CAFRAL Round Table Conference October 7, 2011

1. Outlook on Real Estate and Housing Finance CAFRAL Round Table Conference October 7, 2011

2. Contents Economic Growth and Income Aspirations of the Indian Consumer Housing Industry and Home Finance Outlook Driving Real Estate Growth: Way Forward

3. Contents Economic Growth and Income Aspirations of the Indian Consumer Housing Industry and Home Finance Outlook Driving Real Estate Growth: Way Forward

4. GDP and Income Growth ` trillion Share of Construction in GDP at 8.1% in 2011 73.1 61.3 52.8 45.8 Per capita income increased by 51% over the last 4 years Savings rate at 36% of GDP 10-11 09-10 07-08 08-09 Economic growth has favourably impacted savings and income levels GDP at current market prices (factor cost) Source: RBI

5. Breakup of Savings (%age of GDP) National Savings 36.0% Household25.1% Corporate10.9% Financial Assets12.6% Private sector8.7% Physical Assets12.5% Public sector2.2% Physical assets are a major investment avenue for Indian households Physical assets imply houses, jewellery, etc. Financial assets include Bank deposits, stock, etc Source: RBI - As %age of GDP current prices (2009-10) 5

6. Breakup of Household Savings Savings in Physical Assets (%age of GDP) Physical savings continue to show robust growth 12.5% 11.5% 10.1% Savings in deposits and insurance have increased 3 fold in 2 decades 99-00 09-10 89-90 Real-estate has consistently been a significant savings avenue Physical assets imply houses, jewellery, etc. Financial assets include Bank deposits, stock, etc Source: RBI - As %age of GDP current prices (2009-10)

7. Contents Economic Growth and Income Aspirations of the Indian Consumer Housing Industry and Home Finance Outlook Driving Real Estate Growth: Way Forward

8. Aspirations of the Indian Consumer Affordability and accessibility Civic infrastructure and connectivity Consumer protection and Transparency Assurance of build quality and delivery standards Title clarity and legal protection 8 8

9. Contents Economic Growth and Income Aspirations of the Indian Consumer Housing Industry and Home Finance Outlook Driving Real Estate Growth: Way Forward

10. Supply and Absorption Supply (H1 2011) Absorption (H1 2011) Mumbai Metro Region 45,096 53,859 NCR 59,271 56,829 Bangalore 21,942 19,158 Chennai 24,342 11,964 Hyderabad 10,854 15,183 Kolkata 7,461 4,917 Pune 15,645 15,666 Demand-supply balance is micro-market specific Source: JP Morgan & Prop-Equity estimates 10

11. Price Index Movement NCR Bangalore 131 122 108 108 96 100 100 93 16% (7%) 12% 22% (4%) 12% 2008 2009 2010 2011 2008 2009 2010 2011 Pune Mumbai 171 122 130 103 100 98 100 98 32% 32% (2%) 5% (2%) 19% 2008 2009 2010 2011 2008 2009 2010 2011 Prices have increased substantially in 2011 All estimates as on March 31 11

12. Price Index Movement Chennai Hyderabad 134 110 99 100 100 93 97 101 22% 4% 11% 5% (1%) (7%) 2008 2009 2010 2011 2008 2009 2010 2011 Kolkata 157 109 98 100 44% 10% (2%) 2008 2009 2010 2011 Property prices in Hyderabad have been relatively flat All estimates as on March 31 12

13. Home Finance Disbursements In ` tn Annualized Growth Rate 28% 20% 13% 15% 3.00 1.96 2.00 1.73 1.44 3.40 1.13 1.00 Annual Disbursements 11-12 15-16 10-11 08-09 09-10 Disbursements expected to maintain a CAGR of 15% Source : CRISIL

14. Contents Economic Growth and Income Aspirations of the Indian Consumer Housing Industry and Home Finance Outlook Driving Real Estate Growth: Way Forward

15. Potential Drivers of Real Estate Growth Accelerating growth in urban centers Push from increased infrastructure investments Policy and administrative support Increase in Credit Flow

16. Potential Drivers of Real Estate Growth Accelerating growth in urban centers Rising consumer incomes will provide significant push to housing demand Policy and administrative support Bringing FSI1 norms to global standards can create substantial floor space Greater affordability will be a crucial factor 1 FSI: Floor Space Index 16

17. Potential Drivers of Real Estate Growth Push from increased infrastructure investments Bringing urban infrastructure under priority sector to increase capital availability Increase in Credit Flow Effective urban planning based on a long term development roadmap for each city Increased investments in transport, healthcare and education 17

18. Potential Drivers of Real Estate Growth Property Registry will provide substantial risk mitigation Push from increased infrastructure investments Credit Bureau penetration is facilitating enhanced credit flow Title Insurance and Mortgage Insurance will significantly reduce risks Increase in Credit Flow 18

19. Potential Drivers of Real Estate Growth Real Estate Regulation Act: Encumbrance clearance and delivery protection to consumer Accelerating growth in urban centers Adoption of independent project rating standards & quality assurances by developers Increased supply through rental housing projects Land Acquisition Bill can enhance clarity and transparency Policy and administrative support 19

20. Summary Income growth will continue to drive real estate growth and housing demand Imperative to focus on urban planning and increasing infrastructure investments Unlocking supply through FSI liberalization, rental housing schemes, etc is necessary to increase affordability Need for strengthening consumer protection through a mix of policy, legislative and industry level initiatives 20 20

21. Thank you