Mr. Sathyakumar.pps
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Transcript Mr. Sathyakumar.pps
LIC HOUSING FINANCE LTD
23rd March, 2007
1
Factors Influencing the Real Estate Sector
Shift from Unorganised to somewhat organised
sector
Higher lever of Transparency & Accountability
Socio Demographic Changes
Increased Urbanisation
Higher Disposable Income
Property as “Investment”
Economic Growth Leading to Spur in Demand
2
Factors Influencing the Real Estate Sector
Tax Incentives
Spur in service Industry linked demand
like IT & ITes
Retail Boom (Malls & Multiplexes)
Interest from overseas investors
Positive Regulatory Steps
3
Real Estate - Developer’s perspective
Favorable demand climate
Low entry barriers
Relatively unregulated sector
Financial flexibility (Availability of funds)
Supportive Govt. policies (Like SEZ STP
etc)
Intense Competition
4
Real Estate Finance – Institution’s perspective
Lucrative and well performing segment of the
economy
Innovative Product mix (Lending options)
Holistic service providers rather than mere
lender
Increasing complexity of deals
Need for clear strategic vision from developers
Good processes and systems
5
Real Estate - Regulator’s perspective
Protection of Consumer
Transparency from Developers and Financing
Institution
Over –heating and consequent impact on prices
and overall financial market
Over –exposure by lending institution
Self regulation by industry body (CREDAI etc.)
Misuse of Govt. Policy and Support (SEZ?)
6
Shift in Real Estate Investment from tier I to
Tier II & Tier III cities
Availability of comparative cheap labour pool
Reasonably good infrastructure
Suitable and reasonable real estate options
(Large parcel of land availability)
Business and social environment changes
Sector Specific Demand (Like IT & ITes due to
cost advantage)
7
Evolution of Housing Finance
LIC of India – Loans to Policyholders since the 1960s
Housing Development Finance Corporation (HDFC) –
1977
National Housing Bank Act – 1987
LIC Housing Finance Ltd – 19th June, 1989
Industry was dominated by HFCs –mainly HDFC &
LICHFL till late 1990s
In 1998, RBI allowed PSU Banks to lend directly in the
retail segment.
8
Evolution of Housing Finance
Disbursements to be around Rs. 1,00,000 cr in 2006-07
with Banks contributing to more than 60%
70000
60000
50000
40000
30000
20000
10000
HFCs
Banks
Others
2004-05
2003-04
2002-03
2001-02
2000-01
1999-00
0
1998-99
Annual Disb. Rs cr
80000
9
Growth Drivers
Acute shortage of dwelling units in India
Million Units
250
200
150
100
50
0
Usable Housing Stock
70.0
83.5
82.5
1961
97.1
1971
No of Households
101.5
123.3
1981
129.8
153.2
1991
171.8
191.2
189.7
209.5
2001E
2005E
19.4
19.8
2001E
2005E
Million Units
Shortfall
21.8
25
20
13.5
15
10
23.4
14.6
5
0
1961
Source : NBO
1971
1981
1991
10
Growth Drivers
Population growth & changing lifestyles Growth of mega cities
City
Population in cr
1995
2010E
2025E
Mumbai
1.51
2.43
3.32
Kolkata
1.17
1.56
2.14
New Delhi
0.99
1.55
2.16
Chennai
0.59
0.83
1.18
Hyderabad
0.53
0.94
1.32
By 2016, total population to touch 126 cr with 33 % being Urban Population
Government adopts the National Housing & Habitat Policy in 1998
11
Growth Drivers
Migration of population
- Total population of the country increased by 21%
between 1991 - 2001, whereas urban population grew by 31%
Percentage of Urban Population
27.78
29
28
25.72
27
%
26
25
23.34
24
23
22
21
1981
Source: The Census 2001, Tenth Five Year Plan 2002-2007
1991
2001
12
Future Growth Drivers
70%
% to total households
60%
50%
63%
Middle & Upper Middle Class
Households to grow from 54% to 74%
53%
51%
by 2009-10
46%
45%
40%
26%
30%
20%
11%
10%
3%
2%
0%
1998-99
2001-02
2009-10P
<Rs. 90000
Rs. 90000-500000
>Rs. 500000
13
Source : NCAER & CRISINFAC
Emerging Trends
Increase in Home Ownership Rate
80%
60%
50%
70%
63%
53%
47%
37%
40%
30%
30%
20%
10%
0%
1981
1991
Owned
2001
Age(years)
70%
Declining Age of Borrower
50
45
40
35
30
25
20
15
10
5
0
43
36
1998-99E
2003-04E
33
2009-10P
Rented
14
Industry Outlook
Steady growth projections for the Industry
160000
122000
145000
140000
Rs. cr
120000
102000
100000
80000
60000
40000
20000
0
2007
Source : CRISINFAC Report on Retail Finance, March 2005
2008
2009
15
Mortgage & GDP
India has one of the lowest mortgage penetration rates in the world
Mortgage/GDP ratio(in %)
80
54
60
57
% 40
20
4
7
India
China
14
0
USA
UK
Thailand
Source : Federation of Indian Chamber of Commerce & Industries (FICCI) – Survey on Housing Finance, 2003
16
Balancing Factors
Affordability
Increasing cost
Withdrawal of Section 80IB of the IT Act
Reduction in amount transferrable under
Section 36(1)(viii) of the IT Act
17
Thank You
www.lichousing.com
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