing strategy.Requires decisions on branding and marketing strategy.
 Need full business plan in order to proceed to fundraising .Need full business plan in order to proceed to fundraising .

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Design Brief
 NOTNOT ““what can I build?what can I build?”” butbut ““what can I sell?what can I sell?””
 DESIGN BRIEF = What are you going to build and why?DESIGN BRIEF = What are you going to build and why?
 Market researchMarket research
 Not just a matter of ordering a report, it needs to be properly analysedNot just a matter of ordering a report, it needs to be properly analysed
 Need to consider the potential audience for the development and how to reach them.Need to consider the potential audience for the development and how to reach them.
 Need to understand market depth and likely acceptance of conceptNeed to understand market depth and likely acceptance of concept
 Need hard data (market research) and soft data (customer research)Need hard data (market research) and soft data (customer research)
 Need to identify price points, user preferences, demographics, competitive analysis,Need to identify price points, user preferences, demographics, competitive analysis,
required features, value drivers etc.required features, value drivers etc.
 Financial analysisFinancial analysis
 What options are there and which is most profitable?What options are there and which is most profitable?
 Benefits of doing this areBenefits of doing this are
 Differentiated product – able to sell your product in a crowded marketDifferentiated product – able to sell your product in a crowded market
 Delivering what the market wants = building a brandDelivering what the market wants = building a brand
 Price premium and faster sales ratesPrice premium and faster sales rates
 = more profit and less risk= more profit and less risk

Construction & After
 As your development partner, we will provide services as required during theAs your development partner, we will provide services as required during the
construction and asset management / exit phases.construction and asset management / exit phases.
 These may include any of the following:These may include any of the following:
 Project management services (quality, cost control, timeliness)Project management services (quality, cost control, timeliness)
 Asset management services (retail mall, hotels, golf course maintenance etc)Asset management services (retail mall, hotels, golf course maintenance etc)
 Non-executive project management servicesNon-executive project management services
 Development of exit routes / sales strategies to maximise the return to PromotersDevelopment of exit routes / sales strategies to maximise the return to Promoters

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Asset Management Snapshot
• Assets: Budget Hotels, Commercial Complexes, Apartments,
etc.
• Asset Owners : Builders, Business Families
• Initial Value Proposition
– Cheaper, more efficient alternative
• Sustainable Value Proposition
– ROI, Asset Value Appreciation
– Credentials & Quality of Assets
– Capability in sales & marketing, development & other ends of the
value chain

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Asset Management : Role
 The asset manager provides the following major services. This is not anThe asset manager provides the following major services. This is not an
exhaustive list. exhaustive list.
 Maximises the overall profitability of site.Maximises the overall profitability of site.
 Analysis, options and recommendations to owner for decisions to be made by themAnalysis, options and recommendations to owner for decisions to be made by them
 Implementation to achieve the objectives and decisions of ownerImplementation to achieve the objectives and decisions of owner
 As required decisions for the general manager and management team based on those objectivesAs required decisions for the general manager and management team based on those objectives
 Ensures that the strategy is converted to tactics and implemented with changes as requiredEnsures that the strategy is converted to tactics and implemented with changes as required
 Looks at each Area of Operations (see above list) and look for efficiencies, improvements,Looks at each Area of Operations (see above list) and look for efficiencies, improvements,
structure, operations and qualitystructure, operations and quality
 Create Standard Operating Procedures to capture hotel policy on standards, quality, performanceCreate Standard Operating Procedures to capture hotel policy on standards, quality, performance
measurementsmeasurements
 Leads creation of operating budgets, capex priorities, recommendations and implementationLeads creation of operating budgets, capex priorities, recommendations and implementation
 Builds management team including hiring, reshaping and firing of senior staff, setting objectives,Builds management team including hiring, reshaping and firing of senior staff, setting objectives,
performance reviews and bonuses.performance reviews and bonuses.
 Ensure non-financial objectives are achieved (eg quality, social justice programs, PR etc)Ensure non-financial objectives are achieved (eg quality, social justice programs, PR etc)

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 Opportunity
 Development and Asset Management
 NRI & HNI :Vacation Homes
 Middle Class : Sales & Marketing
 Conclusions

+Understanding – Vacation HomeUnderstanding – Vacation Home
Segmentation of Vacation Home market internationallySegmentation of Vacation Home market internationally
Vacation
Ownership
Property owned generally for personal use
Timeshare
A timeshare is a form of vacation property ownership.
The use and costs of running the resort are shared among the owners
Vacation
Rentals
Renting out a furnished apartment or house on a temporary basis to
tourists as an alternative to a hotel
Vacation
Exchange
You trade your interval or week for new and different vacation experiences
at comparable resorts across the country and around the world

InternationalInternational Demand DriversDemand Drivers
 EconomyEconomy
 PopulationPopulation
 Propensity to spendPropensity to spend
 Income LevelsIncome Levels
 Rate of borrowingRate of borrowing
 Growth rateGrowth rate
 Attracting investmentAttracting investment
 Government InitiativesGovernment Initiatives
 ConferencesConferences
Baby Boomers
Interest Rates
Key movers of the Vacation Home market
Tourism

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Vacation Homes-InternationallyVacation Homes-Internationally
Source: National Association Of Realtors 2006
Desirable Attributes In A Vacation Home
38%
22%
22%
18%
Close To Ocean/Lake/River Sporting Activities
Close To Resort Ares Mountains/Natural Destinations
Leisure Activities Preferred
29%
20%
16%
11%
10%
9%
5%
Water Sports Boating Hunting/Fishing Golf Biking/Hiking Skiing Tennis
Tennis
Mode Of Purchase For A Vacation Home
68%
18%
14%
Real Estate Owners Builders
Golf
Key Learning's:
 Internationally activities are critical aspects of Vacation Homes
 Brokers / real estate agents play a critical role as channel partners
 Locational advantage needs to be broadcast for each individual property

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Vacation Home Buyers: InternationallyVacation Home Buyers: Internationally
Distance (Miles) Vacation Home % Investment Property %
25 44 69
25-99 19 9
100-199 22 5
200-499 1 *
500-999 3 3
1000-1499 * 6
1500 and more 10 8
Median Distance 49 18
* Less than 1 %
Home Size (Sq.ft) Vacation Home % Investment Property %
500 4 1
501-1000 14 14
1001-1500 56 22
1501-2000 11 31
2001-2500 9 12
2501-3000 5 10
3000 and more 1 10
Median Size 1290 1700
Format California Coastal South Florida Golf Destinations Ski Destinations
Studio 600 600 700 NA
1 BDR 590 600 550 550
2 BDR 480 600 450 580
3 BDR NA NA 400 600
Premiums ($ 000) 50-150 50-300 50-150 50-100
Distances between residence & Vacation Home
Usually less than 100 miles
Size of home : 1000-1500 sqf
Average value per sq.ft
Source: Economic Realtors Research

US Vacation Home MarketUS Vacation Home Market
0
2000
4000
6000
8000
10000
12000
14000
1990 2000 2005
0
2
4
6
8
10
12
14
GDP (In Billion USD) Vacation home Industry (In Billion USD)
 International Vacation Home market is
maturing and seeing considerable
growth
 The US$ 13 billion Vacation Home
industry in US is 0.10% of GDP as of 2005
 Multiple players having unlimited
product offerings
 GDP of US playing an integral role for
burst of Vacation Home industry
Vacation Home market is growing @ 9.7% worldwide & @ 14% in U.S
Along with high growth rates comes heightened competition
Brands would soon start at exploiting other geographies
0.05 %
0.08 %
0.10 %

India Vacation HomeIndia Vacation Home
0
100
200
300
400
500
600
700
800
900
1990 2000 2005
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
GDP (In Billion USD) Vacation home Industry (In Billion USD)
 Given the current economic trendsGiven the current economic trends
we can draw the followingwe can draw the following
hypothesis:hypothesis:
- The Size of the Vacation Home- The Size of the Vacation Home
industry is approximately US$ 0.757industry is approximately US$ 0.757
billion or INR 34,150 Crorebillion or INR 34,150 Crore
 Experts predict the GDP growthExperts predict the GDP growth
rate to be close to 8%, the samerate to be close to 8%, the same
would see a rise in income levels – Awould see a rise in income levels – A
factor which is one of the keyfactor which is one of the key
growth driversgrowth drivers
• Generation X will boost the growth of Vacation Homes in India
•India the next growth driver for international companies
0.05 %
0.08 %
0.10 %

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Disposable income 9 lac p.a
Owns D/E segment car
Residing in posh localities
Average age = 36-40
CWE= Mostly Male
Married and has kids
42% live in joint families
35% of wives working
44% traveling abroad for vacation,
at least once a year
Indian Luxury Consumer: HNI

Affluent Map Of India
 Predominantly luxury
consumers are resided in the
north and west of the country
Source: Technopark

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Vacation Home : Snapshot
• Vacation Home
• 100-200 kms from metros around a natural attraction primarily hill
stations, beaches
• International Vacation Homes in Dubai, London etc.
• Customers
– HNIs & NRIs
• Initial Value Proposition
– Variety & convenience of one stop shop
• Sustainable Value Proposition
– Needs based development
– Reach & access to NRIs
– Destination development and marketing

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Indian HNI : Primary Target
Products
 Vacation Home
 Purchase/Lease of Commercial
 Investment in Real Estate Funds/ REITs
Competitive Landscape
 Wealth Managers proffering Equity & Debt
instruments
 Dedicated sales team representing high value
assets
 Advertising & PR by builders & marketers
Needs
 Prestige, Ego Value
 High Service Quality
 Large portfolio of options
 Customized Advisory
 Relationship Building
 Credibility & Accountability
Opportunities
 Convenience of one stop shop for real estate needs
 Advice rather than push
 Broaden the horizon to look at new emerging opportunities like equity involvement
 Wealth Management perspective

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NRI : Secondary Target
Products
 Vacation Home
 Equity investment in
Commercial , Hotel Real Estate
Development
Competitive Landscape
 Wealth Managers proffering
Equity & Debt instruments
 Dedicated sales team representing
high value assets
Needs
 High Service Quality
 Large portfolio of options
 Customized Advisory
 Relationship Building
 Credibility & Accountability
Opportunities
 Convenience of one stop shop for real estate needs
 Advice rather than push
 Broaden the horizon to look at new emerging opportunities like
equity involvement
 Reach to micro-segments

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Key Success Factors
 Direct Selling & Marketing for HNIs, NRIsDirect Selling & Marketing for HNIs, NRIs
 Dedicated sales and service team for HNIs / NRIsDedicated sales and service team for HNIs / NRIs
 Dedicated processes and systems to manage service & sales issuesDedicated processes and systems to manage service & sales issues
 Dedicated telemarketing & call centre supportDedicated telemarketing & call centre support
 Direct marketing strategy comprising of internet marketing and other channelsDirect marketing strategy comprising of internet marketing and other channels
 Pioneering new and exciting initiativesPioneering new and exciting initiatives
 Example :Halfshare.com specializes in the shared ownership of luxury vacation propertiesExample :Halfshare.com specializes in the shared ownership of luxury vacation properties
throughout North America.throughout North America.
 They help buyers find their ideal vacation property or Vacation Home while matching them with the right co-ownerThey help buyers find their ideal vacation property or Vacation Home while matching them with the right co-owner
through a Buyer Match Planthrough a Buyer Match Plan

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Key Success FactorsKey Success Factors
 Continuous inventory acquisition by a dedicated team
 Dedicated team to scout for projects under development, completed projects, re-sale
inventory
 Acquisition could be followed by
 Re-packaging the real estate to make it more appealing to the target buyer
 Sound Real Estate Knowledge Base
 Ability to track trends and assess impact for HNIs
 Ability to give a wealth management perspective and offer
 Good Service Quality
 Training & People development to offer good service experience
 Personalized service to HNIs/NRIs
 Robust processes for transaction management
 Strong performance management system

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Sales & Marketing to Middle Class
 Customers : Middle class
 Initial value proposition
 Good Deal & Good Service Quality
 Sustainable value proposition
 Distribution channel
 Width and depth
 One stop shop
 Good Deal
 Service Quality

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Differentiated Distribution StrategyDifferentiated Distribution Strategy
Franchisee
Full Fledged
Company Operations
Franchisee
Company Operations
+ Franchisee
Average/LowAverage/Low
HighHigh
HighHigh
Average / LowAverage / Low
Purchasing Power
DevelopmentPotential

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Benefits to FranchiseesBenefits to Franchisees
 Business Support
 Business Operations Manual
 Exciting Inventory & Inventory Management Software
 Experienced Management & Franchise Advisory System
 Referral& Lead Management System
 New Business Generation
 Performance Monitor
 Staff Recruitment Assistance Programme
 Regional Managers and Franchise Operations Centres
 Effective Marketing Mix
 Advertising & Public Relations
 After Sales Service
 Regional Marketing Programme
 Branded Promotional Merchandising, Brochures etc
 Loyalty Card Programme
 Personal Business Development
 Comprehensive Introductory Programme
 Comprehensive Sales Training Programme
 Field Support
 Recognition Groups for Outstanding Achievers
 Software Support & Training

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Goa
Chandigarh
Gurgaon
Delhi
Secunderabad Vizag
Vijayawada
Ahmedabad
Bangalore
Chennai
Hyderabad
Mysore
Bhubaneswar
Lucknow
Vadodara
Ranchi
Kochi
Thiruvanantpuram
Hubli
Mumbai
Indore
Jaipur
Kolkata
Siliguri
Raipur
Pune
Coimbatore
● Primarily BranchesPrimarily Branches
● Franchisee + BranchesFranchisee + Branches
● Franchisee OnlyFranchisee Only
Dehradun
Nagpur
Guwahati
Amritsar
Ludhiana
Distribution Development PlanDistribution Development Plan

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 Wide Reach to Increase Convenience & Access
 Branch network in class A cities
 Branch offices in strong NRI markets
 Extensive network of agents & franchisees on a win-win model
 Wide Choice to Facilitate a One Stop Shop Experience
 Effective Tie-Ups & Alliances to offer complementary &
supplementary services
 Incentivizing the network to add inventory
 Effective inventory management software and systems
 Attractive inventory display & merchandising

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 Good Service Quality
 Training & People development to offer good service experience
 Effective systems for inventory management
 Effective software and systems for CRM
 Robust processes for transaction management
 Strong performance management system
 Dedicated team to scout for projects under development, completed projects, re-sale inventory
 Acquisition could be followed by
 Re-packaging the real estate to make it more appealing to the target buyer
 Small value additions to make the inventory more valuable
 Exclusive marketing and sales rights to add to distribution power
 Incentivizing the network to add inventory
 Win-Win model for agents/franchisees to populate the site with inventory
 Outsourcing of inventory acquisition to agents/franchisees in areas with low development potential
and/or low purchasing power

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 Integrated SoftwareIntegrated Software
 A low cost suite of an easy-to-use integrated software systemsA low cost suite of an easy-to-use integrated software systems
 Cover every key aspect of successful real estate agency practiceCover every key aspect of successful real estate agency practice
 Full technical and training support supplied by the team atFull technical and training support supplied by the team at
Technology.Technology.
 Software system has a database, lead management , activitySoftware system has a database, lead management , activity
scheduler, diary and presentations package designed to createscheduler, diary and presentations package designed to create
efficiency, lift sales and allow accountability in the officeefficiency, lift sales and allow accountability in the office
 Software system are fully integrated.Software system are fully integrated.
 This means that data only needs to be entered once. It is thenThis means that data only needs to be entered once. It is then
available for use in all modules of the systemavailable for use in all modules of the system

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Differentiation vs. ReturnsHigh
Differentiation
Vacation
Home/Retirement
& Other
Specialized
Concepts
Average
Differentiation
Asset
Management
Development
Low
Differentiation
Middle Class :
Sales &
Marketing
Immediate
Returns
Medium Term
Returns
Long Term
Returns

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Sounds interesting ?

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Contact Us
 Sarvajeet Chandra
¥ +91 9920803060,sarvajeet@theadiva.com
¥ sarvajeetchandra@gmail.com
 Visit Us at www.mastersungroup.com

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