Project - INSIGHT

PHYSICAL SPACE PORTAL

NEED, OBJECTIVES, PROCESS, & DYNAMICS

US$ Potential estate sector in India.

contribute to about 10% of the country’s

Source: Emerging trends in real estate in Asia Pacific

Department of Industrial policy & Promotion India

Issues projects and transparency in RE sales.

Buyers -Lack of information about different

• Artificial hiking of prices by developer.

Developers -Limited institutional and non- institutional Debt and Equity Funding despite of a massive housing shortage.

• Low Sales Velocity

•Extremely low liquidity for both end users and investors. •Extremely slow price Discovery

$271 billion- Estimated size of the real

The real estate sector will alone

GDP.

2011published by PriceWaterhouseCoopers

CRISIL Research

Housing shortage = 26.53million houses (2007-12), 33 million houses (2012-17) Source: 11th & 12th Five Year Plan

Funding need =US$ 2.5 Trillion (2007-12)

Funding need =US$ 3.2 Trillion (2012-17)

Funding gap =US$ 70 Bn

Source: CREDAI(Confederation of Real Estate Developers Association of India )

US$ 15.8 billion -Foreign Direct Investment (2006-present) ,the Indian real estate & housing sectors. Source - Jones Lang LaSalle (JLL)

4

3

2 2007-2012

1 2012-2017

0 Housing need (units Funding need

crores) (Trillion USD)

Indian Physical Space requirement

uyer

B

Clearing and Settlement

S

ts

Buyer N

Group Buying

(Primary Market)

Resale Trading (Secondary Market)

Property Transfer Sold – GB buyer Bought – Buyer 1 List to sell

Builder OR

Rating Agency

Property Transfer Sold – Buyer 2 Bought – Buyer 3

Buyer 2 Lis GB Buying

Bilateral Bidding HFCs Lawyer

Property Transfer Sold – Buyer 3 Bought – Buyer N

Buyer 3 Lists

Broker

Broker Individuals Institutions

Individuals Institutions BUYERS

Buyer3 Discounted Home

Loans

Broker

sell at Discount

Buyer2

Broker

Primary market GB Buyer

Logic of Price Discovery

Clearing & Settlement

Group Buying Bilateral Bidding

Mechanism

SELLER BUYER GROUP

No. of units discount % discount % Bid Ask Spread

4 8%

8.8%

9.6%

10.4%

11.2%

12.0%

12.8%

13.6%

8.6%

9.2%

9.9%

10.9%

12.0%

12.6%

13.0%

14.2%

0.60%

0.40%

0.33%

0.54%

0.77%

0.64%

0.22%

0.59%

6

8

10

12

14

16

18

SELLER BUYER GROUP

units

discount price

Rs. / sq.ft

discount price

Rs. / sq.ft

Bid Ask Spread 4 4416

4378

4339

4301

4262

4224

4186

4147

4387

4358

4323

4275

4225

4193

4175

4119

29

19

16

26

37

31

11

28

6

8

10

12

14

16

18

Buyer

units

discount%

discount price Rs. /

sq.ft

1 3 8.0 4416

2 1 10.0 4320

3

3

13.0

4176 4 1 13.0 4176

5 3 11.0 4272

6 3 8.0 4416

7 2 13.0 4176

8 1 13.0 4176

9 3 9.0 4368

10 2 9.0 4368

11 1 12.0 4224

12 1 11.0 4272

13 1 12.0 4224

14 1 13.0 4176

15 1 11.0 4272

16 1 10.0 4320

17 2 8.0 4416

18 2 11.0 4272

19 3 10.0 4320

20 1 13.0 4176

20 36 10.5 4297

Selection of units is based on time preference and

the lowest discount bids.

Weighted Average of the individual buyer discounts for corresponding units eg.- 9.9% discount demanded for 14 units.

Logic of Price Discovery (…contd.)

Resale Trading Trading

Mechanism

The lowest bid

There will be multiple buyers bidding for single property.

Sell price = Base price + Floor Rise

Logic of Price Discovery (…contd.)

Individuals and Institutions are able to form groups which is not possible OTC.

Thus they can avail Discounts from 10 to 30% on property buying and also avail cheaper loans. Higher transparency and liquidity which are major barriers in current RE market. A win -win situation for buyer - NO CHARGES to the buyer in fresh sales plus substantial savings.

•

Buyer •

•

• Unlike OTC they will be able to indirectly group with other brokers, enabling them to generate volumes that can be leveraged for discounts (presently a stand-alone broker is unable to generate such volumes). These Discounts will enable him to make bigger and faster transactions, which will make it financially feasible for him to transfer the charge from the buyer to seller. Thus charging the buyer ZERO brokerage. Accelerated sales velocity – enabling faster capital recycling

Bridge the funding gap by generating larger cash inflows via bulk selling

Volumes help bridge the housing shortage and transparency improves revenue generation

Broker •

• •

•

Developer

Government

• Excellent channel for faster and bulk selling of home loans. Banks/HFC’s

Multiplier Benefits

Broker driven volume generation

Dynamic Price Discovery Process

Resale Platform

capture the value chain

flat sales by a

handover of the

developer

quick succession of

transaction across

where each buyer

profit margin

Logical extension to

that extends after fresh

developer until the

physical flat by the Developer

Involves a relatively

multiple sale

three to four buyers

makes a speculative

Get Real Estate Brokers to play an integral role in driving Group Buying volume on a pan-India basis

Enable brokers to group with other brokers and buyers across geographies to form a powerful buying group

Why does this make sense for the broker – Brokers are able to achieve significantly attractive bulk buying prices that they were unable to achieve on a stand-alone basis – this means higher broking volumes that will drive brokerage commissions downwards.

Entire offline process of price negotiation is taken completely online

Negotiation / Price discovery process is clean, efficient, swift and highly streamlined

Process is identical to

the bid-ask spread

seen on stock

exchanges

Participants – both

buyer and seller – are

allowed to set price

limits like in share

trading1

Unique Selling Proposition

THANK YOU!

Manoj Motta

manoj@banyanresources.in +91 98200 25046 +91 98676 06663

www.banyanresources.in

Project - INSIGHT